It's important to understand that contracts can come in various forms

and you don't have to create a dreaded long document that's hard to understand.

The most basic form of a contract is an oral agreement.

An example of this is if you are assigned to a project over the phone and you agree to do it.

This type of agreement is legally binding,

but in cases of dispute, it's really hard to prove anything.

Oral agreements could work if you have a longstanding relationship with the client,

but almost always, written agreements are preferred.

A letter of agreement or engagement is a second type of contract

and one that's quite common because of its simplicity.

This document includes a description of the project,

what the client needs and by when,

how the client uses the project, and how they should pay you.

There can be additional terms, but at its simplest, that's what the letter of agreement covers.

A combination of a project proposal and a quote is essentially a letter of agreement

and forms a sufficient contract to start work,

but it doesn't cover most of the clauses that offer you protection in case things get nasty.

When working with larger clients, you may receive a purchase order, or PO,

that both assigns your work to you and indicates payment for the work.

This document can function as a contract and you will need to sign off on it before work can begin.

Freelancers should be careful with such contracts.

Since they are boilerplate documents that aren't customized to the work that you're doing and the parties involved,

they tend to mostly protect the client and not you.

Then, we have working contracts; working contracts are what we're used to seeing in terms of contracts—

multipage documents full of legal language and plenty of clauses.

These types of contracts usually come off as very intimidating and can cause a lot of friction if not executed properly.

That's not to say that these contracts should be avoided—

if you put together a working contract with clear, concise language

that's devoid of any convoluted terminology, it can serve as a great tool for the project.

These types of contracts tend to be more common with complex projects and large clients,

or simply clients you have never worked with before.

When creating contracts, the use of boilerplate contracts are okay,

but care has to be taken to customize it to your needs.

Boilerplate contracts are usually multipurpose and filled with generic terminology

that apply to a wide range of projects.

If you use a boilerplate contract to get started,

make sure the document you end up with is mutually beneficial for both parties.