What Happens When a Freelancer Does Work for a Client Without a Contract

Companies have limited liability in the USA. They are subject to full market discipline. The owners of the companies are not.

And thus ... business between companies should take precautions such as getting paid a retainer, at milestones, etc. and assume that some payments will not be coming.

Meanwhile people (e.g. employees) can rely on the government to put heavy pressure on employers to pay them. I am in favor of more direct guarantees of basic living standards -- i.e. a basic income -- such as some European countries are doing. That way even the employer-employee relationship can be less regulated.

I have a few clients who basically put me on a retainer, then I send them a bill. If you give an hourly rate + an estimate clients seem to be cool, provided they are actual businessses. The only clients I've ever had issues with are individuals (usually artists since I freelance electronic media) and that stems from budget / rampant psychotic narcissism. But with businesses, I state my rate I estimate hours & then I bill them.

I'm sure there is a more secure way of handling this with contracts but if a company I work remotely for ever stiffs me on a bill: 1. They better be closing up shop the next day or I'm gonna come after them hard. 2. They lose access to the skills I offer them. 3. I probably have accounts/services in their name that they can't alter/operate without my help, so they're really just shooting themselves in the foot & will likely come to realize this rather quickly.

Anyway worst case scenario I lose 1 payment (maybe it was 1-3 grand?). Maybe it's scary to think that a 3k payment might disappear but the reality is, after discussing with them they'll probably just hand it over anyway or you can settle in between. Even if I one day lose a thousand dollars (which I highly doubt) I can look back and smile knowing I never had to deal with a ton of legalese.

The reality of it is that businesses can't just stiff you on a bill if they agreed to pay for your services, and if you have nice clients who are trying to build a business they have no reason to hurt you if you do good work for them. But I understand not everyone has the luxury of sane clients. I certainly didn't back when I was dealing 1-on-1 with artists.

    > The reality of it is that businesses can't just stiff
    > you on a bill if they agreed to pay for your services

Perhaps it actually is better in the software world, where clients (hopefully) know they are going to need you in the future.

Anyway, good for you that you can find clients that know they need to pay you; but not all businesses have figured that out.

But if they brought a civil suit they would win easily, no? That's what I really meant by that line. My father is a lawyer & every time I bring up something like that to him he laughs. "Of course they have to pay, it's just too much trouble sometimes. Usually just the threat of legal action is good enough."

Maybe it's not so simple but that's a shame.

If you give a tech consultant a job they will code from A to B. The client is always the one throwing up roadblocks and change requets. If they don't understand that they are on the hook for those billing hours, yeah you don't have a good client there...

ONLY USE HOURLY RATE + ESTIMATE that's the best advice I can give on top of enobrev's. Maybe others disagree, but in my experience project rates mean the client will try to take advantage or if you get a project price that seems absurdly high & you get that flash of $$ signs in your eyes, the client will usually realize they overpaid and you'll lose potential future business with them. Just use a rate and be somewhat ethical about it. Even if you don't have a huge client base, they will all come back around for more work every few months.