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

But trust me the corporations (the one I work for is an international electronics manufacturer) are very polite and respectful and very much understand the realities of risk/reward, and that you have to spend money to make money. And they all have an army of QA engineers double-checking work because they will not allow $1 million dollars of business to be dependent on a single point of failure. Even if they bring you to court (they never would) I'd assume its VERY difficult to get compensation. If you hire an employee and he does a bad job, do you get to sue him for damaging your profit margins? Hell no, you just get to fire him and hire a new guy. If everyone were legally on the hook for the work they produced, it would be like assuming that everyone you ever hire is required to be omniscient. The reality is, you can't hire someone with a 50 IQ and then sue them because you believe one of their lines of code hurt your profitability. It's your fault for hiring them.

I gotta say a lot of these responses I'm getting are very paranoid. When a company pays you for work it's really hard for them to take that away from you. The most that's ever really at stake is your current paycheck and not even that really because the department of labor is VERY harsh on reputable employers who deny paychecks.

It seems like your point is more of a fantasy scenario where they give you a billion dollars & 5 years of unsupervised time to design a huge blackbox program that has to do X, then find out it doesn't do X. The software industry is simply not like this. All tasks are broken up into discrete components and if you're not doing a good job they'll fire you and bring in a new team to finish the job.

The ONLY way I've actually heard of an employee losing $$ is when they have a long-term employment agreement and they break it. It's kindof like an athlete signing a 10-year deal & walking off the field after 6 months. Then, yes, you're liable.

Otherwise being a paid consultant is pretty much the same thing as being an employee. Also, I doubt that companies will sign some "boilerplate contract" that absolves you of all liability. They'd rather hire someone who is more confident. That's not a dig, I really mean that sincerely. Over-negotiating and specifying a bunch of "unrealistic-covering-my-ass-terms" can come off as amateur.

If what you wrote there were necessarily true, nobody working as a freelancer/consultant would need to set up their own corporate entity as a legal shield, nobody in that field would need professional indemnity insurance, and insurers who offer professional indemnity insurance to IT contractors here in the UK wouldn't routinely ask specific questions about whether those contractors were going to be working with clients in the United States because of the risk of having to cover significant legal bills increases so much in that case that a higher premium is indicated.

I code people's websites all the time with 0% fear of losing my bank account in court.

Well, that's your choice, and of course you're entitled to your personal opinion.

I've worked with other freelancers who didn't feel the need to have a written contract with a long-term client either, but I would never recommend that approach myself.