The importance of contracts as an essential part of every freelancer�s toolkit should not be underestimated. Not only do they outline the wants, needs and expectations of the parties, but they also provide a legal framework within which these will be achieved, and a back up should legal intervention be required. Contracts provide a formal definition of the business relationship between the freelancer and agency or direct client.

For freelance contractors who might be viewed by HM Revenue & Customs as �disguised employees� within the IR35 legislation, having sound contracts in place is all the more important.

First and foremost, it is essential to have a contract for services with your business, not a contract of service or employment contract with you personally. This contract should accurately reflect the relationship between parties, and should include the following elements:

• A substitution clause allowing the work to be performed by another person provided by your freelance business; there will usually be terms relating to right of veto, suitable qualifications and so forth.
• A clause specifying that there is no "mutuality of obligation" between the parties; in other words, there is no "obligation, on the one hand, to work and, on the other, to remunerate."
• A clause stating that you will not be subject to supervision, direction or control as to the manner in which you render the agreed services; as a professional, you will use your own initiative as to the manner in which the services are delivered.