I hid five traps in a freelance contract. What did the $1 AI review catch?

Dear Moss Finch Design Ltd,
TL;DR:
This document expressly says it is fictional and creates no real commitment, so it should not be used as a live agreement. If these terms were used for a real USD 500 logo project, they would be seriously unfavourable to you as Designer.
The highest-risk terms are:
unlimited revisions for a fixed fee; payment only after subjective Client acceptance; no payment if the Client terminates; transfer of your tools, templates and future improvements before payment; and unlimited liability, including for the Client’s own materials and actions.
I would not start work under these terms without substantial amendment.
Preliminary point: stated to be fictional and non-binding
Heading / Section 8:
“Fictional example only. No real parties or agreement. Do not use as a contract template.”
“No signatures are provided. This document records no real engagement and creates no real commitment.”
Comment:
On its face, this is a public demonstration, not an operative contract. It should not be used for an actual engagement without being replaced by a completed agreement with the real parties and agreed terms.
The comments below address the commercial risks that would arise if these provisions were copied into a real contract.
1. Unlimited revisions and additional concepts for USD 500
Section 2:
“Designer will provide the items in section 1 and all changes, additional concepts and revisions requested by Client until Client is fully satisfied.”
“These requests are included in the total project fee. There is no limit on revision rounds or request dates.”
Risk:
You are required to carry out unlimited revisions, changes and additional concepts for one fixed USD 500 fee. “Fully satisfied” is subjective, and there is no deadline by which the Client must make requests. The project could continue indefinitely.
Recommendation:
Limit the included scope, concepts and revision rounds. Require consolidated feedback within a short period. Charge separately for extra work or any scope change.
Suggested replacement:
“The Project includes [one/two] initial logo concepts, a two-colour palette and a one-page brand sheet, together with up to two rounds of consolidated revisions. Client must provide feedback within five Business Days after each delivery. Any additional concepts, revisions, changes of direction, changes in scope or requests made after that period require Designer’s prior written agreement and will be charged at USD [rate] per hour or at a separately agreed fixed fee.”
Clarification needed:
Define precisely what is included in the “one-page brand sheet,” for example logo variants, colour codes, typography, logo-clear-space guidance and file types. Otherwise, the Client may expect a more extensive brand identity package.
2. Payment is uncertain and can be delayed indefinitely
Section 3:
“Client may review each delivery for as long as it considers necessary.”
“The entire fee becomes payable 60 days after Client gives final written acceptance.”
“Acceptance is at Client's sole discretion. No deposit or interim payment is due.”
Risk:
You receive no upfront payment and no interim payment. The Client may review for an unlimited period, can decide acceptance at its sole discretion, and need not pay until 60 days after it accepts. In practice, there is no reliable date on which you become entitled to payment.
The subjective “sole discretion” acceptance standard is particularly problematic: even work that meets the agreed brief can be withheld from acceptance because the Client simply changes its mind.
Recommendation:
Take a deposit before starting, set short review periods, use an objective acceptance standard tied to the agreed scope, and make the final balance payable before release of final files.
Suggested replacement:
“Client shall pay 50% of the Project Fee before Designer starts work and the remaining 50% within seven days of Designer’s invoice for the final deliverables. Client must notify Designer in writing within five Business Days of delivery of any material failure to meet the agreed scope, with reasonable details. If Client does not do so, the deliverables are deemed accepted. Designer may suspend work and withhold final files until all due amounts have been received in cleared funds.”
Suggested late-payment wording:
“Overdue sums shall accrue interest at the statutory rate applicable under the Late Payment of Commercial Debts (Interest) Act 1998, together with reasonable debt-recovery costs. Client shall pay any bank charges, currency-conversion charges and applicable taxes relating to payment.”
Clarification needed:
State whether USD 500 is inclusive or exclusive of VAT, sales taxes, bank charges, third-party licences, fonts, stock assets, printing, and other out-of-pocket costs.
3. You transfer all IP, including existing tools and future improvements, before payment
Section 4:
“Upon creation, Designer assigns to Client all rights in the project deliverables, working files, reusable design templates and tools, including templates and tools created before this project and all future improvements to them.”
“This assignment applies whether or not Client has paid any invoice.”
Risk:
This attempts to transfer far more than the final logo. It includes:
final deliverables;
working and source files;
reusable templates and tools you already owned before this project;
future improvements to those templates and tools; and
rights in all of the above even if the Client does not pay.
This is commercially unacceptable for a small fixed-fee project. It could prevent you from reusing your own templates, processes, design systems and know-how for other clients.
Recommendation:
Assign only the agreed final bespoke deliverables, and only after full payment. Retain all rights in drafts, rejected concepts, working files, templates, tools, processes, background IP and future improvements. Editable/source files should only be included if specifically listed and separately priced.
Suggested replacement:
“Subject to Client’s payment in full of all sums due, Designer assigns to Client the intellectual property rights in the final deliverables specifically created for Client and identified as final approved deliverables. Designer retains all rights in drafts, rejected concepts, working files, editable/source files unless expressly included, pre-existing materials, templates, tools, processes, techniques, know-how and all improvements to them (‘Designer Materials’).”
“To the extent any Designer Materials are incorporated into a final deliverable, Designer grants Client a perpetual, worldwide, non-exclusive licence to use those Designer Materials solely as incorporated in that final deliverable. Third-party materials remain subject to the applicable third-party licence terms.”
Clarification needed:
The agreement should list exactly which final files will be delivered, for example SVG, PDF, PNG and JPG. It should also state whether editable AI, PSD, Figma or other source files are excluded.
Further point:
If the Client asks for a waiver of moral rights, that waiver should be limited to the final paid deliverables and should not apply to your tools, drafts, templates or unrelated work.
4. Unlimited liability, including for Client-provided materials and Client misuse
Section 5:
“Designer will indemnify Client against all losses, claims, costs and expenses connected with the project, without financial limit.”
“This includes claims arising from Client's supplied materials, modifications or use of the work outside its intended purpose.”
“Client may settle a claim without Designer's approval and charge Designer the settlement and related costs.”
Risk:
This gives the Client an unlimited indemnity. You could be responsible for all losses and legal costs connected with the project, including claims caused by:
materials supplied by the Client;
changes made by the Client or another designer; or
the Client’s use of the work outside its intended purpose.
The Client may also settle a claim without your approval and require you to pay the settlement. This exposure is wholly disproportionate to a USD 500 project.
Recommendation:
Delete the existing clause. Use a narrow, fault-based and mutual indemnity. The Client should indemnify you for its supplied content and instructions. Any Designer indemnity should be limited to a proven third-party IP claim relating to your original final paid deliverables.
Suggested replacement:
“Client shall indemnify Designer against third-party claims arising from content, materials, instructions, specifications or trade marks supplied by Client, or from Client’s modification or use of the deliverables other than as supplied by Designer.”
“Designer shall indemnify Client only against a third-party claim that the final deliverables, as supplied by Designer and used in accordance with this agreement, infringe that third party’s intellectual property rights. This does not apply to claims arising from Client Materials, Client modifications, combination with other materials not supplied by Designer, or use outside the agreed purpose.”
“The party seeking indemnity must promptly notify the other party of the claim, provide reasonable cooperation, and allow the other party to control the defence and settlement. No settlement imposing liability on the other party may be agreed without that party’s prior written consent.”
Suggested liability cap:
“Designer’s total aggregate liability arising out of or in connection with this agreement shall not exceed the total fees actually paid to Designer under this agreement. Designer shall not be liable for indirect or consequential loss, loss of profit, loss of revenue, loss of goodwill, loss of opportunity or loss of data.”
Note:
Under English law, the enforceability of a liability cap depends on the wording and circumstances, including whether it is reasonable. It should be checked against your insurance position and the final contract.
5. Client can cancel at any time, take the work, and pay nothing
Section 6:
“Client may terminate this agreement at any time for any reason.”
“On termination Designer must hand over all work in progress within two business days.”
“Client owes no further fee for completed or partly completed work that had not received final written acceptance before termination.”
Risk:
The Client can end the project for any reason, require work in progress within two business days, and pay nothing for completed or partly completed work that has not been finally accepted. This would allow the Client to take your drafts or work in progress and potentially use them or give them to another designer without payment.
The clause also gives no equivalent right for you to terminate or suspend work if the Client does not pay, fails to provide feedback, delays the project, or repeatedly expands the scope.
Recommendation:
The Client should pay for work performed and non-cancellable costs up to termination. No work, drafts or files should be delivered or licensed until all sums due are paid. You should have termination and suspension rights for non-payment and material Client breach.
Suggested replacement:
“Either party may terminate this agreement if the other party commits a material breach and fails to remedy it within seven days after written notice. Designer may suspend work or terminate this agreement immediately if Client fails to pay a due amount or fails to provide required feedback or materials for more than [10] Business Days.”
“Client may terminate for convenience on written notice, but shall pay Designer for all work performed, fees accrued and non-cancellable costs incurred up to the termination date. Designer is not required to deliver work in progress, and Client has no right to use any drafts, work in progress or deliverables, unless and until all amounts due have been paid in full.”
6. Scope does not exclude trade-mark clearance or registration work
Section 1:
“Paper Kite Studio Ltd (Client) engages Moss Finch Design Ltd (Designer) to create a logo, a two-colour palette and a one-page brand sheet.”
Risk / clarification needed:
A logo project can create assumptions that you are confirming that a name or logo is legally available, does not infringe others’ rights, or can be registered as a trade mark. The agreement does not limit your role in this respect.
Recommendation:
Expressly exclude trade-mark availability searches, legal clearance and registration advice unless separately agreed in writing and carried out by an appropriately qualified adviser.
Suggested addition:
“Designer does not provide legal advice, trade-mark clearance, trade-mark availability searches, trade-mark registration services or any guarantee that the deliverables may be used or registered in any jurisdiction. Client is responsible for obtaining independent legal advice and any required clearance before using or registering a name, logo or other brand asset.”
7. Delivery date is not protected against Client delay
Section 1:
“The intended delivery date is 30 November 2026.”
Section 7:
“Client will provide brand names and reference materials.”
Risk:
Although the delivery date is described as “intended,” there is no deadline for the Client to provide content, materials, instructions, approvals or feedback. There is also no express extension to your delivery date if the Client delays.
Recommendation:
Make all dates estimates dependent on timely Client cooperation. The timetable should automatically move if the Client delays feedback or supplies incomplete materials.
Suggested replacement:
“All delivery dates are estimates and depend on Client providing complete instructions, materials, approvals and feedback on time. Any delay by Client shall extend Designer’s delivery dates by at least the period of delay. Designer shall not be liable for delay caused by Client, Client’s suppliers, third-party platforms or circumstances outside Designer’s reasonable control.”
8. Client should warrant that its materials can be used
Section 7:
“Client will provide brand names and reference materials.”
Risk:
The Client is to provide materials, but gives no warranty that it owns them or has permission for you to use them. This is especially concerning given the current indemnity clause attempts to make you liable for claims relating to Client materials.
Suggested addition:
“Client warrants that it owns, or has obtained all necessary rights, permissions and licences to provide Client Materials to Designer and to authorise Designer to use them for the Project. Client is responsible for the accuracy, legality and non-infringing nature of Client Materials.”
9. Portfolio use is not clearly permitted
Section 7:
“Neither party may make public announcements naming the other without written approval.”
Risk:
This may stop you from identifying the Client or showing the work in your portfolio, website, social media, pitch materials or awards submissions. It does not give you a positive right to display completed work.
Suggested addition:
“Following Client’s first public launch of the final deliverables, and provided Client has paid all amounts due, Designer may display the final deliverables and identify Client in Designer’s portfolio, website, social-media channels, pitch materials and awards submissions, unless Client has notified Designer in writing before launch that the Project is confidential.”
10. Confidentiality and third-party assets are not properly addressed
Section 7:
“Neither party may make public announcements naming the other without written approval.”
Clarification needed:
This is a non-announcement restriction, not a full confidentiality clause. If either party will disclose non-public business, product or customer information, a separate confidentiality provision should define what is confidential, permitted use, exceptions and duration.
Clarification needed:
The agreement should also state who selects, purchases and pays for third-party fonts, stock imagery, illustrations, mock-ups, software or other licensed assets. These materials may have restrictions and cannot always be assigned to the Client.
Recommended minimum position
50% deposit before work begins; balance due before final-file release.
A fixed number of concepts and no more than two revision rounds.
Deemed acceptance after five business days if no specific non-conformity is identified.
Ownership of final deliverables only after full payment.
Retention of your drafts, working files, source files, templates, tools, methods and future improvements.
No responsibility for Client-supplied content, Client modifications or Client misuse.
A reasonable liability cap, ideally no more than fees paid.
Payment for work completed if the Client cancels.
Express exclusion of trade-mark clearance, registration and legal advice.
Clear scope, delivery, feedback, expenses, third-party asset and portfolio terms.
Please double-check this review with a qualified solicitor before relying on it or signing a real agreement. I am an AI and cannot provide legal advice tailored to your particular circumstances, insurance arrangements or final negotiated wording.
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Kind regards,
AI Contract Lawyer