Kill Fee Clause in Freelance Contracts: What Happens When a Client Cancels?
What This Clause Does
A kill fee is compensation you receive if the client cancels a project after you've started work. Without one, a client can pull the plug at any time and you lose all the time you've invested. Kill fees are typically a percentage of the total contract value, calculated based on how far into the project the cancellation occurs.
Kill fees protect your livelihood, especially for projects that require significant upfront investment or cause you to decline other work. Many clients resist kill fees, but they're a professional standard in creative and consulting industries.
Example Clause Pattern
"In the event Client cancels this Agreement after work has commenced, Client shall pay a kill fee as follows: 25% of remaining fees if cancelled before [Milestone 1]; 50% of remaining fees if cancelled after [Milestone 1] but before [Milestone 2]; 100% of remaining fees if cancelled during final phase."
What to Watch
- No kill fee provision: client can cancel at any time with zero compensation
- Kill fee only covers work already invoiced, not time invested in future milestones
- Kill fee waived if client claims the work was unsatisfactory (subjective standard)
- Kill fee calculation doesn't account for held time or declined projects
What to Negotiate
- Structure the kill fee as a percentage of remaining unpaid contract value — not just work already completed
- Include compensation for calendar time you blocked and projects you declined during the engagement period
- Ensure the kill fee cannot be waived on a subjective "unsatisfactory work" claim — require an objective standard for disputes
- Set the kill fee to escalate as the project progresses: 25% early on, 50% mid-project, 100% in the final phase
How This Clause Works by Jurisdiction
Kill fees are enforceable in California freelance contracts. Courts assess them as liquidated damages under Civil Code §1671, requiring they represent a reasonable pre-estimate of harm at the time of contracting. The California Freelance Worker Protection Act (SB 988, 2025) mandates payment according to contract terms, reinforcing that cancellation provisions are binding.
Reviewed May 2026
Kill fees are enforceable in New York freelance contracts under the Freelance Isn't Free Act and its 2023 statewide extension. Courts treat them as agreed contractual remedies rather than penalties where they represent a reasonable estimate of lost revenue, particularly for escalating kill fee structures tied to project progress.
Reviewed May 2026
Kill fees are enforceable in UK freelance contracts provided they are not unenforceable penalty clauses. Following Cavendish Square v. Makdessi (2015), a cancellation payment is valid if it protects a legitimate interest and is not out of proportion to that interest. Escalating kill fees tied to project progress are generally defensible as reflecting increasing sunk cost.
Reviewed May 2026
Jurisdiction-specific information is general in nature and not legal advice. See disclaimer.
Found in These Contracts
This clause commonly appears in the following contract types:
Frequently Argued Questions
What is a kill fee in a freelance contract?
A kill fee is compensation you receive if a client cancels a project after work has begun. It compensates you for time already invested, revenue you turned down to take the project, and the cost of suddenly having open capacity you need to fill. Without a kill fee clause, a client can cancel at any point and owe you only for work explicitly invoiced — potentially nothing if you haven't sent an invoice yet.
How much should a kill fee be?
Kill fees typically range from 25% to 100% of the remaining contract value, increasing as the project progresses. A common structure: 25% if cancelled in the first third, 50% in the second third, and 100% (full remaining payment) in the final phase. Kill fees are separate from payment for work already delivered — you receive both the kill fee and payment for completed milestones.
Is a kill fee the same as a deposit?
No. A deposit is paid upfront before work begins, often applied toward the first invoice. A kill fee is triggered only when the client cancels — if the project completes normally, no kill fee is owed. Both protect freelancers from different risks: deposits guard against clients who never start, kill fees guard against clients who cancel partway through.
Negotiation Strategies
Structure the kill fee as a percentage of remaining unpaid contract value
Include compensation for time blocked out in your calendar regardless of milestones reached
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