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3 key provisions to have in an independent contractor’s contract

On Behalf of | Sep 22, 2023 | Business Formation & Planning

Whenever you hire a third party to complete a specific task on a short-term basis, you need to draft a contract for them. Done right, this contract outlines the terms of engagement, each party’s responsibilities and entitlements as well as any other requirements. 

However, independent contractors’ contracts are governed by law. Thus, for a contract to be valid, it must contain certain components. Here are three crucial provisions that you should never overlook when drafting an independent contractor contract:

The terms of the job

Besides outlining a detailed description of the job, this clause should also specify each party’s particulars, where the contractor will work from as well as the contract period. It’s important that the contract has a definite time frame to avoid the risk of misclassification, which can cause legal problems down the road. 

Each party’s responsibilities and deliverables

It is important that the contract is concise and clear on the specific work the contractor will do as well as the expected output. The contract should also outline how the deliverables will be assessed and approved. It should explain how and when the contractor will be compensated. Will there be a downpayment? Will payments be made periodically after accomplishing certain milestones? And, will they be paid a fixed rate or an hourly wage?

Confidentiality agreement

In the course of their work, an independent contractor is likely to come across sensitive data and business information. A confidentiality agreement binds the contractor and ensures that they do not mishandle sensitive information or disclose it to third parties.  

An independent contractor agreement is a legally binding contract. As such, it is important that you carefully review its provisions before anything is signed. Understanding the basics of creating an independent contractor agreement can help you protect your business interests while working with independent contractors.