Verbal agreements may be legally binding and may potentially be supported by documents such as emails, quotes or notes about discussions. However, there are risks associated with verbal agreements, therefore we recommend always putting your agreements in writing.
Your agreement should identify each of the parties, include both businesses’ ABN numbers (or ACN), specify that the contractor is not an employee, and be signed and dated by each of the parties.
Your agreement must specify what, when and where work will be done. It’s important to be very clear and give plenty of detail.
Your agreement must contain how the contractor is to be paid. i.e. fixed fee, per hour, per month, or on completion of the job.
It is important to outline how issues will be handled in case of a dispute. Your agreement should specify your dispute resolution process for solving disputes without needing to go to court. For example, this may include: an informal discussion, followed by formal negotiation, followed by alternative dispute resolution.
The contractor will own any intellectual property they produce, unless the business that engages them specifies ownership of intellectual property in the agreement.
Your agreement should contain a clause to protect important confidential information such as client lists, prices, profit margins, or trade secrets.
Indemnity clauses usually involving transferring risk from the hiring business to the contractor. Alternatively, it may state that the contractor is not liable for risks or losses that the hiring business has control over.
It is important to specify whether the contractor is covered by the hiring business’ insurance or whether they must carry their own insurance, for issues such as public liability, property damage, personal injury, negligence, or professional indemnity.
Your agreement should specify whether any or all of the work done by the contractor can be subcontracted, and any restrictions on what can be subcontracted. This may include a clauses stating that the subcontractor must be preapproved by the hiring business, or that the subcontractor is liable for any work done by the subcontractor.
An exclusivity clause prevents either party from entering into a similar arrangement with other businesses or contractors.
A restraint of trade clause prevents the contractor from taking the hiring business’ clients or competing with the hiring business, during the time the contractor is working for the business and for a specified period after this time. Note, the clause my be reasonable to be legally enforceable.
In a contract that covers a long duration of time, either party may wish to make an alteration to the agreement. A variations clause usually sets out that for any change to the agreement needs to be agreed in writing and signed by both parties.
Your agreement should specify when and how the agreement can end. This may include: on completion of the work, ending early because one party has breached the agreement, or ending early for other specified circumstances agreed by both parties.
Contact us today if you require any assistance with your Contractors Agreement.
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