When hiring an independent contractor, an agreement must be made that conforms to legal definitions, includes a scope of work, payment terms, and specifies the contractor’s equipment and location of work. A section detailing the rights and responsibilities of each party should also be included.
When choosing to hire an independent contractor rather than an employee, or if you intend to work as an independent contractor, you will need to write an independent contractor agreement detailing the details of the agreement. The first problem you face is making the agreement conform to the legal definition of an independent contractor. After your agreement matches these specifications, you’ll add scope of work, contract length, deliverables, a payment agreement, and legal recourse options. Some independent contractor agreements have conditions for canceling or renewing the contract.
An independent procurement contract must specify what is being purchased from the contractor or seller. There is no employer/employee relationship in this type of contract, so instead of a job description with duties, an independent contractor contract contains a scope of work. This section details the duration of the contract, with start and end dates and deliverables or the products the contractor agrees to create or the services the contractor will perform.
Clarify that the contractor’s work product will meet specifications by indicating that the arrangement is ‘work for hire’. After the company and the contractor have agreed to these terms, the product or service can be refused if it does not meet the specifications. Without this statement, an attempt to control the final product received by the contractor can put a business in a gray area that separates contractors from employees.
The place of performance is an important element of an independent procurement contract. Establishes legal jurisdiction and helps meet legal requirements that separate employees from independent contractors. Explain clearly that the contractor supplies its own equipment and tools and that the work performed will not take place on the company premises. Without this clause, the existence of an employer / employee relationship could be ruled out.
Payment terms are essential in the agreement. Specify whether the contractor receives incremental or lump sum payments and approximate payment dates. If applicable, the agreement must state that the contractor is responsible for any taxes owed.
The final piece of an independent procurement contract is a section detailing the rights and responsibilities of each party to the contract. Be sure to include these statements in case of disagreement. This helps to avoid actions by the contractor that adversely affect the business and vice versa.
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