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Independent Contractor’s Contract Template – Include these eight points!

26 Jun 2020 by Maria Kotaniemi

One of the most popular questions of the Talented Slack Community’s #freelance-work  -channel is this: What kind of contract templates are used by other independent contractors of the community and whether anyone could share a contract template.

For independent contractors, it’s necessary to sign a contract with the client. The importance of a thorough and explicit contract and agreeing on the details of the project (such as schedule, hourly rate and payment period) cannot be overemphasized.  If the project details have not been officially agreed, it can lead to negative surprises or, in the worst case, independent contractor’s serious financial loss.

In this text, we’ll explain the eight essential things that need to be found in an independent contractor’s contract. Also, you’ll get an example contract template.

Why must an independent contractor sign a contract?

Contract protects you as a self-employed person and gives you flexibility in case of unexpected events or changes in the agreed details occur. Creating an explicit contract reduces the possibility of individual interpretation and prevents disagreements and conflicts between you and the customer. In addition, the contract gives both parties a clear picture of the expectations of the work to be done.

If the client is hesitant to sign the contract you have drawn up and offers own template, do not sign anything before a lawyer has checked the contract. There’s a risk of fishy clauses in small print.

Eight essential points you want to include in your contract

To secure yourself, make sure that these eight points are included in the contract regardless of whose template you’re using; your own or the client’s. These points are to ensure that both parties understand the details of the work to be done so that you’d avoid disagreements about them during and after the project.

1. Introduction

Explain the purpose of the contract as clearly as possible. Give also a brief description of the background to the contract and / or project, and explain the parties of the contract.

Who will work at which company?

It may also make sense to describe all the designations used by the parties in the contract.

2. What the job involves and what you’re expected to deliver

This paragraph is to prevent misunderstandings and disagreements. If the work to be done involves more tasks or you want to make the contract more open, you can use bullet lists.

Describe in detail what you are expected to produce and deliver to the customer. This protects you from situations where the client suddenly asks if you can do different tasks or more work than agreed. If the task is not specifically agreed in the contract, do not do it. All additional work must be agreed separately.

Explain what the contract means but also what it does not mean if there are some gray areas that could lead to misunderstandings.

3. Possible changes

Include a separate section for possible changes. You can use this section in the situation we just described, where the client asks you to do new tasks or more work than agreed.

In this section, describe how you’ll bill for changes and that you expect the customer to pay for work that has already been done.

4. Comments and remarks

You can put both your own notes and the customer’s comments to this part of the contract. Give the client a chance to tell what they expect from you and the work to be delivered. This way you’ll show that you are cooperative and take the customer’s needs and wishes into account.

5. Schedule

When the project will start and when it is expected to end?

We also recommend writing down the number of hours the work is expected to take you. This is to avoid a situation where the project  is taking longer than the customer has agreed to pay you. Also, writing down the time estimate will ensure that you’ll receive a reasonable compensation for your work, regardless if it’s a fixed amount for the entire project or an hourly rate.

6. Price and payment

As an independent contractor, you should play safe and not take a risk with the customer misunderstanding the payment details and cost of your work.

Write down the hourly rate or a fixed amount for the entire project, how the payment will be carried out and when the invoice sent by you will be due (payment period). Also describe the rate of interest that will be charged if the invoice is not paid on time.

If you have agreed that the project will be paid for in several installments after each completed phase, describe in detail when you’ll invoice the customer and what the payment period is.

7. Other regulations

In this section, provide any other important information that affects your work or the collaboration between you and the client. Such information may be, for example, who owns the content that you produce, who has the rights to use the content, confidential content, responsibilities and insurance.

8. Signature

Define two parts to be signed; one for yourself and one for the customer. Contract is a written agreement between two or, in some cases, more parties, and it’s important that all parties sign it.

Contract template for an independent contractor

Here’s a template that we at Talented use when our clients purchase subcontracting from Talented Consultants. The template is generalized and it’s easy to make additions on a case-by-case basis. However, it is not directly usable as a contract between an independent contractor and the client.  However, we strongly believe that you can still get tips from it and you’re free to use the template yourself!

You can find the Google Docs customizable template here. It can also be downloaded as a Word document.

 

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