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Running a business as an independent contractor is a huge challenge. Looking for clients, exceeding customer expectation, and charging them the correct fees are just but a few of the challenges the independent contractor must face each day. The challenge increases manifold when you consider that some of the contractors have employed several individuals to work under them. For these reasons, the contractor needs everything in place to run the business successfully. One of the factors needed to enjoy success is an independent contractor agreement, or independent contractor contract template.
1. The independent contractor contract template helps
It defines all elements essential to maintaining a healthy contractor-client relationship. It defines the responsibilities and duties of the client vis-à-vis the contractor. The contract defines who the contractor is clearly. It leaves no room for any sort of ambiguity. Everything is clearly spelled out, and the independent contractors begin working as one safe in the knowledge that their status will not change, especially later when they have to file their tax returns. The contract is essential for the success of any arrangement or project between contractor and client.
2. The contractor contract template goes into detail while explaining the relationship between the two parties
Before preparing or signing the contract, it is good to check what the local laws have to say. For example, what do state laws say regarding independent contractors? Other than that, the two parties also need to specify everybody’s duties and responsibilities. Additionally, issues regarding compensation (remuneration) also need to appear on the independent contractor contract template. What is more, the contract needs to stipulate the kind of reports that need to be written in the course of the project.
Who is in charge of out-of-pocket expenses? This issue also needs to appear on the contract. Where the out-of-pocket expenses are concerned, the independent contractor contract template should be clear on questions regarding the “what” and the “how.” It should define what these types of expenses are. It should also highlight how these expenses will be handled. As previously stated, it is worth reiterating the fact that the contract indicates that the client is dealing with an independent contractor rather than an employee.
A detailed contract also goes into issues regarding what to do to terminate it. When can the contractor or client terminate the contract? Will the person terminating the contract have to pay fines or penalties? At some point, the relationship between the contractor and client may need reevaluating. While reevaluating it, one or both of the parties may arrive at the conclusion that the relationship is no longer tenable. When this happens, the only solution would be termination of the contract.
Therefore, it lays the procedure regarding what to do when this happens.
As the contract clearly stipulates, it is harder to fire an independent contractor. As previously stated, an independent contractor is different from an employee in definition, status, and other parameters. After all, the contractor’s services are only required on a project-by-project basis. This is different from employees whose services are required every day regardless of where their services are needed for any particular project or not. This situation demonstrates why it is easier to fire employees rather than independent contractors.
The closest a client comes to firing an independent contractor is by canceling the contract.
Confidentiality is an important factor in any contractor-client relationship. Confidentiality often involves maintaining trade secrets. It involves not sharing what the client does not want the rest of the world to know until the right time. Some clients come up with new products they want to launch at the right time. Timing is everything with any product launch. Confidentiality has both legal and practical significance to the business an independent contractor runs. It has the same significance to the clients the contractor serves.
A company’s trade secrets together with its confidential information represent two of its most important assets. All businesses must do whatever it takes to protect itself. The need for protecting its assets has gone a notch or two higher, especially now that Internet has become such a major platform for sharing or finding information quickly. An independent contractor might share something regarding an on-going project only to jeopardize something the client wanted to keep away from the public until an opportune moment.
All businesses must value confidentiality since they all have information they;
Any precious or sensitive information a business has is worth something substantial.
Confidentiality is not something to worry large companies alone.
Therefore, the independent contractor contract template must clarify the issue of confidentiality.
What about inventions, improvements, and innovations? Should the independent contractor contract touch on these issues too? Yes, it should. In fact, it should not only touch on but also specify these crucial issues. Any new product or way of doing things the contractor come up with while working on a client’s project need protection. Here, the contract should not leave the issue in abeyance. Instead, it should clarify matters, so all parties know what is required of them for the duration of the project.
The other issue that should appear on the independent contractor agreement is how to manage issues regarding conflicts of interest. Talking about these issues on the contract helps everybody. The client and contractor do not have to wait for the conflicts to arise to start looking for solutions. A healthy relationship between the two hinges on their ability to anticipate trouble and doing whatever it takes to work their way through it. In fact, the ability to manage conflict of interest determines your success.
Do not sign a contract that does not handle conflicts of interest and hope for the best.
You do not have to be a pacifist to find ways of managing conflicts of interest. The goal here is to do your part in ensuring the relationship survives minor hiccups and moves on to the next level. You have the choice of handling conflicts of interest in a functional or dysfunctional manner. Conflict of any kind, even if its conflict of interest, is neither good nor bad. How it pans out depends on the approach you take in solving the conflict in the first place. That is what determines whether the conflict works for your good or harm.
The main goal of talking about conflicts of interest in the independent contractor agreement is to find a way of deescalating it. You cannot de-escalate what you work so hard to avoid. In many instances, it is nearly impossible to try to avoid conflict of any kind. In such cases, what you need is a way of deescalating the whole thing. You can learn a few tips that make you effective at deescalating conflict. When any party to the contract notices the conflict of interest, the first thing is to avoid going defensive or attacking the other one excessively.
Other tips to follow include:
An independent contractor agreement should also explain or talk about the expectations regarding hiring or non-hiring. Does the client have a problem with an independent contractor who hires or delegates the work to more personal? Does the client have a problem with sub-contracting? Alternatively, the contract should indicate the positions that are open or available for hire. Independent contractors should never assume that they have a leeway to do whatever they want.
Feel free to check and learn from these few right to injunction samples.
At times, the client or contractor might contemplate a merger. Nothing is wrong with mergers. However, none of the parties can proceed with this path without informing the other one. More importantly, the steps to take in case a merger is in the pipeline are also worth anticipating. The best way to take care of everybody’s interest is by ensuring the contract talks about what to do in case mergers are contemplated. An issue worth negotiating in such situations is that of successions and assigns.
At times, the parties may opt to stop the project for some time until the merger is complete.
Everything is possible only if it all appears on the independent contractor contract.
It is also good to include a clause that talks about arbitration in the contract. Arbitration is just one of the ways of solving a conflict between clients and contractors. First, start by reviewing the contract in detail to discover what it stipulates regarding arbitration. Next, organize a meeting between the two of you to negotiate a way out of the quagmire. Find a professional to help mediate the dispute. Mediation is more structured. It should happen if a meeting between the two feuding parties bears no fruit.
Choose an independent and unbiased mediator.
Mediation involves making compromises until a mutually beneficial agreement is reached.
A mediation agreement is necessary to prove the two parties arrived at an understanding.
Arbitration usually happens when the two parties have tried to negotiate without any success. It arises when everything else becomes unproductive. It requires the services of an independent third party known as an arbitrator. The arbitrator plays the role of a judge. The success of arbitration depends on several factors. The most important factor is that both parties have to agree to arbitration. It requires mutual consent to proceed. Both parties have to take part in selecting an arbitrator too.
If arbitration fails, the client and contractor would be justified in going for litigation, but only if the contract has a provision for this option. Litigation is always the last resort in conflict resolution. It revolves around court proceedings. Litigation happens when one of the parties feels compelled to seek the court’s help in enforcing legal rights. It also happens when one of the parties needs court’s assistance to defend legal rights that are under threat. Litigation is always structured. The court dictates the whole process.
Litigation is effective. The process is also costly and capable of consuming too much time.
Litigation ends the moment the judge makes a decision.
The court may require whoever is unsuccessful with the litigation to pay all or part of the legal costs incurred by the other party. The successful litigant may recover part of the money spent paying for legal fees. However, clients and contractors should spend time trying to find other ways of solving the conflicts before dashing to the courts. Litigation has several disadvantages, as you may have noticed above. It will keep the clients away from a product that should be out being sold and earning more money for them. It prevents contractors from making money too.
Lastly, check what the independent contractor agreement says about amending some of the provisions. Additionally, it should also talk about the measures the client and contractor intend to take to enforce the contract. It goes without saying that both parties have to agree to all provisions and stipulations in the contract. Do not forget to invite lawyers to help draft the contract. If you feel hiring a lawyer is an expense too many for both of you, find a pre-defined contract, which is readily available online. Search for one on the Internet.
Undoubtedly, as a freelance contractor, you are your own boss. Despite this, or because of it, you have to put in more effort to get your business going. One such task involves being familiar with what all this means for your taxes. Additionally, it is also prudent for you to familiarize yourself with tools such as a simple contractor agreement. As seemingly insignificant as you might consider it, this tool could be the difference for your business, as you are about to learn below.
It Protects You and the Client
Freelancing is quite different from the normal 9-5 jobs. One difference is in the few face-to-face meetings, though this depends on the kind of service that you provide. For this reason, it is important to have a well-drafted simple contractor agreement to protect you. More than that, the agreement also protects your clients. That is not all, though. The agreement is highly effective at protecting your intellectual property too. To do this, you might need to hire a lawyer to help you draft a good agreement. Alternatively, draft one as long as you:
It Specifies the Job and Your Responsibilities
In the freelancing world, you could end up doing more than you should. Consequently, it is important to be as categorical as possible when drafting a simple contractor agreement. This piece of document defines your responsibilities. It lists everything that you would be doing for the client. With this out of the way, it then becomes much easier for you to go over and beyond what the client wants. However, without it, some “bad” clients could manipulate you into offering more without paying you extra for the additional tasks. Make sure that it:
It Covers Your Rates
Freelancers love to offer services that bring a smile on clients’ faces. However, that is just but one of the rewards of working as a freelancer. Other rewards come in the form of doing something you love and being paid for it. For this reason, draft a simple contractor agreement that covers your rates too. The agreement should state what clients are to pay you. That way, you leave no room for doubts. Crucially, it would be fine to ask if the client would be covering your expenses beyond your salary too. If yes, you must include this in the agreement too.
It Highlights the Need for Confidentiality
Lastly, you should remember to include a confidentiality clause too. It is essential in your freelancing business. Depending on your niche or area of expertise, it might be necessary to protect your trade secrets and inventions. The best way of doing that is by inserting a confidentiality clause in the agreement. Such a clause is not good for you only. It also protects your clients. After all, you might only be able to provide excellent service once clients grant you access to confidential files and information. Sign it to protect them!
Are you now ready to draft the simple contractor agreement? The information above should help you understand why such a document is crucial for the success of your freelance business. In some cases, lack of such an agreement could be the difference between a successful career and failure. Therefore, get this agreement ready to assure clients of your professionalism. Use it to keep their minds at ease, especially with clauses on confidentiality. Define your roles too to avoid a situation where clients take advantage of you without rewarding you properly!
This Contract is between Sample Client (the "Client") and John Doe (the "").
The Contract is dated [the date both parties sign].
1. WORK AND PAYMENT.
1.1 Project. The Client is hiring the to do the following: The Contractor will assist the Client with specialized services.
1.2 Schedule. The will begin work on August 21, 2020 and the work is ongoing. This Contract can be ended by either Client or at any time, pursuant to the terms of Section 6, Term and Termination.
1.3 Payment. The Client will pay the a rate of $60.00 (USD) per hour. Of this, the Client will pay the $300.00 (USD) before work begins.
1.4 Expenses. The Client will reimburse the 's expenses. Expenses do not need to be pre-approved by the Client.
1.5 Invoices. The will invoice the Client weekly. The Client agrees to pay the amount owed within 15 days of receiving the invoice. Payment after that date will incur a late fee of 5.0% per month on the outstanding amount.
1.6 Support. The will not provide support for any deliverable once the Client accepts it, unless otherwise agreed in writing.
2. OWNERSHIP AND LICENSES.
2.1 Client Owns All Work Product. As part of this job, the is creating “work product” for the Client. To avoid confusion, work product is the finished product, as well as drafts, notes, materials, mockups, hardware, designs, inventions, patents, code, and anything else that the works on—that is, conceives, creates, designs, develops, invents, works on, or reduces to practice—as part of this project, whether before the date of this Contract or after. The hereby gives the Client this work product once the Client pays for it in full. This means the is giving the Client all of its rights, titles, and interests in and to the work product (including intellectual property rights), and the Client will be the sole owner of it. The Client can use the work product however it wants or it can decide not to use the work product at all. The Client, for example, can modify, destroy, or sell it, as it sees fit.
2.2 's Use Of Work Product. Once the gives the work product to the Client, the does not have any rights to it, except those that the Client explicitly gives the here. The Client gives the Contractor permission to use the work product as part of the Contractor's portfolio and websites, in galleries, and in other media, so long as it is to showcase the Contractor's work and not for any other purpose. The Contractor is not allowed to sell or otherwise use the work product to make money or for any other commercial use. The Client is not allowed to take back this license, even after the Contract ends.
2.3 's Help Securing Ownership. In the future, the Client may need the 's help to show that the Client owns the work product or to complete the transfer. The agrees to help with that. For example, the may have to sign a patent application. The Client will pay any required expenses for this. If the Client can’t find the , the agrees that the Client can act on the 's behalf to accomplish the same thing. The following language gives the Client that right: if the Client can’t find the after spending reasonable effort trying to do so, the hereby irrevocably designates and appoints the Client as the 's agent and attorney-in-fact, which appointment is coupled with an interest, to act for the and on the 's behalf to execute, verify, and file the required documents and to take any other legal action to accomplish the purposes of paragraph 2.1 (Client Owns All Work Product).
2.4 's IP That Is Not Work Product. During the course of this project, the might use intellectual property that the owns or has licensed from a third party, but that does not qualify as “work product.” This is called “background IP.” Possible examples of background IP are pre-existing code, type fonts, properly-licensed stock photos, and web application tools. The is not giving the Client this background IP. But, as part of the Contract, the is giving the Client a right to use and license (with the right to sublicense) the background IP to develop, market, sell, and support the Client’s products and services. The Client may use this background IP worldwide and free of charge, but it cannot transfer its rights to the background IP (except as allowed in Section 11.1 (Assignment)). The Client cannot sell or license the background IP separately from its products or services. The cannot take back this grant, and this grant does not end when the Contract is over.
2.5 's Right To Use Client IP. The may need to use the Client’s intellectual property to do its job. For example, if the Client is hiring the to build a website, the may have to use the Client’s logo. The Client agrees to let the use the Client’s intellectual property and other intellectual property that the Client controls to the extent reasonably necessary to do the 's job. Beyond that, the Client is not giving the any intellectual property rights, unless specifically stated otherwise in this Contract.
3. COMPETITIVE ENGAGEMENTS. The won’t work for a competitor of the Client until this Contract ends. To avoid confusion, a competitor is any third party that develops, manufactures, promotes, sells, licenses, distributes, or provides products or services that are substantially similar to the Client’s products or services. A competitor is also a third party that plans to do any of those things. The one exception to this restriction is if the asks for permission beforehand and the Client agrees to it in writing. If the uses employees or subcontractors, the must make sure they follow the obligations in this paragraph, as well.
4. NON-SOLICITATION. Until this Contract ends, the won’t: (a) encourage Client employees or service providers to stop working for the Client; (b) encourage Client customers or clients to stop doing business with the Client; or (c) hire anyone who worked for the Client over the 12-month period before the Contract ended. The one exception is if the puts out a general ad and someone who happened to work for the Client responds. In that case, the may hire that candidate. The promises that it won’t do anything in this paragraph on behalf of itself or a third party.
5.1 Overview. This section contains important promises between the parties.
5.2 Authority To Sign. Each party promises to the other party that it has the authority to enter into this Contract and to perform all of its obligations under this Contract.
5.3 Has Right To Give Client Work Product. The promises that it owns the work product, that the is able to give the work product to the Client, and that no other party will claim that it owns the work product. If the uses employees or subcontractors, the also promises that these employees and subcontractors have signed contracts with the giving the any rights that the employees or subcontractors have related to the 's background IP and work product.
5.4 Will Comply With Laws. The promises that the manner it does this job, its work product, and any background IP it uses comply with applicable U.S. and foreign laws and regulations.
5.5 Work Product Does Not Infringe. The promises that its work product does not and will not infringe on someone else’s intellectual property rights, that the has the right to let the Client use the background IP, and that this Contract does not and will not violate any contract that the has entered into or will enter into with someone else.
5.6 Client Will Review Work. The Client promises to review the work product, to be reasonably available to the if the has questions regarding this project, and to provide timely feedback and decisions.
5.7 Client-Supplied Material Does Not Infringe. If the Client provides the with material to incorporate into the work product, the Client promises that this material does not infringe on someone else’s intellectual property rights.
6. TERM AND TERMINATION. This Contract is ongoing, until ended by the Client or the . Either party may end this Contract for any reason by sending an email or letter to the other party, informing the recipient that the sender is ending the Contract and that the Contract will end in 7 days. The Contract officially ends once that time has passed. The party that is ending the Contract must provide notice by taking the steps explained in Section 11.4. The must immediately stop working as soon as it receives this notice, unless the notice says otherwise. The Client will pay the for the work done up until when the Contract ends and will reimburse the for any agreed-upon, non-cancellable expenses. The following sections don’t end even after the Contract ends: 2 (Ownership and Licenses); 3 (Competitive Engagements); 4 (Non-Solicitation); 5 (Representations); 8 (Confidential Information); 9 (Limitation of Liability); 10 (Indemnity); and 11 (General).
7. INDEPENDENT CONTRACTOR. The Client is hiring the as an independent contractor. The following statements accurately reflect their relationship:
- The will use its own equipment, tools, and material to do the work.- The Client will not control how the job is performed on a day-to-day basis. Rather, the is responsible for determining when, where, and how it will carry out the work.- The Client will not provide the with any training.- The Client and the do not have a partnership or employer-employee relationship.- The cannot enter into contracts, make promises, or act on behalf of the Client.- The is not entitled to the Client’s benefits (e.g., group insurance, retirement benefits, retirement plans, vacation days).- The is responsible for its own taxes.- The Client will not withhold social security and Medicare taxes or make payments for disability insurance, unemployment insurance, or workers compensation for the or any of the 's employees or subcontractors.
8. CONFIDENTIAL INFORMATION.
8.1 Overview. This Contract imposes special restrictions on how the Client and the must handle confidential information. These obligations are explained in this section.
8.2 The Client’s Confidential Information. While working for the Client, the may come across, or be given, Client information that is confidential. This is information like customer lists, business strategies, research & development notes, statistics about a website, and other information that is private. The promises to treat this information as if it is the 's own confidential information. The may use this information to do its job under this Contract, but not for anything else. For example, if the Client lets the use a customer list to send out a newsletter, the cannot use those email addresses for any other purpose. The one exception to this is if the Client gives the written permission to use the information for another purpose, the may use the information for that purpose, as well. When this Contract ends, the must give back or destroy all confidential information, and confirm that it has done so. The promises that it will not share confidential information with a third party, unless the Client gives the written permission first. The must continue to follow these obligations, even after the Contract ends. The 's responsibilities only stop if the can show any of the following: (i) that the information was already public when the came across it; (ii) the information became public after the came across it, but not because of anything the did or didn’t do; (iii) the already knew the information when the came across it and the didn’t have any obligation to keep it secret; (iv) a third party provided the with the information without requiring that the keep it a secret; or (v) the created the information on its own, without using anything belonging to the Client.
8.3 Third-Party Confidential Information. It’s possible the Client and the each have access to confidential information that belongs to third parties. The Client and the each promise that it will not share with the other party confidential information that belongs to third parties, unless it is allowed to do so. If the Client or the is allowed to share confidential information with the other party and does so, the sharing party promises to tell the other party in writing of any special restrictions regarding that information.
9. LIMITATION OF LIABILITY. Neither party is liable for breach-of-contract damages that the breaching party could not reasonably have foreseen when it entered this Contract.
10.1 Overview. This section transfers certain risks between the parties if a third party sues or goes after the Client or the or both. For example, if the Client gets sued for something that the did, then the may promise to come to the Client’s defense or to reimburse the Client for any losses.
10.2 Client Indemnity. In this Contract, the agrees to indemnify the Client (and its affiliates and its and their directors, officers, employees, and agents) from and against all liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of: (i) the work the has done under this Contract; (ii) a breach by the of its obligations under this Contract; or (iii) a breach by the of the promises it is making in Section 5 (Representations).
10.3 Indemnity. In this Contract, the Client agrees to indemnify the (and its affiliates and its and their directors, officers, employees, and agents) from and against liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) related to a third-party claim or proceeding arising out of a breach by the Client of its obligations under this Contract.
11.1 Assignment. This Contract applies only to the Client and the . The cannot assign its rights or delegate its obligations under this Contract to a third-party (other than by will or intestate), without first receiving the Client’s written permission. In contrast, the Client may assign its rights and delegate its obligations under this Contract without the 's permission. This is necessary in case, for example, another Client buys out the Client or if the Client decides to sell the work product that results from this Contract.
11.2 Arbitration. As the exclusive means of initiating adversarial proceedings to resolve any dispute arising under this Contract, a party may demand that the dispute be resolved by arbitration administered by the American Arbitration Association in accordance with its commercial arbitration rules.
11.3 Modification; Waiver. To change anything in this Contract, the Client and the must agree to that change in writing and sign a document showing their contract. Neither party can waive its rights under this Contract or release the other party from its obligations under this Contract, unless the waiving party acknowledges it is doing so in writing and signs a document that says so.
(a) Over the course of this Contract, one party may need to send a notice to the other party. For the notice to be valid, it must be in writing and delivered in one of the following ways: personal delivery, email, or certified or registered mail (postage prepaid, return receipt requested). The notice must be delivered to the party’s address listed at the end of this Contract or to another address that the party has provided in writing as an appropriate address to receive notice.
(b) The timing of when a notice is received can be very important. To avoid confusion, a valid notice is considered received as follows: (i) if delivered personally, it is considered received immediately; (ii) if delivered by email, it is considered received upon acknowledgement of receipt; (iii) if delivered by registered or certified mail (postage prepaid, return receipt requested), it is considered received upon receipt as indicated by the date on the signed receipt. If a party refuses to accept notice or if notice cannot be delivered because of a change in address for which no notice was given, then it is considered received when the notice is rejected or unable to be delivered. If the notice is received after 5:00pm on a business day at the location specified in the address for that party, or on a day that is not a business day, then the notice is considered received at 9:00am on the next business day.
11.5 Severability. This section deals with what happens if a portion of the Contract is found to be unenforceable. If that’s the case, the unenforceable portion will be changed to the minimum extent necessary to make it enforceable, unless that change is not permitted by law, in which case the portion will be disregarded. If any portion of the Contract is changed or disregarded because it is unenforceable, the rest of the Contract is still enforceable.
11.6 Signatures. The Client and the must sign this document using Bonsai’s e-signing system. These electronic signatures count as originals for all purposes.
11.7 Governing Law. The laws of the state of Pennsylvania govern the rights and obligations of the Client and the under this Contract, without regard to conflict of law principles of that state.
11.8 Entire Contract. This Contract represents the parties’ final and complete understanding of this job and the subject matter discussed in this Contract. This Contract supersedes all other contracts (both written and oral) between the parties.
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