The Importance of an Independent Contractor Contract

Written by Wesley Henderson

March 5, 2023

Businesses often use independent contractors to provide services for the company. For example, a coaching business may hire a marketing company or graphic designer or even additional coaches as independent contractors.

Likewise, many people are thrilled about the concept of being an independent contractor. For many, this means working boundlessly from the four corners of an office cubicle. However, it’s not all fun and games.

As an independent contractor, you’re responsible for yourself in every aspect — from acquiring clients to demanding late payments. This can quickly stress you out, leading to burnout. One way to prevent this is by providing an iron-clad contractor contract for each client.

With an independent contractor contract, you can protect yourself from any legal repercussions arising from your independent activities. If you want to learn more about how this professional agreement can protect you, keep reading.

independent contractor

What Is an Independent Contractor?

Independent contractors are self-employed individuals who offer services to other companies without being direct employees. They are typically contracted project-by-project and have more flexibility regarding working hours, location, and activities.

Employee vs. Independent Contractor

Independent contractors are not subject to the same corporate regulations as regular corporate employees. While employees have a fixed salary, access to benefits, and other forms of financial security, independent contractors must fend for themselves in terms of compensation and other forms of protection.

Moreover, a contractor’s employer or client has limited liability for their activities, and the employer will not be held responsible if a contractor accidentally causes any damage while working.

For these reasons, drafting a comprehensive contractor contract ensures legal and financial protection.

Why Do You Need a Contractor Contract?

Now that we discussed the nature of an independent contractor’s work, here’s how a contractor contract helps protect your interests:

Sets the Right Expectations

A contractor contract defines the scope and limitations of your work, including the roles and responsibilities of both parties and any deliverables associated with the project. Setting this up ensures that all expectations are clear from the start, so there will be no surprises along the way.

For example, you might only be responsible for developing content marketing strategies for your client, but not creating the materials. With this, you can prevent your client from demanding too much from you without any additional compensation.

Ensure Proper Payment

Rates and payment schedules are also outlined in a comprehensive contractor agreement. It stipulates when you must receive your payment and how much you should get for the services rendered.

You can also indicate in your contract how often you will be paid and what conditions must be met before payment is issued.

With this, you can ensure that you won’t be shortchanged by a client who otherwise might have delayed or denied payments. Additionally, you can use this as a legal tool if your client defaults on their payments.

Copyrights and Intellectual Properties

If you’re hiring or hired for a creative job such as designing or content creation, you must also ensure that your contractor contract includes provisions regarding copyrights and intellectual properties. With a contract, you can guarantee that you and your client legally use the materials you produce.

One problem many creatives face is using prototypes or drafts of their work without permission or proper compensation. With a contract, you can prevent this and ensure you reserve your rights to use rejected samples for your future clients.

IMPORTANT: The person that creates IP like a graphic design is the owner unless an agreement assigns it to the person who paid for it. So if you are a company using contractors to create IP, you must have an agreement that assigns this work. Many many disputes and lawsuits have occurred for failure to clarify this somewhat obvious but important point.

Terminate a Professional Relationship

Not all professional relationships are mutually beneficial. It’s a shared experience among freelancers and independent contractors for their clients to demand more work than initially agreed. A contract protects you from these occurrences.

For example, suppose your client aggressively demands you take over tasks beyond the scope of your agreement. In that case, you can state in your contractor contract that you reserve the right to terminate the relationship and receive fair compensation for work already rendered.

Establish Your Legitimacy as a Contractor

Serving a contract to your clients establishes your reputation as a legitimate and reputable service provider. An independent contractor contract is meant to protect the client and the contractor, and this assures your client that they can also take legal action if the terms of your agreement are not met.

Save Your Time. Save Your Rights.

Drafting a contract yourself is challenging and time-consuming. Without knowledge of the law, you might make mistakes that can be used against you. You can avoid this costly mistake using a freelancer or independent contractor contract template, like the one we offer at DraftedLegal.

At DraftedLegal, all our professional contract templates are reviewed and updated by licensed and experienced attorneys. With this, you can guarantee that your contract will be legally binding in any situation.

Save yourself the hassle and time and get an attorney-drafted independent contractor contract template today.

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