Why You Need a Contractor’s Agreement

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Table of Contents

• What is the Relevant Law?
• What is a Contractor’s Agreement?
• What Will it Cover?
• Conclusion

Engaging contract workers can sound relatively simple and straightforward. You need some work done. They can do the work. You agree on a price. Simple.

In reality, when engaging contractors you should consider a number of potential issues that could arise. For example, have you thought about the contractor poaching your clients or staff? What about a failure to perform the work correctly? Is there liability for you to pay superannuation? What if they leave the work unfinished to accept a more lucrative deal? What if they criticize you or your company on social media?

It is then sensible to take steps to address each of these issues through a comprehensively drafted and executed Contractor’s Agreement.

What is the Relevant Law?

There is no ‘Contractor’s Act’ setting out in one uniform document the legal obligations a principal owes a contractor or vice versa. Instead, general contract law governs this relationship. Other relevant areas of law including consumer, superannuation and industry codes may also apply depending on, among other things, the contract’s purpose

What is a Contractor’s Agreement?

A Contractor’s Agreement (or Contractor’s Contract) is a formal contract between a Principal and a contractor. Both parties can be natural persons or entities.

What Will it Cover?

A Contractor’s Agreement will clearly define, among other things:

• The scope of the contracted work,
• The time for completion of the contracted works,
• Reporting and communication methods,
• The payment (including ongoing or progress payments),
• Liability for works so performed,
• Use of equipment,
• Confidentiality and intellectual property considerations,
• Obligations concerning insurance,
• Dispute resolution mechanisms, and
• Whether the work can be sub-contracted and/or outsourced.

Importantly, the agreement will define the relationship of the parties as that of principal and contractor.

Conclusion

A commercial lawyer can assist you with identifying the legal issues and preparing a binding Contractor’s Agreement that covers the issues identified above, and anything else you require (within reason!).

If you engage contractors to complete work, don’t just rely on a handshake, particularly if it is a high-value transaction for you and your business. Having a correctly drawn agreement signed before the contractor performs any contract work will help each party clearly understand their rights and responsibilities to one other, and will be invaluable if the contract’s scope gets derailed. LegalVision’s experienced contract lawyers would be delighted to assist you with drafting or reviewing your contractor’s agreement.

Questions? Please get in touch on 1300 544 755.