The Contractor’s job title should reflect the work that they will be doing for the Company. It should be sufficiently broad to encompass all the tasks they will be required to perform. For example, “Marketing Consultant” or “Strategic Growth Advisor”.
The Contractor’s start date should be their expected first day of work, or the expected first day they will be providing services to the Company. The Contractor Agreement is written so this day is an approximation, and it won't cause issues if the Contractor starts on a different date.
Note that any work-related onboarding or training will normally take place after the start date, even if it happens before the Contractor begins their regular tasks.
The Contractor’s termination date can be based on a specific date, or the termination can be when all work has been completed. If the Contractor will be working on a single clearly-defined project, rather than various day-to-day tasks, the Contractor Agreement will likely terminate when all contract work is complete. In that case, the completion of the Contractor's work will be clear to the Company and the Contractor. If the Contractor will be engaged in various tasks that do not have a clear point of completion, a specific termination date may be preferable.
Description of Work
The description of the Contractor's work and responsibilities should include the day-to-day tasks the Contractor will be expected to perform and the deliverables to be provided by the end of the contract. This description should be broad enough to cover the tasks normally expected of the Contractor and other important tasks.
The Contractor can be paid in the following ways:
- A single lump sum,
- A deposit plus a lump sum;
- An hourly rate, or
- Any other payment method agreed by the Company and the Contractor.
If there is uncertainty about how long the project will take or if it may extend to other projects, hourly payments may be best method for the Contractor.
A deposit plus a lump sum allows the Contractor to receive an upfront payment while ensuring the Company does not need to pay the full amount before the work is complete. This method incentivizes the Contractor to complete the work on time and to the Company's satisfaction.
If custom payment terms work best for the Contractor and the Company, the parties can enter their own payment terms and insert them into the Agreement. For example, the Contractor might ask to be paid when specific project milestones are reached.
Contractors normally provide periodic invoices for completed work. If the Contractor is working frequently, they will typically submit an invoice every two weeks. However, the timing of invoices can be determined based on the needs of the Contractor and the Company. Even if the Company and the Contractor have agreed to a single lump sum payment, the Contractor should send the Company a single invoice for payment.
The length of time the Company has to pay the Contractor’s invoices and the interest rate for unpaid invoices can be negotiated between the parties based on their preferences and the Company’s payment practices. Typically, invoices are paid within 7 - 30 days.
An alternative to invoicing is for the Company to pay the Contractor on a pre-determined schedule for which the Contractor will not have to submit invoices.
For some types of Contractors, it is common to have their expenses reimbursed. For example, if the Contractor is required to travel on behalf of the Company, the Contractor could expect that travel costs would be covered by the Company in addition to regular payments for completed work.
Reimbursements can also cover materials and supplies required by the Contractor to complete their work.
Reimbursements should be included in the Contractor Agreement so both parties are clear on whether reimbursements are provided in addition to payment, or if the payment amount has been calculated to cover the expenses incurred by the Contractor.
A Contractor provides warranties to ensure their work will meet the standards requested by the Company. Standard warranties provide that all work completed for the Company will be performed “in a professional and workmanlike manner” and will meet the usual quality standards expected in the Contractor's industry.
Founded also provides an option for users to insert custom warranties for the specific work being provided by the Contractor.
A mutual indemnity provision can protect the Contractor and the Company from liability that arises from the other's acts. By including this provision in the Contractor Agreement, the Company is protected from lawsuit that may arise as a result of the Contractor’s work or breach of the Contractor Agreement. Similarly, the Contractor is protected from lawsuits that arise if the Company breaches the Agreement. The provision creates important legal responsibilities on both parties, so it should be carefully considered before including it in the Agreement.
A confidentiality provision requires the Contractor to treat certain information confidentially and not disclose it to others. This protects trade secrets and sensitive information that the Company may disclose to the Contractor in the course of business dealings. Including this provision is particularly important for Contractors who may be exposed to information that is not public knowledge. If a confidentiality provision is not included in the Contractor Agreement and the Company later determines that the Contractor is required to have access to confidential information, the parties can enter into a separate Non-Disclosure Agreement.
If a Contractor is creating any intellectual property during their work for the Company, it is important to specify who will own the intellectual property created by the Contractor.
For example, if the Contractor is engaged to develop a piece of software for the Company, the Company will want to own the intellectual property rights over that software.
However, in a different situation, the Contractor may insist on owning the intellectual property rights over their work. This may be negotiated between the Contractor and the Company.
A non-solicitation provision prevents the Contractor from attempting to recruit or hire the Company’s employees, or to approach or solicit the Company's customers, for a certain period of time. This is a way to ensure a Contractor does not “poach” the Company's employees or customers while working for the Company.
A non-solicitation provision can only be enforced for a reasonable period of time because it may interfere with the freedom of the Contractor to conduct business. Accordingly, it will only be enforced for a fair and reasonable amount of time.
The signing officer should be the representative of the company who will sign the Contractor Agreement on behalf of the company.