Considerations In Getting Your Contractor’s Agreement

March 6, 2020

There are many important factors to consider prior to knowing your Contractor Agreements are correct and meet the legislative and other legal requirements, common law principles and to give what you and your business need from those contractors working on your behalf.

Why Do You Need A Contractor Agreement

Contractors are important for businesses. Especially in respect of covering the needs of small businesses in terms of providing the right level of goods and services and in accordance with the specific purposes in alignment with your businesses mission.

Good contractors do often provide a number of advantages when looking to scale your business. However, it is important to remember the legal considerations which need to be met by your contractor agreements. 

This is the reason why you do need to be sure your contractor agreement serves the purpose for which your business needs require. 

You need to ensure those engaged are not employees so as to avoid breaching the laws of employment and the entitlement or taxation requirements and be sure you avoid legal penalties from otherwise breaching legal requirements, 

What Price and Costs Clauses Should You Have

It is essential that Contractor Agreements include prices and fees to be paid, when, by whom and specific amounts 

It is important to note, all fees and prices should be clearly understood and agreed to by the parties prior to finalising agreements. Parties should consider industry awards and previous contracts in assessing whether amounts offered are fair and reasonable.

The Confidentiality Requirements

It is important that parties retain a level of mutual trust when beginning contractual arrangements, particularly as contractors may be privy to confidential information of the hiring company. 

The Agreements specify that each party must only use confidential information as required to fulfil the agreement, not to gain additional benefit. Confidential information includes, for example, technical knowledge and business practices. This assists parties in maintaining trust, enabling the completion of contracts in a timely and effective manner without concerns regarding what information to share between parties. 

Some Other Risks

A safe work environment is of paramount importance on all projects. Your Contractor Agreement really should specify that the contractor must comply with company safety guidelines, be fully equipped, and have appropriate levels of safety training amongst other risk and indemnity provisions to cover you against liability and you need to be sure your risks are fully covered as well.

Your contractors must give you protection against damage to equipment during contract performance. Your Contractor Agreement should also contain a general indemnity clause for the benefit of you and your company. Indemnities can be wide so as to ensure the contractor gives you the fullest possible protection against all liability or loss arising from the performance of the contract. It is important to note, however, where loss is the result of negligence, the indemnity will be reduced proportionally to the level of negligence. 

Termination Clauses 

Termination clauses are important; for example, in the unfortunate event that a party suffers insolvency or breaches their obligations under the agreement, parties should be aware of their corresponding rights. 

Defaults and Breaches

Your Contractor Agreement should specify that in the events of default or significant breach of the Contractor Agreement, you will be able to terminate the agreement immediately. 

Your Contractor Agreement could provide for arbitration and non-litigious resolution mechanisms endeavouring to resolve disputes, to avoid the expense of litigation while facilitating an amicable working relationship between you and your contractor where possible.

If you’re involved in business and looking to begin a commercial agreement, you might very well need a carefully written Contractors Agreement. 

You should ensure that you review any Contractors Agreements you have in place and also get legal advice to understand your obligations and seek legal assistance if necessary. 

Important disclaimer: The material contained in this publication is of a general nature only and it is not, nor is intended to be legal advice. This publication is based on the law as it was prior to the date of your reading of it. If you wish to take any action based on the content of this publication, we recommend that you seek professional legal advice.

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