Working With Contractors Made Easy

Part 5 - Legal Agreements

Get the legals out of the way early and quickly.

Nothing erodes a good working relationship like a big, convoluted legal document. Keep in mind that most contractors don’t have easy access to a lawyer and probably aren’t able to do a legal review of the document themselves. This might seem like a winning proposition, but it’s really in everyone’s best interest to have a well-understood, binding, and clear agreement at all times.

You’ll need to establish a general agreement that will cover you for multiple projects with each contractor, so try to find a very broad agreement and have an attorney review it for you. Typical sections of a general agreement would include:

1. Services to be Performed by the Contractor
   
2. Contractor Payment Terms
   
3. Invoices -– Frequency and Level of Detail
   
4. Term of Agreement
   
5. Terminating the Agreement
   
6. Independent Ccontractor Status
   
7. Intellectual Property Ownership
   
8. Company's Materials
   
9. Confidentiality
   
10. Warranties
    
11. Liability
    
12. Force Majeure
    
13. Taxes
    
14. Ccontract Changes
    
15. Dispute Resolution
    
16. Attorney Fees
    
17. Other General Provisions

You’ll also need to take care of any tax related matters right up front, such as 1099 documents (if you’re in the US) and other government forms.

These critical steps should be handled prior to the trial project, and are a crucial part of your qualification process. Your contractor should be familiar with all of this, have the required documentation ready, and readily participate in the process. If the contractor seems unsure or resists the legal and tax matters, they might not be the right contractor for you.

Good Business

A solid legal agreement is a must, but it won’t protect you from anything, really. It simply provides a framework for dealing with problems once they’ve already occurred, and that’s not the same as a truly preventative measure against potential issues.

The essence of a successful business relationship is based not in legal contracts, need, or greed, but in the simple pillars of good business:

1. Fairness
   
2. Respect
   
3. Profitability
   
4. Growth
   
5. Promise
   
6. Mutual Benefit
   
7. Trust

In other words, the best protection against unscrupulous contractors is to simply do good business, and increase your own value as a client.

• Make your contractors value the relationship by being respectful and paying them well.
• Be sure to include them in company events and news, and keep them abreast of any new business developments that might benefit them.
• Make it clear that their satisfaction is critical to your business, and you appreciate their efforts.
• Acknowledge their desire to grow and increase their earnings. Make it clear that as your company grows, so will their role.
• Reward contractors and employees for new client referrals or other networking benefits.