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What is Contract Agreement ?
A contract is a legally binding document that sets out the expectations and responsibilities of all parties involved in the home improvement project. It defines the goals of the homeowner and the contractor and protects each party’s rights in relation to the project. Click here to view sample contracts.
What Should an Contractor Agreement Contain?
Term / Requirement
This is the first part of an agreement or contract and contains the names and locations of the parties involved. It also includes details of the date and description of the project and / or task to be performed.
Responsibilities & work results
As the name suggests, this section provides a detailed description of each party’s responsibilities and the information that is expected from independent contractors.
For example, in the case of a freelance programmer who specializes in mobile application development, this section might include “Create a five-page mobile app and contact form to collect user information.”
This section shouldn’t be more than a few paragraphs, but should be detailed enough to make it clear what to expect as a result. However, if the project is large and has a number of milestones, it is best to include a work plan and attach a quote to the agreement.
Payment related details
Here it must be determined how the payments are to be made (per completed service at the end of the project, if there is an advance payment, and much more).
A quick note: in the event of such an agreement, it is best to avoid paying an hourly rate.
If we use the sample mobile app, upon successful completion, you will be able to make a 25% prepayment and a 75% payment. You can also enter a trial period before the application is deemed successful and functional.
Large companies (especially in the technology sector) want to ensure that their knowledge and work processes are protected, which is why they include such a clause in the agreement (this is not mandatory in all situations).
The same applies of course to freelancers who want to protect their intellectual property.
Quick Tip: If this section needs to be wider, it is best to replace it with an NDA or non-competing agreement signed as a separate document for the same project.
Termination of contract
If the project ends before the set end date, this is the part that defines the acceptable terms.
For example, freelancers could include a clause stating that they would like to be notified 15 days before the cancellation date. If these conditions are not met, they should be compensated accordingly.
Additionally, companies may want to protect their own interests by including a clause requiring freelancers to pay compensation if the project is delayed or certain conditions are not met.
Choice of law
This establishes the laws of the state under which the agreement is enforced (where the work is usually done). If the company is headquartered in another state, they may prefer to comply with that state’s laws.
For this reason, this section should be carefully examined by both parties before anything is signed.
Whether you use a template or create an agreement from scratch, it is still ultimately a legal document. Therefore, both the company and the independent contractor must ensure that they understand each part and language that the terms and conditions are explained in.
When things go wrong, always trust your instincts and seek advice from a lawyer or ask for a contract workout before signing it.