Contracts are an important part of starting a new project. They provide legal protection, detail services to be performed, and include payment terms and conditions. If you’re new to the process, you may find that drafting a contract is a fairly complicated task, requiring specific key terms, provisions, legal obligations, and ultimately, client agreement.
As a solo-business owner, a simple contract mistake can end up costing you valuable time and money. With your business and reputation on the line, it’s important to carefully negotiate a contract that includes critical terms, safeguards against potential issues, and establishes a solid foundational client relationship. Here are five common contract mistakes to be on the lookout for when drafting your next independent contractor agreement.
In a contract, it’s important to outline the services you will provide as precisely as possible. For example, “independent contractor will perform consulting services for client” leaves far too much open to interpretation and disagreement on the actual scope of the project. When drafting a contract, including details and being specific will work to your advantage. Don’t assume that particulars will be mutually understood—if something is not specified in your contract, your client is not legally accountable for it.
Creating a contract without estimations can be difficult, particularly if you use an hourly billing rate or plan to rely on outside vendors who may affect your timeframe. However, it’s important to go into an agreement with as much established information as possible. At the very least, scope, responsibilities, and payment terms should be discussed, clearly defined, and written down. Any timeline estimations should be based on careful calculations and data, if possible.
Just because a contract is a legally binding document doesn’t mean it has to be filled with “legalese” that is difficult to understand. Avoid using highly technical industry terms and jargon that your client may not be familiar with. Likewise, if your client wishes to include a clause that you’re not familiar with, work with them to simplify the request. A contract’s language should be thorough, but also simple to understand.
When drafting your own contracts, referencing a template can provide a helpful guide and outline. However, using templates as a substitute for a custom contract can be risky, as templates may omit sections are verbiage that are particular to your field or project. Templates may also fail to meet the requirements of your state’s contract laws. When using a contract template as a reference guide, be sure to add in additional information to customize it to your needs.
Many independent professionals choose to hire an attorney to draft their contracts. This helps to ensure that the contracts are properly written, include all necessary information, and fully protect both parties. Should you choose to draft your own contract, or if your client provides a contract, it is highly advisable to have an attorney review the contract and terms before signing.
Consultants who run their business through MBO Partners receive help with reviewing contracts for potential issues. Don’t hesitate to reach out if you have questions about creating a contract for your next project.