How to write a contract

Not all contractors will send their clients a written contract, but this can leave you unprotected in the event of a dispute. A written contract gives your project a strong start, ensuring that both you and your client are clear on the project goals, and will reduce the chance of any conflicts later down the line.

So, if you’re new to contracting, or if you have a big project on the horizon that you want to write a contract for, we’ve pulled together some tips of things to consider.

A contract is a legal document, so it’s always best to have it reviewed by an expert.

Define your role and the project goal

It’s important to define exactly what it is that your limited company will be doing for the project. You should include what the main tasks will be, and what your responsibilities are for the work. Not only will this ensure that both you and your client are on the same page, but it will also give you some protection if your client keeps adding on extra work or responsibilities which wasn’t agreed upon in the contract.

If your client asks for something extra that is minor, you may choose to keep the peace and just do it. But, if they have asked for something extra which will cost you time and money, a contract makes it easier to politely refuse or to quote how much extra it would be to take on the extra work.

Payment terms

As you are working for yourself, you don’t have the luxury of a weekly or monthly salary that employees typically get. Therefore, it’s important to consider when you will get paid. After all, if you have just agreed to a year-long contract, you probably can’t afford to work for free until the project has finished.

Will you get paid after completing certain deliverables? Or will you get paid an agreed upon amount every quarter? This should ideally be discussed with your client, and then once agreed, included in your contract. You should also mention how quickly you will get paid, most contractors and freelancers stipulate that invoices should be paid within 30 days of being received.

Consider your timelines

As you don’t get paid an hourly wage or annual salary, it’s important to make sure that your timelines are realistic, as you don’t want to end up working for less than minimum wage. You should consider what happens if your project is delayed, due to something out of your control or a change made by the client.

IR35 in your contract

If you are working outside IR35, then you should ensure that your contract points you towards this. You can find out more about IR35 on our Knowledge Hub. In the event of an employment tribunal that challenges your IR35 status, they will review not only your contract but also your working practices. So it’s all very well having a substitution clause included in your contract, but you should also ensure that you would be able to actually do this in practice.

Contract cancellation terms

Usually, either party would be able to end the contract relatively quickly, as having a long notice period from either side can indicate an employer-employee relationship. But, what happens if you or your client decide to terminate the contract early? How and what would you be paid?

Are you liable for mistakes?

As a limited company contractor, you do not have the same protection that is afforded to employees of a company. Including the details of the insurance you hold in your contract will offer your client peace of mind, making you a more desirable hire. They will likely insist that you hold professional indemnity insurance before starting the work.

To get all your cover sorted in one place, Kingsbridge can help. Our contractor insurance package includes all the cover that your client may require when signing a contract; professional indemnity, public liability and employers’ liability. It also includes occupational personal accident cover and directors’ and officers’ liability as standard for added protection.

You can also elect for optional additional cover, such as IR35 Protect cover, which protects you against tax, interest and penalties from HMRC. To find out more about our cover options, give our friendly team a call on 01242 808740, or get a quote here.