| [Note: No template can cover all circumstances. But this template may give you a good starting point to construct/design a contract that suits your circumstances] |
| Item to be covered | Explanation of the clause | Example Clause | |
| The Parties | Each of the parties to the contract should be clearly stated and identified using ABN or ACNs. | This contract is between Warehouse Pty Ltd of 17 Big St (ACN ……) And Painter Partners of 10 We Paint St (ABN ….) |
|
| Description of Services or results | This should be in as simple language as feasible but be as comprehensive in detail as is needed and practical. | Painter Partners will paint the full exterior of the warehouse at 17 Big St using … brand of paint with … coats etc etc. | |
| Payment | It’s essential that the payment terms are set in the contract with clauses covering what happens if payment is not made within the required time. | The agreed price is $ … Warehouse Pty Ltd will pay Painter Partners under the following schedule. 10% before painting starts. 40% on the first coat being finished and before the second coat application begins. 50% (balance) on completion of the job following inspection and approval by Mr Inspector. |
|
| Intellectual Property | If you are undertaking design or other work requiring the use or development of intellectual property, you need a clause covering who owns the IP. | Here’s a clause taken from our Green for Go! contract checklist: ‘The Client shall only be entitled to the intellectual property developed for and on behalf of the Client during the contract term for work directly undertaken by the Consultant’. |
|
| Confidential Information | If you have access to a client’s confidential information or supply your own CI, you’ll need a clause governing the use of the CI. | Here’s a clause taken from our Green for Go! contract checklist: ‘Any confidential information acquired by the Sub-Contractor in connection with the provision of the Services must be held in the strictest confidence both during and after the Contract Period. Release, copying, removal from the Principal’s premises or any use of any of that information other than for the performance of the Services requires the prior written approval of the Principal.’ |
|
| Indemnity | Indemnity simply means that one party will cover the liabilities of the other party for any damages occurring as a result of the contract. Be very careful about agreeing to indemnify the losses of a client. | Here’s a clause taken from our Green for Go! contract checklist: ‘To the extent permitted by law, the Consultant shall not be liable to the Client or to any third party for any loss or damage arising directly or indirectly in connection with the provision of services. The Client will indemnify and holds harmless the Consultant from and against any claims, costs, expenses, actions or suits suffered, sustained or incurred by the Client or any third party.’ |
|
| Insurance | Normally, as a contractor, you provide your own insurance. But the insurance you have needs to be appropriate to the specifics of the work. Sometimes state legislation requires the client to cover you for insurance even if you are self-employed (eg) workers’ compensation. Make sure your contract price reflects your insurance costs. | Here’s a clause taken from our Green for Go! contract checklist: ‘The Sub-Contractor must produce to the Principal upon demand evidence of insurance held by the Sub-Contractor including that for workers’ compensation in respect of the Nominated Employee.’ |
|
| Subcontracting/Assigning | Your right to use other people to assist in the delivery of services is a key part of being self-employed. Sometimes it’s reasonable for the client to want to approve this, particularly if high-level skills are needed for the work. | Here’s a clause taken from our Green for Go! contract checklist: ‘The rights and obligations of the each Party under this Agreement cannot be assigned, changed or otherwise dealt with other than in accordance with this Agreement, without the prior written consent of the other Party.’ |
|
| Exclusivity Arrangements | Sometimes clients want your services exclusively. This breaches a key indicator of being an independent contractor. Be careful about agreeing to exclusivity unless, of course, you’re being paid a large amount to compensate. | Here’s a clause taken from our Green for Go! contract checklist: ‘The provision of the Services by the Contractor is not exclusive to the engaging Party.’ |
|
| Restraint of your trade | Sometimes clients want you NOT to work in a situation that presents them with competition after you have worked for them. You should only agree to this if you have been adequately compensated and it fits your practical circumstances. | Here’s a clause taken from our Green for Go! contract checklist: ‘The Sub-Contractor must not, for a period of six (6) months from the expiry of the Contract Period or the termination of this Agreement, whichever is later, provide Services directly or indirectly to the Client or in connection with the Project without the prior written approval of the Principal.’ |
|
| Responsibility for fixing faulty or incomplete work | As a contractor it’s a normal expectation that you will fix any deficiencies in your work. | Here’s a clause taken from our Green for Go! contract checklist: ‘The Sub-Contractor must ensure that the Services are performed and completed in a timely and cost effective manner and that any deficiencies in Services are rectified by the Sub-Contractor at the Sub-Contractor’s cost’. |
|
| Procedures for settling disputes | You should not enter a contract that does not have a clear dispute-resolution procedure otherwise any dispute creates the possibility of expensive legal action. We strongly suggest that you have an agreed dispute arbitrator when you and your client cannot agree on how to resolve a dispute. | If there is a dispute under any clause in this contract, the parties agree to meet and discuss the dispute and attempt to reach resolution. If no resolution is reached, the parties agree to refer the dispute to an independent arbitrator … who shall make a final and binding decision on the parties. Each party shall cover its own costs. | |
| Variations | Your contract is your business. Your contract should not be capable of being changed unless you give your written agreement. | Here’s a clause taken from our Green for Go! contract checklist: ‘Subject to a written agreement between the parties, the Services may be changed or extended.’ |
|
| Contract Termination | This is the area of contracts that causes most dispute. Clients frequently want contracts that enable them to terminate the contract at any time for no reason. It is quite normal for a clause to require termination if either party becomes bankrupt/insolvent. Other than this, termination (for no reason) should have pre-agreed conditions. | Here’s a clause taken from our Green for Go! contract checklist: ‘Should the Client wish to give notice of early termination, then the Client agrees to the payment of the difference between the standard (base) rate and the discounted rate (if any) for the period served and payment of the standard rate for the balance of the term of the contract.’ |
|
Here’s what this contract might look like
1. The Parties
This contract is between Warehouse Pty Ltd of 17 Big St (ACN ……)
And
Painter Partners of 10 We Paint St (ABN ….)
2. Agreed work and services
Painter Partners will paint the full exterior of the warehouse at 17 Big St using … brand of paint with … coats etc etc
3. Price and Payment Terms
The agreed price is $… which shall include GST.
Warehouse Pty Ltd will pay Painter Partners under the following schedule.
- 10% before painting starts.
- 40% on the first coat being finished and before the second coat application begins.
- 50% (balance) on completion of the job following inspection and approval by Mr Inspector.
4. Intellectual Property
Warehouse shall only be entitled to the intellectual property developed for and on behalf of Warehouse during the contract term for work directly undertaken by Painter Partners.
5. Confidential Information
Any confidential information acquired by Painter Partners in connection with the provision of the Services must be held in the strictest confidence both during and after the Contract Period. Release, copying, removal from Warehouse premises or any use of any of that information other than for the performance of the Services requires the prior written approval of Warehouse.
6. Indemnity
To the extent permitted by law, Painter Partners shall not be liable to Warehouse or to any third party for any loss or damage arising directly or indirectly in connection with the provision of services. Warehouse indemnifies and holds harmless Painter Partners from and against any claims, costs, expenses, actions or suits suffered, sustained or incurred by the Warehouse or any third party.
7. Insurance
Painter Partners must produce to Warehouse, upon demand, evidence of insurance held by Painter Partners including that for workers’ compensation in respect of any Nominated Employee.
8. Assignment
The rights and obligations of each Party under this Agreement cannot be assigned, changed or otherwise dealt with other than in accordance with this Agreement, without the prior written consent of the other Party.
9. No Exclusivity
The provision of Services by Painter Partners is not exclusive to Warehouse.
10. Restraint
Painter Partners must not, for a period of six (6) months from the expiry of the Contract Period or the termination of this Agreement, whichever is later, provide Services directly or indirectly to the business next door to Warehouse without the prior written approval of Warehouse.
11. Rectification
Painter Partners must ensure that the Services are performed and completed in a timely and cost effective manner and that any deficiencies in Services are rectified by Painter Partners at Painter Partner’s cost.
12. Dispute Resolution
If there is a dispute under any clause in this contract, the parties agree to meet and discuss the dispute and attempt to reach resolution. If no resolution is reached, the parties agree to refer the dispute to an independent arbitrator …. who shall make a final and binding decision on the parties. Each party shall cover its own costs.
13. Variations
Subject to a written agreement between the parties, the Services may be changed or extended.
14. Termination
Should Warehouse wish to give notice of early termination, then Warehouse agrees to pay Painter Partners for all work completed plus an additional 10 per cent for costs and inconvenience.
15. Insert signatures
Make sure that the contract is signed and dated by all parties.
Click here for a skeleton Word document of the foregoing into which you can cut and paste your own clauses.