The Complete Guide to Writing a Contractor Agreement

  • By: OnBoard Meetings
  • July 14, 2022
Reading Time: 3 minutes
Contractor agreement

When hiring an independent contractor, writing a contractor agreement proves critical to protecting your board’s investment. While this duty may fall under a finance committee’s responsibilities, including it on the board meeting agenda allows the entire board of directors to weigh in. Read on to learn what a contractor agreement is and how to write one.

What is a Contractor Agreement?

A contractor agreement is a written contract that outlines the terms of service for the working arrangement between the business and an independent contractor. The board of directors is tasked with writing a contractor agreement, while keeping in mind the company’s best interests.

A contractor agreement is also referred to as an independent contractor agreement, consulting agreement, service agreement, or consultant agreement.

Benefits of a Contractor Agreement

A contractor agreement reflects the services the contractor is expected to provide, outlines the duration the job is meant to take, and includes other specifics, like the non-disclosure and payment terms. The agreement should also stipulate the dispute resolution mechanisms that will be applied if a conflict arises. This protects all parties involved.

Moreover, the contractor agreement includes a confidentiality clause for any contractors who are given access to confidential information, like trade secrets or intellectual property. The contract stipulates the consequences of breaching the contract, and serves as a single source of truth in case of unexpected tag audits.

How to Write a Contractor Agreement

Follow these 5 steps to write a comprehensive contractor agreement.

1. Outline Services to be Provided 

Your contractor agreement should list the services contracted. Include as much detail as possible. For example, if the contractor is hired for grant writing services, does this include submitting the grant? For repeat contractors, make a separate agreement each time there’s a new scope of work. 

2. Document Duration of the Agreement 

Stipulate the duration of the working relationship, whether it’s for a single project, fixed term, or ongoing work arrangement. Include how much notice is required for either party to terminate the contract.

3. Document Payment Terms 

Your contractor agreement should specify how much you will pay the contractor, and whether payment will be made as installments or a lump sum, and the frequency of said payments. 

4. Document Confidentiality Agreement 

To protect intellectual property, include a confidentiality clause within your contractor agreement. Specify how long the information must stay confidential. You may consider including a non-compete agreement if your contractor will be privy to trade secrets. 

5. Consult With a Lawyer

Like with all contracts, consult with a lawyer to ensure your contract agreement covers all the bases and would hold up in a court of law. Contractors are an extension of your team, and should be held to high standards. 

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Do Boards Need a Contractor Agreement?

Board of directors often have board member agreements. Similar to a contractor agreement, they outline the roles and responsibilities of board members. Since boards have term limits, you want to ensure your board members will act in good faith even when they’re no longer obligated to do so.

RELATED: The Complete Guide to Writing a Partnership Agreement

OnBoard Powers Board Effectiveness

Working with independent contractors is inevitable in today’s gig economy. A contractor agreement ensures your organization remains protected throughout this working relationship. 

A board management platform allows your board to issue, sign, and store contractor agreements digitally and securely. This system of record comes backed with intuitive data and analytics to get work done faster, build board materials easier, and communicate more effectively.

Power your board’s governance and streamline board business with OnBoard. Request a free trial today.

About The Author

OnBoard Meetings
OnBoard Meetings
At OnBoard, we believe board meetings should be informed, effective, and uncomplicated. That’s why we give boards and leadership teams an elegant solution that simplifies governance. With customers in higher education, nonprofit, health care systems, government, and corporate enterprise business, OnBoard is the leading board management provider.