Free Enterprise - The FindLaw Small Business Law Blog

What Small Businesses Need to Include in Freelance Contracts

Depending on the type of business you run, hiring freelancers or independent contractors may be necessary from time to time, or maybe even regularly. An all too often overlooked aspect of hiring freelancers or independent contractors is the written hiring contract itself.

A small business owner should, like larger businesses, take control of their contracts whenever possible. This means that contracts should be drafted by the business and not the freelancers or contractors. Doing so enables the business to adequately protect its legal interests, of which there could be many.

Below, you'll find several common terms that should be considered for your freelancer or contractor agreements.

"Work for Hire" Terms

If you are hiring a programmer, or creative, or anyone that is going to make something, make sure that you will own everything they do while you are paying them, if that is to your benefit. Also, make sure you own the end product. If you haven't heard of an invention assignment agreement, it's time to read up.

Dispute Resolution Terms

Including terms regarding dispute resolution is advisable so as to make sure that disputes are dealt with swiftly and with as little disruption to business or finances as possible. Right now, arbitration agreements and clauses are being increasingly upheld by courts as valid, to the delight of business owners.

The advantages to using arbitration revolve around the ability to keep costs down and keep conflicts out of the public eye. Additional dispute resolution terms can include requiring mediation, informal negotiations, or written grievances prior to court actions.

Confidentiality, NDAs, and Privacy

If your freelancer or contractor is going to have access to secret company information, you must include a confidentiality or non-disclosure clause in the agreement. These provide penalties to the freelancer or contractor for breaching company privacy or using the company's own trade-secrets against it.

Payment Terms and Time Frames

Delineating clear payment terms in the contract is highly recommended, as well as anchoring payments to achievable benchmarks, or specific terms, such as hours worked, or production/output. Also, including a time period or duration in a freelance contract is generally advisable, particularly so if the work is project based or time sensitive.

Businesses that need help figuring out what legal interests they need to protect in their freelancer, contractor, or other employment, agreements, should contact an experienced business attorney for help.

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