MBO Partners offers terrific recommendations for drafting agreements with independent contractors. In particular, it is critical to specify the terms relating to product ownership and warranties.
5. Specify Product Ownership
As an independent contractor, it’s important to understand your intellectual property rights. Keep an eye out for non-compete clauses, which may prohibit you from starting new work if it in any way competes with the client’s business.
To get around non-compete clauses, explain to the client that the clause would effectively prohibit you from working until after the contract ends. If necessary, include a non-disclosure or non-solicitation clause to protect the client’s intellectual property, trade secrets, or proprietary information. Be sure to define time limits for any additional agreements.
6. Beware of Warranty Clauses
Warranty clauses are a guarantee to one party—usually the client—that certain facts or conditions are true and will happen. These sections often include re-performance clauses or refunds and should be removed if possible.
If you do include a warranty, be sure that it is within your own resources and control and that it is not unreasonable to deliver. For example, a software developer may guarantee a defect-free product for 6 months after delivery.
Remember, the goal of a contract is to find mutual ground between you and the client, so you are both protected. The right contract can help establish a good working relationship form the start; don’t be afraid to suggest changes and work with your client to find what works best for both of you.
For more information about contract key terms and best practices, download our Consulting Contracts 101 guide.
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