Contractor - Subcontractor?

Whether you're working as a contractor on a short-term assignment, or using subcontractors for a specific project, it's important to have an agreement in writing. Don't just sign the contract offered - read it carefully.

Contracts can help or hurt you.

A good contract clearly explains what each party expects to give and get, and what happens if one party fails to perform. A well-written contract increases the chances that you'll be paid for the work that you perform.

A badly written contract, or one that you do not understand, can hurt you.

Projects have a way of expanding in scope. So, beware of "flat fee" projects. Your agreement needs to specify the initial scope and be clear that you'll be compensated for additional work. It's also a good idea to discuss how you will handle changes that may be necessary as the project evolves.

Contract Negotiation

Not as scary as it sounds. You can propose changes, for example:

1) If you don't like a term, propose a modification that is
acceptable to you.

* "I can't complete my section of this project unless the [whatever] is completed. Let's change the contract to indicate that I'm not responsible if [source] does not supply the [whatever]."

* "My normal fee for this type of work is $X per hour, not $Y (lower amount). Let's change the hourly rate, or modify the specification."

2) Give yourself some room to maneuver.

People often expect to negotiate. So, if you propose your lowest rate, and the other party expects to negotiate with you, you could end up with a price much lower than you want, or no deal at all.
If price is the sticking point, change some other term that helps you (or the employer) reduce another expense.

For example: working from home (if appropriate) can reduce your commuting expenses, making a lower hourly rate potentially more acceptable to you.

3) Know when "the deal" is a bad deal for you, and be prepared to walk away from it.

Don't agree to something you know is going to carry too large a cost for you, either in dollars or in lost opportunity.

Avoid:

Broad non-compete and non-solicitation provisions.
These provisions can seriously limit your future employment options. Try to narrow the scope of the restrictions to project or technology-specific confidential information or customers.
"Unwritten" provisions, or verbal assurances.
Verbal assurances, for example that a clause or provision will never be enforced, should send up a yellow (or red!) flag. If something will not be enforced, then it doesn't need to be in the contract. If it does apply, it should be included.

Bottom Line:
It is good business practice to have a written agreement for every project, even if it's just an email confirming your conversation. Being clear about billing and payment terms, the project scope, milestones, and completion criteria can save you from a "misunderstanding" and lots of headaches.

This eNews is adapted from an article jointly authored with Susan Joyce and also appears on her award winning web site www.jobhunt.org, which was named Forbes Magazine Best of the Web, 2002 (http://www.forbes.com/bow/b2c/category.jhtml?id=52)

Jean D. Sifleet
Attorney & CPA
120 South Meadow Road
Clinton, MA 01510

t. 978-368-6104
f. 978-368-6105
jean@smartfast.com
www.smartfast.com

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Jean Sifleet, business attorney, CPA and three-time entrepreneur, is pleased to announce the release of her new book, Advantage “IP”: Profit from Your Great Ideas. Visit the Smartfast Bookstore for details, and to order the book.