Two Contracts Every Small Business Needs

Client Agreements & Contractor Agreements

Small and mid-sized businesses need a reliable Client Agreement and Contractor Agreement. But they don’t have to be complicated.

Using a contract can help reduce the odds of a dispute (because each party will know what is expected of them up front) and if a dispute does arise, the contract can make dispute resolution faster, cheaper, and easier overall.

Client Agreements

A Client Agreement is just that, it’s the agreement between you and your client. It can be a single-project agreement, or it can follow the MSA/SOW format if you plan to do multiple projects with the same client. In addition to describing your scope of services and the client’s payment obligations, you can (and should) describe who will own the work product you create, whether confidential information needs to be protected, among other things. See the full list of recommendations below.

You can use physical paper or just create a digital contract using a small business contract platform like Rally. Create your first contract for free »

Contractor Agreements

When you hire someone to work for you (either for your business, or for a client project), you should write and sign a Contractor agreement with them. Like above, it can be a single-project agreement or use the MSA/SOW format. It will look very similar to your Client Agreement, but it will be very different. For example, you’ll be the one paying, and the contractor will be the one providing the services. And most of the other terms will be flipped too. 

When hiring contractors in the U.S., it is absolutely critical to use an assignment provision to make sure you obtain ownership of the work product and related intellectual property. This is especially true if the contractor is creating something for you which you must assign over to your client per your client agreement.

Below is a list of things you should think about adding to your contractor agreement.

What to Include in Your Client Agreement and Contractor Agreement

You can include all kinds of things in your contracts. Here are some common, and important things to consider adding.

• Party Names
• Effective Date
• Term (length of the contract)
• Renewal Rights
• Payment Options (Down Payments, Hourly Payments, Fixed-Fee Payments, etc.)
• Expense Reimbursements
• Scope of Services
• Permission to Use Subcontractors
• Intellectual Property Assignment (and Portfolio Use Rights)
• Obligations of the Other Party
• Confidentiality Obligations
• Non-Solicitation Provisions
• Early Termination Rights
• Force Majeure
• Disclaimers & Limitations of Liability
• Entire Agreement
• Amendment & Waiver
• Severability
• Assignment
• Notices
• Governing Law
• Attorneys’ Fees

Get access to free contract templates for small and mid-sized businesses. Create your account »

Related Guides

There’s so much more to learn! Here are a few related guides you should read:

• Digital Signatures: Can I sign contracts digitally?
• Drafting: Five rules to write better contracts
• Templates: Four ways to get a contract template
• Oral Agreements: Are oral agreements enforceable?
• MSAs & SOWs: How to use MSAs and SOWs