CONTRACT REVIEW CHECKLIST

INDEPENDENT CONTRACTOR AGREEMENT

I have gone through the Agreement. In this review, I have made my comments regarding every Section in the Agreement. Accordingly, I outlined my observations in numbered format. My observations begin with a comment on the importance/relevance of the Section in IC contracts. Then, I have summarily interpreted the Section, and lastly made any recommendations. I have also made relevant changes in the Agreement per my recommendations. All references to the Agreement shall be to the unedited (original) Agreement that you sent to me.

  1. AGREEMENT

This Section is important because any failure by the Contractor to perform all services given to them, or performing them in a substandard manner, would amount to a breach of the agreement.

In this Section, the Contractor agrees to provide all services you contracted them for, including any additional services. They also agree to provide the services in a professional manner.

  • INDEPENDENT CONTRACTOR

The purpose of this Section is that it clearly states the Contractor’s independent status. It emphasizes that the Contractor is not an employee of your company. Also, being independent, the Contractor will have to file their tax returns for the period covered by the contract.

This Section provides that the Contractor is not an employee of your company. Accordingly, the Contractor shall not be entitled to benefits that come as a result of employment relationship. The contract also provides that the Contractor shall pay their own taxes.

From your instruction, you seek to emphasize that Contractor shall pay their own taxes. I find that this provision is sufficiently covered in the agreement. It is mentioned in both Sections 2, and 3(b). Accordingly, I find no need to change them as they appear, I have only bolded them to make the emphasis.

However, I note that the Agreement seems to grant the Contractor too much independence because there is nothing restricting the Contractor from setting up a business that competes with your company during the duration of the agreement. Accordingly, I recommend that you include a provision that prohibits the Contractor from setting up a competing company while completing work for your company. I have therefore made changes to Subsections (b), (d), and (k) of Section 2.  

  • PAYMENT

This purpose of this Section is to provide for the amount of payment/compensation, the payment schedule, and any other matter regarding payment of Contractor.

In your agreement, the Section provides for the payment amount. It also emphasizes that Contractor will pay their own taxes.

  • NON-SOLICITATION

Non-solicitation clauses prevent an independent contractor from soliciting employees or current and prospective clients.

In your agreement, this Section provides that the obligations of Contractor under the said Section shall bind them for the period specified in the Section. It also prohibits Contractor from soliciting your employees and/or clients. The Section provides for your right to receive any remedy at law for Contractor’s violation of the Section. Lastly, in Subsection (c), it is agreed that the running of the time to keep obligations under the Section shall toll (pause) during investigation of the violations. This tolling is an advantage because it serves to extend Contractor’s obligations even after their breach of the Section.

  • CONFIDENTIALITY

The key objective behind this Section is to ascertain that both the parties involved in the agreement will maintain secrecy and high levels of confidentiality.

In your agreement, Contractor is prohibited from disclosing any information obtained by Contractor with respect to any Customer, or any information concerning Company’s business, without Company’s approval. It also provides that Contractor shall surrender to Company any material Contractor obtained during the term of the agreement.

  • LICENSES

License clauses serve the purpose of ensuring Contractor provides their service in adherence to any existing regulation and under permit from the relevant authorities.

In your agreement, Contractor agrees to maintain any authorization/permit from the local authorities, for the performance of their services under the agreement.

  • LIMITED LIABILITY; INDEMNITY

The purpose of the indemnity clause is to defend the other and pay for all costs of the lawsuit if it is sued by a third party for specified reasons and to pay any damages and judgment resulting from the lawsuit. The indemnity clause shifts “third party” risks from one contracting party to the other.

In your agreement, the Contractor shall defend and indemnify you from any suit or damages arising from their services under the agreement, their failure to adhere to any legal obligation, and their breach of the agreement. Also, the agreement provides that the provisions of this Section shall last past the duration of the Contract.

  • TERMINATION

A termination of agreement clause provides details of the circumstances under which parties can end their legal relationship and discontinue the fulfillment of their obligations.

In your agreement, either party may terminate the agreement upon issuance of at least 30 days’ notice. You may also terminate the agreement anytime without notice if Contractor fails to fulfill their obligations under the agreement. Your obligations to pay Contractor shall cease upon termination.

  • NOTICE

The importance of notice clauses is to provide the accepted avenue of making communications with Contractor.

In your agreement, both parties are to provide their addresses for the purpose of effecting communication during the contract duration.

  1. ARBITRATION

An arbitration clause is very important in your contract as it would save you time and stress for the resources you would ordinarily expend in court.

You agree to resort to arbitration to settle any dispute that arises from the agreement. It follows, both Contractor and you are prohibited from filing any court action for any dispute. The Section also provides for the venue of the arbitration proceedings, and the responsibilities for payment of fees thereof. Lastly, both of you are free to seek administrative relief from any administrative body.

  1. CLASS AND COLLECTIVE ACTION WAIVER

A class/collective action, also known as a class-action lawsuit, class suit, or representative action, is a type of lawsuit where one of the parties is a group of people who are represented collectively by a member or members of that group. Waiver of class action serves to protect your company from such cases, which mostly involve a large sum of money in damages.

In your agreement, you limit the statutory right of Contractor to bring class/collective action. You should note that the law places much regard to agreements entered between parties to a contract. It is only when there is illegality when the law will step in. Therefore, the law will respect and recognize as valid any waiver that was consented to by both parties.

  1. ENTIRE AGREEMENT

This Section serves to prevent the introduction of any extraneous/additional evidence of agreement between you and Contractor. During disputes, some parties to a contract bring other evidence of agreements not captured in the main agreement. Therefore, this Section prevents such instances.

Your agreement limits the agreement to the agreement itself, and any accompanying appendices, duplicates, or copies.

  1. NO WAIVER

A no waiver clause spells out the fact that both parties always have the right to enforce the terms of the contract.

Accordingly, your agreement provides that your waiver of any Contractor’s breach shall not mean you have waived all subsequent breaches.

  1. LIABILITY

Limitation of liability clause serves the purpose of protecting your company from potential lawsuits and from exorbitant damages.

In your agreement, both the Contractor and you agree that subject to Section 7 (Indemnification), no party shall bear the liability of another party for any damage arising from the agreement.

  1. GOVERNING LAW

The governing law provision states the law that shall govern the interpretation of the obligations and/or responsibilities in the agreement.

  1. AMENDMENT

This provision states that any and all amendments to the agreement shall be made in writing upon consent by both parties. Accordingly, no single party to the contract can attempt to change any term thereof without informing the other party and obtaining their consent.

  1. SEVERABILITY

This provision seeks to protect the relevance of the other terms in the agreement in case one term/provision is pronounced unenforceable by law.

  1. ASSIGNMENT

This provision prohibits either party from assigning their obligations under the agreement to other parties not covered under the agreement, without prior authorization.

  1. COUNTERPARTS

Counterparts Sections help to prevent a party from claiming that an agreement is not binding because there is no single copy of it that is signed by all the parties or because they did not know that they were entering into a binding contract by signing an agreement not signed by the other parties to it.

In your agreement, both parties have agreed that counterparts shall be binding as if they are the original copies of the agreement.

Regards!

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