What's in a contract?

Contractor's Question: I work as a freelance consultant. In my recent long-term contracts, I have worked from the office of the client and been placed via a recruitment agency, which gave me a contract to sign. I work as a limited company and usually invoice the recruitment company.

However, I have now taken on two months' work in a business to business capacity –it is direct to the client and not through the recruitment agency. Although I will be invoicing the client directly, the office-based work has not thrown up any contract.

I feel a bit 'unprotected' to just start work without a contract, so should I ask for one? Also, I clearly want to set out my payment terms, so should I have these included in the contract as well? What else should a contract include?

Expert's Answer: Firstly, if they haven't volunteered a contract, then it may be in your better interests to come up with something yourself, rather than ask them for one. By doing this, you get to decide what goes into the contract, and how it is expressed.
You should expect your contract to cover at least:

- what you will be doing, together with the associated 'where, how and when'

- what they will be doing - and clearly this will include the payment basis and timing

- what happens if either party fails to do what they have agreed to do

- how long the relationship is intended to last, and whether (in the absence of fault) either party can end it sooner, and how

- provisions covering confidentiality (-keeping each others' secrets) and intellectual property rights ( i.e. who will have what rights of ownership over anything you may produce in the course of the work)

- other general provisions (perhaps including how notices are to be given; and governing law)

In addition, you will of course want to ensure that the intended relationship will fall outside IR35, and that the contract itself reflects that.

An engagement letter, with accompanying terms of business, can be a good but informal way to address these factors.

The letter will cover the points that are likely to change from one engagement/client to the next, and the terms those points which tend to remain unchanged. The informality of this approach can often mean that the client won't automatically pass it to their lawyers.

The expert was Roger Sinclair, a legal consultant at Egos , which helps freelance professionals with contractual issues on a one-to-one basis.