Starting a business in Chicago takes more than the right product or service. A crucial step in any business formation is to create a set of contracts which will dictate the rights and obligations of parties participating in the business venture. This includes an agreement with independent contractors, which are used frequently by small business owners in the city. An independent contractor agreement is a contract which defines the parameters of the independent contractor’s engagement. In order to protect your business in the best way, it’s important to ensure that you consider and include all of the necessary provisions.

When crafting an independent contractor agreement, there are five important topics to consider.

1. Define the Scope of Work

The first element to define in an independent contractor agreement is the scope of work. This should delineate what the independent contractor is expected to do and the elements of the project which will require specialized skills, if any. The scope of work should be as specific as possible so that there are no misunderstandings about the scope of work for the contracted services. Additionally, the agreement should detail the deliverables and timeline for completion.

2. Specify the Payment Arrangements

The second element which should be included in an independent contract agreement is the payment arrangements. This should include the method of payment, as well as the rate or agreed-upon compensation. The agreement should also include provisions regarding when payment is due and what will constitute a breach of payment.

3. Indemnification

The third element to include in an independent contractor agreement is indemnification. This is a type of legal protection which safeguards the individual hiring the contractor from legal claims if the contractor fails to perform the contracted work in the agreed upon manner. The indemnification clause ensures that if the contractor fails to fulfill obligations, the business will not be held liable for any losses which may arise.

4. Confidentiality

The fourth element that should be included in an independent contractor agreement is confidentiality. This ensures that the contractor does not disclose any private confidential information which they may come across as a result of their relationship with the company. The disclosure of confidential information can put your business at risk of a lawsuit or significant fines, so it is important to put provisions in your contract to protect the business from such exposure.

5. Termination and Governing Law

Lastly, the agreement should include terms regarding termination and governing law. It is important to be as specific as possible in the contract so that there is no confusion regarding how or when the agreement can be terminated. Additionally, it is important to specify the governing law so that if a dispute arises, it can be quickly resolved by courts in the jurisdiction which has been selected in the contract.

An independent contractor agreement is a crucial document for any business which is using the services of an independent contractor. By drafting a well-crafted agreement, small business owners in Chicago can protect their business and ensure that the independent contractor understands the terms of the agreement. By including provisions regarding the scope of work, payment arrangements, indemnification, confidentiality, and termination and governing law, small business owners can ensure that the contract meets their expectations and provides them with the legal protection they need.


Independent Contractor Agreement,

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