By Lynne Gowers on 3rd September 2014

Important things to consider when agreeing to a contract

Having a good, solid contract is one of the most important things that is to be considered when taking up work with a company. Here we have created some information about the most important things to think about before signing on the dotted line.

Things to consider before you sign your contract

Bring out the fine-tooth comb

This may be the most obvious point to make, but it is one that mustn’t be overlooked. When you are given a contract by a company, it is imperative that you read through it until you feel like you know it like the back of your hand. You should feel fully comfortable with all fine print and know that should any issues arise, you would be able to protect yourself if need be.

Is the deal between both parties actually fully stated?

You may be surprised that this is a possibility, but stranger things have happened. Some contracts can be quite generic and just a copy of a previous one that the company has used. With this being the case, sometimes you can read through the contract only to find that the specifics aren’t there.

This is especially of concern should a third party, for whatever reason, become involved in an issue in which your contract is brought into play. How would they know what the particulars of your deal is if it’s not written down and fully explained? It is so important that a contract is specific and to the point.

Are the commercial provisions clear?

The commercial provisions, such as the dates on which the work will commence, payment dates and specifics, and the services you will provide, to name but a few, need to be clear.

If it is a fixed-price contract, then it is particularly imperative that the specifics of the services are laid out so that both parties can identify where the boundaries are set. You need to know what you are actually agreeing to, and if any part of this is unclear, it must be dealt with before the contract is agreed.

Is the chance of there being any confusion minimalised?

Again, this may seem like an obvious factor, but as the saying goes ‘you say tomato, I say tomato’. Basically, what something may read as meaning to you may read differently to someone else and when it comes to a contract, there isn’t really room for blurred lines.

If something in the contract is somewhat vague, then it is more likely that the chance of it being breached is higher, and this is something to be avoided at all costs. If anything does seem as though it could cause confusion, bring it up and ensure it is written clearly.

Consider IR35

A lot of contractors will wait until after a contract has been agreed and signed to start thinking about IR35, but it is well worth your time to see where you stand prior to this. The contract should make it clear that you are not a disguised employee, that you are in fact a freelancer.

Having a contract professionally reviewed is the best way to ensure it passes IR35, and would allow you peace of mind. Otherwise, there are a few things you can do to check it yourself – try our guide for starters.

The first thing to do is to go back to the advertised role and ensure it states that it is a contractor role, and if it suggests that it is a cover position, then the chances are the contract will have the characteristics of one used for an employee, rather than a contractor. Another warning sign would be if the contract states that you can’t work for another company.

As a general rule of thumb, anything that suggests exclusivity would cause you problems should HM Revenue and Customs (HMRC) investigate the IR35 status of your contract.

Written by Lynne Gowers
Disclaimer Although we attempt to ensure that the Information contained in this publication is accurate and up-to-date at the date of publication it may not be comprehensive, we accept no liability for the results of any action taken on the basis of the information they contain and any implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement and accuracy are excluded to the extent that they may be excluded as a matter of law.

View our latest blogs

Take a look at our recent blogs below.

Explore our accountancy packages

If you need a little help to find the right accountancy service, don’t worry. Get in touch with our friendly team for a FREE service consultation.