This week’s Let’s Talk, our experts discuss what belongs in a contractor agreement before work begins, and the costly issues businesses face when key terms are left out.
Contractor relationships are one of the most common sources of legal and financial disputes for small business owners, and most of them start the same way: with an agreement that seemed clear enough at the time. Scope creep, payment disagreements, IP ownership, confidentiality, termination rights. The gaps only become visible when something goes wrong.
This week in Let’s Talk, we asked our panel what a contractor agreement actually needs to include to protect both sides, and what small business owners consistently leave out until it costs them.
Let’s Talk!
Pedro Barros, SVP for Frontier Products, Remote
“A strong contractor agreement does more than reduce legal risk. It gives businesses the confidence to engage talent across borders while creating clarity from the outset about how work will happen, what success looks like, and how both sides will operate together.
As more Australian businesses build global teams, that clarity becomes increasingly important. Most disagreements do not arise from bad faith. They happen when expectations are interpreted differently, whether around scope, timelines, payment, or ownership of work. A well-structured agreement creates alignment early, so both parties are working from the same page.
That is why the fundamentals of partnerships matter. Scopes of work should be specific and measurable, including deliverables, timelines, revision rounds, ownership of work, and what “done” actually looks like. Payment terms should be equally clear: currency, invoicing cadence, payment windows, and what happens if the project changes scope or runs over time. Termination clauses should be balanced and clear, written to reduce ambiguity for both parties.
For businesses engaging international contractors, classification is another important consideration. The definition of an independent contractor varies significantly by country, and regulators across Australia, the UK, and Europe are increasingly focused on whether someone is genuinely independent or functioning more like an employee. Understanding those differences helps businesses expand with greater confidence.
At Remote, we work with businesses managing contractors worldwide. Our Contractor Management platform and Contractor of Record solution help keep contracts, payments, and compliance requirements current wherever contractors are based, and our free misclassification risk tool helps businesses understand country-specific considerations before engaging talent.
Ultimately, a good contractor agreement should not be viewed as paperwork to complete once and file away. It is a foundation for a productive working relationship, one that creates clarity and confidence as businesses grow.”
Janine Thompson, Partner, McGrathNicol
“Focus not only on what is in the agreement, but on how it is written. Lawyers and commercial teams may draft the deal, but any clause involving financial terms or calculations should be properly stress-tested by accounting professionals. In my experience, too many disputes stem from financial clauses that are vague, poorly defined, or fall apart when applied in practice.
Try to incorporate worked examples where payment mechanisms or pricing formulas are involved. Practical examples are one of the fastest ways to uncover different interpretations early and make sure everyone is aligned before contractual issues arise.”
Shaun McLagan, General Manager and Group Vice President, APJ, Docusign
“Most contractor disputes do not come from bad intentions. They come from vague agreements where the detail lives in scattered email threads rather than the contract itself.
To avoid problems later, a contractor agreement should have a clear scope of work and deliverables, including payment terms and timelines, the project duration and how either party can end it, who owns the intellectual property created, and any confidentiality obligations. Get these right at the start and you remove most of the grey areas before they become costly.
The harder part is doing this consistently across every contractor agreement. That’s where intentional leadership matters and where the right platform makes all the difference. When agreements are centralised and visible, gaps close before they become costly.
Docusign IAM gives business leaders a single place to standardise templates, flag missing terms before signing, and stay on top of key dates like renewals.
But here’s a question worth asking: do you actually know what’s in your existing contracts – your standard terms, your payment obligations, your renewal dates?
Most businesses don’t and that’s where disputes can start forming. Docusign IAM captures and analyses data across your entire agreement history, so nothing stays buried.”
Rafie Faruq, CEO & Co-founder, GenieAI
“Most contractor disputes that we hear about don’t come from bad intentions but rather from too vague agreements. Primarily, be specific about scope i.e. exact deliverables, deadlines, etc. “Build me a website” means five different things to five people, so define deliverables, deadlines and what “done” looks like in plain terms.
You should spell out payment, including amounts, invoicing schedule, and what happens when a payment is late or disputed. Always assign intellectual property explicitly, because the work doesn’t automatically belong to you just because you paid for it. And confirm the contractor’s status clearly to avoid misclassification, which carries real penalties in Australia.
I’d also add a short termination clause and a simple dispute-resolution step before anyone speaks to lawyers. A two-page agreement that simply and accurately reflects what you agreed upon will be far more useful than a 20-page template nobody reads.”
Tiffany English, CEO, Access Offshoring
“If you want to avoid disputes, your contractor agreement must define operational logic and measurable outcomes rather than just outlining abstract legalities. Traditional agreements tend to fail because they focus heavily on terms and clauses while leaving the day-to-day execution lacking or ambiguous.
A bulletproof agreement needs to clearly detail the alignment between an individual’s responsibilities and their performance. It needs to establish absolute clarity on communication protocols and define decision rights, so there’s no confusion over authority. It must establish a shared operating rhythm, setting clear expectations for the timing and pace of task or project delivery. If you can explicitly define what ‘done’ actually looks like, you will also prevent costly reworks or confusion.
Operational frameworks can also be built directly into the schedules so that both parties understand how individual contributions align with the overall project goals, eliminating guesswork or interpretation.
When you standardise these operating structures inside the agreement from day one, you build mutual accountability and true psychological safety for your team. You transition the partnership from an unpredictable manual arrangement into a predictable, scalable ecosystem. Trust your contract to vet the process, and trust your systems to protect the relationship.”
Morgan Wilson, Founder and Director, creditte chartered accountants and advisors
“The most common issue I see isn’t a bad contractor agreement. It’s no agreement at all.
Most small business owners bring on contractors with a handshake. It feels fine until it isn’t. A written agreement doesn’t need to be complicated, but you need one. You don’t need it until you need it, and by then it’s too late.
Beyond the commercial basics, scope, deliverables and payment terms, there’s a compliance dimension that gets overlooked entirely. The ATO has specific rules around worker classification. If your contractor looks, works, and gets paid like an employee, the tax treatment changes. That means PAYG withholding obligations, superannuation, and potential penalties if you get it wrong.
A properly structured agreement helps establish the genuine nature of the working arrangement. It isn’t just about protecting you in a dispute. It’s about demonstrating to the ATO that the relationship is what you say it is.
Get a lawyer to draft it and an accountant to check the tax compliance angle. That combination in your corner before the work starts will save you far more than it costs.”
Amber Daines, Founder and Chief Communicator, Bespoke Co.
“As a PR agency owner who regularly works with contractors, freelancers and specialist consultants, I’ve learned that the best contractor agreements don’t just protect both parties legally but they set clear expectations from day one.
Start with a detailed scope of work. Be specific about deliverables, responsibilities and what is considered out of scope. In PR, this could include podcast script writing, media pitching, content creation, or media training. Ambiguity is often where disputes begin.
Timelines and deadlines are critical. Your agreement should clearly state turnaround times for you and the third party, review periods and who is responsible for approvals. A missed deadline can mean a missed media opportunity, particularly when working with journalists.
Payment terms should also be transparent, including fees, invoicing schedules, and how additional work will be charged. Scope creep is one of the most common sources of tension between agencies and contractors.
Importantly, manage expectations around outcomes. In PR, no contractor or agency can guarantee media coverage. A contractor can commit to activities such as pitching stories, developing media lists and securing interviews, but editorial decisions remain with journalists and media outlets. This distinction should be clearly documented.
Include clauses covering confidentiality, intellectual property ownership and communication protocols. I also strongly recommend a clear termination clause with a notice period of 14 to 30 days. Business priorities change, budgets shift and projects evolve. A simple, fair exit process protects both parties and prevents long, frustrating disengagements.”
Maria Kathopoulis, CEO & Chief Marketing Officer, UNTMD
“Most contractor disputes aren’t caused by bad people. They’re caused by vague expectations and poor documentation.
I’ve seen businesses spend tens of thousands arguing over work that two paragraphs upfront would have resolved. A solid contractor agreement covers scope, deliverables, timelines, payment terms, IP ownership, confidentiality, termination rights, and dispute resolution.
One of the biggest mistakes SMEs make is assuming they own creative work or systems simply because they paid for them. In Australia, intellectual property doesn’t automatically transfer unless the agreement explicitly says so.
Vague language is the other common trap. “Manage marketing” or “support operations” means nothing without specifics. Ambiguity creates emotional conversations later because both sides believe they agreed to different things.
The Australian Small Business and Family Enterprise Ombudsman consistently flags contract disputes, particularly around payment and unclear obligations, as one of the most common legal pain points for SMEs.
The businesses that avoid unnecessary conflict are the ones that document expectations before work begins.
A good contractor agreement should also contemplate the relationship ending before it starts. That’s not pessimistic — it’s commercially mature. Strong agreements protect both parties, reduce emotional reactions, and create cleaner exits if things change down the track.”
Justin Sulley, Director, Spend Solutions
“The contents of a contractor agreement should always be developed through the prism of ‘what could go wrong with this contractor & what will the impact be for my business?’.
Firstly, let’s start with the basics. Have the correct parties as the contracted entities including the correct legal names, ABN & contact information, without which the contract may be difficult to enforce.
Secondly, it’s important to define what services are being supplied, expected deliverables & contract completion provisions. Care & time should be taken to specify these details so both parties are clear on expectations.
All relevant commercial terms should be specified including the pricing structure (e.g. per hour), applicable rates, payment terms, gst status, treatment of expenses plus any other terms that may become an area of dispute around payment of invoices.
Lastly, consider any legal or contractual points important enough to be included in the agreement such as IP, insurance, confidentiality, privacy & data protection, WHS, indemnities, termination rights & dispute resolution.
The contractor agreement should reflect both parties’ requirements & what has been discussed throughout the project to ensure there are no surprises & as a result minimise the risk of dispute.”
Michael Russell, Managing Director, Finwave Finance
“Most contractor disputes do not start because there was no agreement. They start because the agreement was vague where it needed to be specific.
Businesses tend to focus on payment terms and deliverables, which matter, but the disputes usually happen somewhere else.
Scope creep is where most commercial relationships quietly break down. Your agreement needs to define not just what is included but what is not, and what the process is when additional work is requested. If variations are not documented, every new request becomes a negotiation with no reference point.
Termination is the second gap. Both parties need to know under what conditions the arrangement ends, what notice is required, what happens to work in progress, and who owns what at that point.
Intellectual property ownership must be stated explicitly. In Australia, the default position under copyright law is that the creator owns the work unless a written agreement says otherwise. If you are paying for something you intend to use as your own, that needs to be documented.
Finally, if you operate in a regulated industry, ensure the agreement does not inadvertently create an employment relationship. The ATO and Fair Work look at the substance of the arrangement, not what you call it.
A one-page agreement that is clear beats a ten-page document full of ambiguity.”
Renee Roumanos, Founder and Principal Solicitor, Renee Roumanos Legal
“Everyone is lovely until something goes wrong.
Most business owners start a relationship full of optimism.
Everyone is friendly, motivated and aligned.
Then something goes wrong.
The work is late.
The invoice isn’t paid.
The expectations don’t align.
Suddenly, everyone is pulling out emails from six months ago trying to prove what was agreed.
This is why a properly drafted Contractor Agreement is one of the simplest and most effective risk management tools available to any business.
Not because you expect people to do the wrong thing – because people are lovely until something goes wrong.
Here’s what needs to be in there:
Scope of work. Exactly what is being delivered, by when, and to what standard. Vague briefs create vague outcomes.
Payment terms. Amount, schedule, what triggers payment, and what happens if it’s late.
IP ownership. Who owns what they create for you? If it’s not in writing, you might be surprised by the answer.
Termination. How either party exits, and what happens to work in progress.
Confidentiality. If they’re in your business, they’re seeing your business. Protect it.
Dispute resolution. How disagreements are handled before they become litigation.
Contracts are not written for when things go right.
They are written for when things go wrong.
One conversation with a lawyer now costs a fraction of a later dispute.”
Rekha Thawrani OBE, Global Director at NEC Contracts
“A contract dispute rarely comes out of nowhere. More often, it traces back to something that wasn’t written down or wasn’t written clearly enough at the start.
So what actually belongs in a well-drafted contractor agreement?
Start with the scope. Ambiguity is the single biggest source of disputes. What is included, what is not, and how scope changes are managed all need to be defined precisely. If the agreed work shifts during a project, there must be a clear mechanism to acknowledge it and adjust the contract accordingly.
Next, risk allocation. Every project carries risk. The question is not whether risk exists, but who carries it and under what circumstances. A robust contract assigns risk to the party best placed to manage it, rather than defaulting to “the contractor takes everything” – a position that typically drives inflated prices and adversarial behaviour.
Early warning and communication obligations are also essential. Contracts that require parties to flag emerging problems, rather than wait until they escalate, create the conditions for collaborative problem-solving.
Finally, payment timelines and dispute resolution processes must be explicit. Slow or unclear payment mechanisms damage trust and cash flow. And when disagreements arise – because they will – a defined resolution process prevents a manageable difference of opinion from becoming protracted litigation.
These principles sit at the heart of how NEC Contracts is designed. Built around collaboration, transparency, and managing risk fairly between parties.
The best contractor agreements are not designed to win arguments. They are designed to prevent them.”
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
