Legal Agreements

What are the Steps for Contractor Agreement

Contractor Agreement

Steps for Contractor agreement were never easy like this before to understand and follow. Gone are the days when the building builds on the words of mouth, now only the contract exists. There should be a valid contract or an agreement who which act as the root of the duties and responsibilities both the parties going to perform.

What is a Contractor Agreement?

A contract is a legal formal agreement between two parties which is legally binding on it. The purpose is to limelight the responsibilities and obligations of each party. A contract is used for various purposes like in legal situations, real estate transactions, employment agreements, and business deals. The Contract flows with various essential elements and steps involved in creating a contract to ensure the rights of all the parties are protected.

Now, when we are discussing contractor agreement, it is wise if we also shower some light on the parties to the contract or agreement-

  • Contractor- is a person or company that does the work for the contractee or organizations.
  • Contractee- is client or principal or the entity that enters into the contract with the contractor or vendor and receives specific goods or services under the terms of the contract.

Steps Involved for Contractor Agreement

The following are the steps involved for Contractor Agreement –

Measure the Scope of work –

The very first step of the contractual agreement is to measure the scope of work. The agreement will be drafted on the basis of the parameter of the work, what work should be done, how much time it will take etc. The contractor agreement should clearly define the work standards and clear what all duties were to be accomplished.                    

Do a market survey- 

The next step is to survey the market of the contractor. It is very stringent to survey the market to know what is trending in the market, what is the best possible price quota is tendered and who all are in the market who have the professional background of offering best and finest work. It is very important to keep a proper check on the contractor’s history or collecting data on the payment for work made by or to the contractor. Public data or public survey can reveal a lot of details about the business.

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Frame the price quote- 

After the scope of work and the market survey what you need to do is to set a price quote on which you or the other party will draft the contractor Setting a price quota or negotiating the price is one of the major steps of the contract or agreement. You can also set the mode of payment or the place of the payment. The mode of the payment could be cash, cheque or net banking.

Check Contractor’s License- 

In case you are contracting for some specific purpose or objects which needs a contractor’ license then it is wise to check the contractor’s license as he/she is competent to be a party of the contract. The state Department of Labor and Industries keeps a searchable database to show the whether the business is actively armed with a license to perform work as a contractor and to verify the status of worker’s compensations, bonding, liability insurance, departments of revenue account, outstanding lawsuits.

In case, you come into any contract that involves some Intellectual property rights then, the ownership and the rights of the product or service will be pre-decided and should be very clear to both the parties.

Duration of service- 

Every contractor agreement is made for a specific time period. The contract includes the time limit or time period in which the contract needs to be completed. The duration of the contract is requiring for every contractor agreement.

Make the payment- 

The last step is to make the payment or to decide the mode of the payment. Once the contractor agreement is completed from one end then it is the time to make the payment.

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Key Elements of the Contractor Agreement –

Following are the key elements of the contract or agreement-

The intention of the contract

The very first step in creating a contract is to have the intent to be in contractor agreement. The intent is the desire or wishes between two or more parties to enter into the agreement with one another.

Obligations and duties of the contractor

The contract or agreement shall be planned, managed and shall be mention all the obligation and duties of both the parties of the contract or agreement. Details of the duties, responsibilities, and compensation in a case that both the parties have to undertake should be properly drafted.

Following are the duties and the responsibilities parties’ needs to follow-

  • The contractor is bound to provide the delivery of the goods or services according to the contractor
  • It is also having the responsibility to provide the goods in the best quality. The contractor should maintain the quality of the goods or services proposing to deliver.
  • It should deliver the goods or services on time.
  • The contractor should comply with all the policies and regulations which should be completed from his/her end.


The amount of the consideration is to be decided in the contract or agreement for his service. It is one of the important key elements of the contract, without consideration there is no legal existence of the agreement it is treated like a gift, not an agreement. The mode of the payment will be also inserted in the clause.

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Information, Data, and Material 

The contract or agreement must divulge all the reports, information, formulae, inventions, software specifications and manuals etc


The contractor agreement should follow the confidentiality norms that are mentioned in the agreement. The contractor shall at any time not disclose any information that is related to the pricing, methods, and data to any person.


If in case, there is any loss or damage is suffered by the contractee, due to the work or the activity of the contractor then the contractor is liable to pay the contractee for the loss or damage incurred


The contractor when sign a contract or agreement then he/she is responsible to follow some of the compliances which are predefined in the agreement. The compliances are like-

Safety and Security regulations of the contractee – the contractor should comply with the safety and the security regulations applicable to the contractee.

Payment of the taxes and the notifications to tax authorities- the contractor must pay the applicable taxes wherever required and should follow the necessary tax compliance.


The last but not the least is the arbitration. Select an arbitration to manage and sort the things if in case any legal dispute arises. It is also a key element to set arbitration in the contract or agreement.

In conclusion

The Contractor agreement flows with various essential elements and steps involved in creating a contract to ensure the rights of all the parties are protected. For further information contact us.

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