Contractor Agreement Risk Check (Before You Sign)
Contractor Agreement Risk Check | Red Flags + Negotiation Scripts (US & Canada)
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Meta Description: Before you sign a contractor agreement, run a risk check. Spot scope, IP, payment, and termination red flags—and use negotiation scripts. Educational only.
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Contractor Agreement Risk Check: Red Flags Before You Sign
Intro (above the fold)
Contractor agreements go wrong for predictable reasons: vague scope, messy IP ownership, one-sided termination, and uncapped liability. This page highlights the most common red flags and gives you example scripts to negotiate cleaner terms.
Primary CTA: Get the “Before You Sign” Pack
Secondary CTA: Download the Free Checklist
Disclosure: Educational information only. Not legal advice.
How to use this page (60 seconds)
- Confirm scope, payment, and “what done means.”
- Check the red flags below.
- If you hit 2+ red flags, slow down and consider legal review.
The 8 contractor red flags (preview)
1) Scope is vague (no deliverables / acceptance criteria)
Why it matters: Scope creep and disputes.
Example script:
“Can we add deliverables, milestones, acceptance criteria, and an ‘out of scope’ section?”
2) No change-order process
Why it matters: Changes become free work.
Example script:
“Let’s add a change-order process: material scope changes require written approval and updated fees/timeline.”
3) Payment terms create cashflow risk
Why it matters: You finance the project.
Example script:
“Can we use milestone payments (or monthly invoicing) with clear acceptance criteria and net 15/30?”
4) Termination is one-sided or immediate
Why it matters: You can lose revenue mid-project.
Example script:
“Can we add notice for termination for convenience and payment for work completed through termination?”
5) IP assignment is too broad (captures pre-existing tools/templates)
Why it matters: You lose your core assets.
Example script:
“We can assign IP in the paid deliverables, but we need to retain pre-existing tools and know-how (with a limited license if needed).”
6) “Work made for hire” is used broadly
Why it matters: It can be misapplied and create confusion.
Example script:
“Let’s specify exactly which deliverables are being assigned and exclude pre-existing materials.”
7) Non-compete / broad non-solicit slipped in
Why it matters: It can restrict your business beyond the project.
Example script:
“We can consider a narrow, time-limited non-solicit, but we can’t agree to a broad non-compete.”
8) Uncapped liability / one-way indemnity
Why it matters: Small deals can create huge exposure.
Example script:
“Can we add a reasonable liability cap tied to fees paid and limit indemnity to specific, reasonable categories?”
US↔Canada watch-outs (short preview)
If cross-border: clarify currency/FX fees, flag tax/withholding questions for your accountant, and get IP boundaries in writing (deliverables vs pre-existing tools).
When to escalate (pause and get review)
Escalate if:
- high-value/long-term engagements
- sensitive data involved
- IP terms touch core business assets
- liability/indemnity is broad and uncapped
- non-compete language appears
- cross-border tax/withholding is unclear
CTA section
Want the complete contractor toolkit (fillable Deal Snapshot, full scorecard, and full script library with A/B/C fallback options)?
Button: Get the “Before You Sign” Pack
FAQ
Is an independent contractor agreement the same as employment? No. Misclassification risk exists; if the agreement tries to control work like employment, get advice.
Do I need an IP clause for a simple project? Often yes—at least to clarify deliverables vs pre-existing tools.