Work Has Started But There’s No Contractor Agreement - What Now?

You hired a contractor - or maybe you are the contractor - and they’ve started work. You agreed on the basics and swore you’d get around to finalising the agreement, but it’s been six months and nothing has been signed. What now?

Ideally, a Contractor Agreement should be agreed to and signed before any work begins. It gives both sides a clear record of what they’ve agreed to before work, money and intellectual property start changing hands.

However, if the work is already underway, that doesn’t mean you’ve missed your chance. You can still put an agreement in place while the relationship is ongoing. The important thing is working out where things currently stand, clearing up anything that is uncertain and properly documenting the arrangement from here.

Work Out Where The Relationship Currently Stands

Not having a signed Contractor Agreement doesn’t necessarily mean there is no contractual arrangement at all. Depending on the circumstances, agreements made verbally, in writing or through the parties’ conduct can still create contractual obligations.

Maybe the contractor sent through a quote, the client approved it and work began. Perhaps a price was agreed during a call and several invoices have already been paid. Or maybe there is a long trail of emails and messages discussing the work, deadlines and changes to the project.

The first step is getting clear on what has actually happened so far. What work was the contractor brought in to do? What has already been completed? What was agreed around price and timing? Have expectations changed since the project started?

From there, you can formalise the relationship.

A written agreement can reflect the fact that work is already underway, clarify anything that remains uncertain and set out how the relationship will operate going forward.

If you want the agreement to deal with work that has already been completed, that should be made clear in the document rather than simply treating it as though it had been signed before the relationship began.

That also doesn’t mean one side can send over a document containing completely new terms and assume they automatically apply. Both parties should understand and agree to the terms they are putting in place.

Getting everything sorted before the first piece of work is delivered is always easier. But if that didn’t happen, you can still put appropriate terms in place now.

Make Sure It Really Is A Contractor Relationship

Before putting the arrangement in writing, it’s also worth checking that a self-employed contractor relationship is still appropriate.

In the UK, someone described as a contractor may in practice be self-employed, a worker or, depending on the arrangement, an employee. Simply calling someone a contractor - or putting a Contractor Agreement in place - does not necessarily determine their legal status.

This can be particularly worth checking if the relationship has changed significantly since it began. Someone might have initially been brought in to complete a standalone project but, several months later, the way they work with the business may look quite different.

That doesn’t automatically mean their status has changed. However, if there is uncertainty about the nature of the relationship, it can be worth getting advice before documenting it as a self-employed contractor arrangement.

Assuming contracting is the right setup, you can then focus on getting the important parts of the existing relationship clear.

Get Clear On The Work And The Money

Six months into a project, the work might look quite different from what everyone first discussed.

Five website pages may have become eight. Two rounds of revisions may have become six. An estimated completion date might now be treated as a firm deadline. A contractor may think a new request falls outside the original project, while the client thinks it was included from the beginning.

This is where putting the arrangement in writing can be particularly useful.

Rather than simply recreating the original plan, look at where the project stands now. A Contractor Agreement can clarify what has already been completed, what still needs to be delivered, any remaining deadlines or milestones and how additional work or changes will be handled.

Payment should be just as clear.

If invoices have already been issued and paid, the parties may already have an established way of doing things. However, both sides should still understand what the contractor will be paid for the remaining work, when invoices are due, whether expenses are included and how any additional work will be priced.

That clarity helps both sides. The client has a better idea of what they are paying for, while the contractor is less likely to find themselves completing extra work they never intended to include in the original price.

Sort Out Who Owns The Work

Intellectual property can become particularly important when work starts before the contract is finalised.

Imagine a contractor has already spent several months developing software, designing a brand, creating marketing materials or writing content for a client. The client may assume that because they paid for the work, they own it. The contractor may have a very different understanding.

If you’re the client, don’t assume that paying a self-employed contractor automatically gives you ownership of everything they create. For example, a self-employed contractor will generally retain copyright in work they create unless the parties have agreed otherwise.

Other intellectual property rights can have their own ownership rules, so the agreement should be clear about what belongs to whom and what rights are being transferred or licensed.

There can be another side to this for contractors. You might be happy for the client to own particular work created specifically for their project, but that doesn’t necessarily mean you intend to give up ownership of your existing templates, tools, processes, code or other materials that you use across your business.

If the relationship has already started, your agreement may therefore need to deal with both work that has already been created and work that will be created going forward.

Where copyright needs to be transferred, UK law also requires an assignment to be in writing and signed by or on behalf of the person transferring it. This can make proper documentation particularly important where the work already exists but ownership was never dealt with at the beginning.

Depending on the circumstances, an IP Assignment Deed may be appropriate where existing intellectual property rights need to be formally transferred.

The important thing is not to leave ownership sitting on assumptions simply because the project is already underway.

Deal With Information And Access That Has Already Been Shared

By the time everyone realises the agreement is still unsigned, the contractor may already have access to a significant amount of the client’s business.

That could include customer information, internal documents, passwords, software accounts, source code, pricing information or commercially sensitive plans. The contractor might also have shared their own confidential processes, templates or other proprietary materials with the client.

A Contractor Agreement can set expectations around confidentiality, who can access particular information and how business information can be used during and after the relationship.

If the contractor is processing personal data on the client’s behalf, additional UK GDPR requirements may also apply. Where the business is acting as a controller and the contractor as its processor, the relationship must be governed by a contract or other legal act containing certain data processing terms.

Depending on the arrangement, those provisions may be included in the Contractor Agreement or dealt with through a separate data processing agreement.

Not every contractor will be acting as a processor, so the requirements will depend on what they are actually doing with personal data. The important thing is to look at the information and access involved now rather than relying on what everyone expected at the beginning.

What If You’re Not On The Same Page?

Sometimes, finally putting things in writing reveals that the two sides weren’t quite as aligned as they thought.

Perhaps the client assumed it would own all of the IP, while the contractor never intended to transfer it. Maybe the contractor considers a new piece of work outside scope, while the client thinks it was part of the original fee.

Finding that out now can actually be useful.

Instead of allowing different assumptions to continue for another six months, both sides have an opportunity to clarify what they understand the arrangement to be and agree on how things will work from here.

If one side sends through an agreement and the other objects to an important term, don’t simply assume the issue has been resolved because that term has now been put in writing. Any material differences should be worked through before substantially more work, money or IP becomes tied up in the relationship.

Sometimes, the parties may decide that continuing the arrangement no longer makes sense. If that happens, there may still be practical matters to sort out, including outstanding payments, unfinished work, handover of files, IP ownership, confidential information and access to business systems.

Having those things agreed from the beginning is preferable. But if they weren’t, addressing them now can still make the relationship - or its end - much clearer for everyone involved.

Get It In Writing - Even If You’re A Little Late

Getting a Contractor Agreement in place before work starts is always the better option. But projects move quickly, deadlines appear and sometimes everyone gets started with every intention of sorting the paperwork later.

If that’s where you are now, it doesn’t mean it’s too late.

Whether you’re the business or the contractor, take a look at what has already been agreed, identify anything that is still unclear and properly document how the relationship will work from here.

If you would like a consultation on getting a contractor agreement, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.