Make sure your IC agreement is properly signed and put together. This is not difficult if you know what to do. Follow the tips offered below.
a. Signatures
It’s best for both you and the IC to sign the agreement. Signatures should be in ink. You and the IC need not be together when you sign, and it isn’t necessary for you to sign at the same time. There’s no legal requirement that the signatures be located in any specific place in a business contract, but they are customarily placed at the end of the agreement; that helps signify that you both have read and agreed to the entire document.
It’s very important that both you and the IC sign the agreement properly. Failure to do so can have drastic consequences. How to sign depends on the legal form of your business and of the IC’s business.
Sole proprietors. If you or the IC are sole proprietors, you can simply sign your own names, because a sole proprietorship is not a separate legal entity.
However, if an IC uses a fictitious business name, it’s better for him or her to sign on behalf of the business. This will help show the worker is an IC, not your employee.
EXAMPLE: You hire Chris Craft, an IC sole proprietor who runs a marketing research business. Instead of using his own name for the business, he calls it AAA Marketing Research. You should have him sign the IC agreement like this:
AAA Marketing Research
By: Chris Craft
Chris Craft
Partnerships. If either you or the IC is a partnership, a general partner should sign on the partnership’s behalf. Only one partner needs to sign. The signature block for the partnership should state the partnership’s name and the name and title of the person signing on the partnership’s behalf. If a partner signs only his or her name without mentioning the partnership, the partnership is not bound by the agreement.
EXAMPLE: You hire Chris, the general partner of a partnership called The Chris Partnership, to perform marketing research. He should sign the contract on the partnership’s behalf like this:
The Chris Partnership
A California Partnership
By: Chris Craft
Chris Craft, General Partner
If an IC is a partnership and a person who is not a partner signs the agreement, the signature should be accompanied by a partnership resolution stating that the person signing the agreement has the authority to do so. The partnership resolution is a document signed by one or more of the general partners stating that the person named has the authority to sign contracts on the partnership’s behalf.
Corporations. If either you or the IC is a corporation, the agreement must be signed by someone who has authority to sign contracts on the corporation’s behalf. The corporation’s president or chief executive officer (CEO) is presumed to have this authority.
If someone other than the president of an incorporated IC signs—for example, the vice president, treasurer or other corporate officer—ask to see a board of directors’ resolution or corporate bylaws authorizing him or her to sign. If the person signing doesn’t have authority, the corporation won’t be legally bound by the contract.
If you sign personally instead of on your corporation’s behalf, you’ll be personally liable for the contract.
The signature block for a corporation should state the name of the corporation and indicate by name and title the person signing on the corporation’s behalf.
EXAMPLE: You hire Chris, an IC marketing consultant, to perform marketing research. Chris is president of his own corporation called Chris Marketing, Inc. Chris should sign the IC agreement on behalf of his corporation. The signature block should appear in the contract like this:
Chris Marketing, Inc.
A California Corporation
By: Chris Craft
Chris Craft, President
b. Dates
When you sign an agreement, include the date and make sure the IC does, too. You can simply put a date line next to the place where each person signs—for example:
Date: ______________, 20__.
You and the IC don’t have to sign on the same day. Indeed, you can sign weeks apart.
c. Attachments or exhibits
An easy way to keep the main body of an IC agreement as short as possible is to use attachments, also called exhibits. You can use them to list lengthy details such as performance specifications. This makes the main body of the agreement shorter and easier to read.
If you have more than one attachment or exhibit, they should be numbered or lettered—for example, Attachment 1 or Exhibit A. Be sure to mention that they’re included as part of the contract in the main body of the agreement.
d. Last-minute alterations
Sometimes it’s necessary to make changes to a contract just before it’s signed. If you use a computer to prepare the agreement, it’s usually easy to make the changes and print out a new agreement.
However, it’s not always necessary to prepare an all new contract. Instead, the changes may be handwritten or typed onto all existing copies of the agreement. The changes should also be initialed by those signing the agreement as close as possible to the place where the change is made. If both people who sign don’t initial each change, questions might arise as to whether the change was part of the agreement.
e. Copies of the contract
Prepare at least two originals of your agreement. Make sure that each contains all the needed exhibits and attachments. Both you and the IC should sign both. Both you and the IC should keep one signed original of the agreement.
f. Faxing contracts
It has become very common for hiring firms and ICs to communicate by fax machine. They often send drafts of their proposed agreement back and forth to each other by fax. When a final agreement is reached, one signs a copy of the contract and faxes it to the other who signs it and faxes it back.
A faxed signature is probably legally sufficient if neither you nor the IC dispute that it is a fax of an original signature. However, if an IC claims that a faxed signature was forged, it could be difficult or impossible to prove it’s genuine since it is very easy to forge a faxed signature with modern computer technology. Forgery claims are rare, however, so this is usually not a problem. Even so, it’s a good practice for you and the IC to follow up the fax with signed originals exchanged by mail or express delivery.