Should You Use A Free Contractor Agreement Template? (2025 Updated)

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When you’re working in a small business or startup and decide to hire a contractor to outsource some of your work, it’s tempting to download a free Contractor Agreement template from the internet to cut costs. But in 2025, with the legal landscape continuously evolving, is it still safe to use a free template in this situation?

Most free templates come with a disclaimer urging you to seek professional advice. This is because there are certain risks associated with hiring a contractor that are unique to your business, and a one-size-fits-all template rarely addresses those specifics. Modern legal requirements now demand that your agreement reflects current case law, regulatory updates, and industry-specific nuances. For more detailed insights, check out our guide on hiring contractors and building a team.

Learn more about contractors and the key considerations for a Contractor Agreement below.

What Is A Contractor?

A contractor is an independent, self-employed professional you engage to complete specific projects or tasks for your business. They typically operate under their own Australian Business Number (ABN), invoice for services rendered, and manage their own insurance, superannuation, and tax obligations. Unlike employees, contractors maintain a higher level of control over how they deliver the work. For a deeper dive into these distinctions, you might want to read our article on how contractors differ from employees.

Contractors can be ideal for achieving project-specific goals or for short-term engagements. However, because there is a clear legal distinction between engaging a contractor and hiring an employee, it’s crucial to ensure your contracting practices comply with current laws and best practices in 2025.

When Do I Need A Contractor Agreement?

If your business engages contractors, it’s a wise strategy to have a tailored Contractor Agreement in place with each one you hire. Such an agreement sets clear expectations about the scope of work, standards of service, fees and payment terms, confidentiality, intellectual property (IP) ownership, and termination processes. Keeping your contracts updated not only aligns you with legislative changes but also safeguards your business interests.

How Do I Use It?

Ensure your contractors sign their Contractor Agreement before commencing work. This document serves as your roadmap, so if any issues arise, you have a clear reference that outlines both parties’ rights and responsibilities. It’s an essential tool for maintaining clarity and trust in your business relationships. For further guidance on legal documentation, you might also consider our resource on contract drafting.

Contractor Agreement Example

Daley runs an ecommerce business and needs a digital marketing consultant to help grow his online presence. Without the capacity to build an in-house team, he decides to hire Reece, a freelance marketing expert, as a contractor. The Contractor Agreement stipulates that Reece will be engaged for a three-month period to set up a robust marketing system, along with clearly defined payment terms, IP ownership clauses, and confidentiality requirements. This arrangement provides Daley with cost certainty and the flexibility of not committing to permanent staff, which is especially beneficial in the fast-paced business environment of 2025.

What’s In It?

A well-drafted Contractor Agreement covers various important aspects that a free template might overlook. While every agreement should be customised to fit your business model, here are some common elements you can expect:

Fees / Payment – Clearly outline how and when you will pay the contractor for their services. For additional tips on pricing models, see our contract essentials.
Term – Specify the contract’s duration. Is the engagement for a fixed period or an ongoing project? Align this with your business needs and future planning.
Intellectual Property – Define who owns the IP created during the engagement. This is key to avoiding disputes over work produced.
Termination – Detail the conditions under which either party can end the contract prematurely, including any notice requirements or associated penalties.
Dispute Resolution – Outline a clear process for resolving conflicts, which can include mediation or arbitration, to avoid costly litigation.

Moreover, in 2025, regulatory expectations have increased around data security and privacy. Including clauses that address these concerns—especially when contractors handle sensitive business data—can save you potential headaches later down the line. For further reading, consider our article on privacy policies and how they interlink with your contractual obligations.

Need Help?

Having a properly drafted Contractor Agreement is crucial—it not only protects your company’s intellectual property and confidential information but also provides clarity about your engagement, reducing the risk of future disputes. With legal frameworks continually evolving, especially in 2025, it’s more important than ever to ensure your agreements reflect current laws.

When you get a lawyer involved in drafting or reviewing your Contractor Agreement, you benefit from bespoke advice that addresses the nuances of your business model. Whether you’re a sole trader or operating as a limited company—as detailed in our Sole Trader vs Company article—having tailored legal support can save you time, money, and unnecessary stress.

At Sprintlaw, our team of experienced lawyers is ready to help you draft or review your Contractor Agreement and address any other legal issues your business may face. For a comprehensive check on your legal documentation, you might also want to explore our legal tips and info sheets section. Get in touch with one of our consultants for a no-obligation chat about how we can support your business in 2025 and beyond.

Minna Boyle

Minna is the Head of People & Culture at Sprintlaw. After completing a law degree and working in a top-tier firm, Minna moved to NewLaw and now manages the people operations across Sprintlaw.