I offer my clients contracts for major projects or on-going work; but I have to say, even with contracts most of my business is done through good faith. Contracts are like insurance—they’re only necessary if something goes wrong.
They do, however, protect your mutual investment—the contractor’s time, efforts and the company’s money, interests and information. Depending on the project, you may want to consider a Letter of Agreement which is shorter than the standard contract, but still covers the essentials. Most likely your legal department will review your contract and the contractor will have the chance to modify his or her terms until you both agree.
I’d recommend that for any major project or for on-going work, you sign a contract or letter of agreement. If nothing else, it adds a level of professionalism to the outsourced relationship. Companies worry they won’t get satisfactory work and freelancers worry that they won’t be paid. Contracts can help both parties relax and focus on the actual project.
Remember, contracts are back-up—any good freelancer should work as if good faith is all that’s needed, but be wise enough to know a contract is a good thing.
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