Independent Contractor Disputes:

A dispute concerning an independent contractor or an agreement for the provision of services under an independent contractors’ arrangement, may have the following character (and may not necessarily be limited to the below):

• A provision or provisions of the independent contract agreement may be in question. The provision may be ambiguous or unclear. The rights and liabilities of each party may therefore not be clear and their performance of obligations uncertain. A dispute relating to some other controversy may in fact arise from a misunderstanding or misconstruction of a contractual obligation;
• There may be an allegation that there has been a breach of a term of the agreement between the independent contractor and the principal. That breach may be in relation to an essential or non-essential term. The nature of the term itself may be in question. This will need to be determined to ascertain what rights and liabilities the parties may have: whether the innocent parts can rescind the contract (justly terminate the agreement) or whether taking any rash action may amount to repudiation (unjust termination of the contract);
• An allegation may be made that a term is illegal, unlawful or oppressive. Some terms of contracts may be deemed unenforceable due to well established legal principals which state that certain types of clauses are not permitted. Some examples are penalty clauses, or clauses which are far too onerous in relation to the obligations and liabilities they place on a party;
• A party may claim that he is not obliged to comply with some aspect of the agreement which may not be articulated but which the other party claims is to be inferred from the broader context of the parties’ business or commercial relationship; and
• Likewise, the common law (and in some circumstances, an industry code, specific legislation or policy) may imply certain obligations into a contract that may not be there, and indeed, which may not have even been contemplated between the parties as they were entering onto the contract.

Of course, the very nature of the independent contractor’s agreement can itself be disputed. The independent contractor entity has a specific legal definition. If reality of the relationship between the parties to an alleged independent contractors’ agreement does not match with the criteria and requirements of the legal definition, it may be the case that the relationship is something other than an independent contract. This will result in different liabilities arising as between the parties in dispute. It may also alter the liability of the alleged independent contractor for loss or damage suffered by a third party as a result of the alleged independent contractor conducting his duties under the agreement.

For example, if the level of control over the day to day conduct of the alleged independent contractor’s affairs is high, the relationship may in fact be characterised as an employment relationship. This will mean that the actions of the alleged independent contractor will fall under the doctrine of vicarious liability and the employer will be responsible. Likewise, if the duties of the alleged independent contractor more closely resemble those of an agent, then the laws relating to agency and agency agreements will affect the liabilities of parties in dispute.

These questions can have serious consequences on parties’ statutory liability (whether or not they have complied with their duties under the law, industry guidelines and the like) as well as other issues, such as insurance policies and whether or not they will cover loss or damage under the circumstances. Each insurance policy will contain conditions and exclusions which may be exercised in the event that a Court, Tribunal or Commission holds that the commercial relationship between parties is something other than what was represented to the insurer at first instance. Moreover, a policy may be voided if the insurer successfully establishes that a relevant disclosure was not made, or that information which was provided did not accurately reflect the position of the party seeking insurance.

For these reasons, detailed legal advice should be obtained from an independent contractors’ solicitor before steps are taken to prosecute or defend a claim. The laws relating to issues outlined briefly above are complex and constantly evolving. The independent contractors’ lawyer will need to investigate the pertinent facts of the dispute and consider the most recent updated legal precedents which will determine the status of each party’s claim and counter-claim. Litigation in the area of independent contractor disputes can be costly and time consuming. A competent contractor litigator will first inquire with the other side whether or not good faith negotiations can be entertained before suing the other party (indeed, the litigator will have to investigate whether or not there are mandatory dispute resolution processes in the particular industry that need to be sought before litigation is commenced).

If you wish to meet with a Sydney Lawyer about your Contract Dispute, please contact our firm by telephone on (02) 9233 4048 or send an email to info@navado.com.au and arrange an appointment. 

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