the contract’s purpose is to legally protect the business and the contractor who sign it. understanding the difference between an employee and an independent contractor will go a long way in helping you develop your business. to underscore the difference between a contractor and an employee, project-based contracts often contain a clause stating that nothing in the agreement will be interpreted as creating an employer-employee relationship. you should also include in the agreement a list of services the contractor will perform. finally, to make the contract legal, both you and the contractor must sign and date the document. common types of agreements include: in some cases, the extent of the work required by the company might expand during a project.