A contractor agreement—also known as an independent contractor agreement, 1099 agreement, or freelance contract—is a contract between a client willing to pay for the performance of services by a contractor (person, sole-proprietor, or single-member LLC) who is willing to perform the services. Under the Internal Revenue Code (26 U.S.C. §3509), an independent contractor is not an employee, and the client hiring an independent contractor is not responsible for tax withholdings and payment of FICA taxes. A contractor agreement should be in writing, and will usually address issues such as the (1) scope of the work (description of the services); (2) terms and length of the project or service; (3) payment details, including fee deposits, hourly rate, and billing procedure; and (4) confidentiality, non-solicitation, and dispute resolution clauses.

A contractor may also operate as a corporation or multi-member limited liability company, for example, and the contractor agreement with such an entity will be similar to an agreement with an individual who is an independent contractor.

In California, a contractor agreement is a legally binding document between a client and a contractor, where the contractor is engaged to perform services as an independent contractor rather than an employee. This distinction is important for tax purposes, as outlined in the Internal Revenue Code (26 U.S.C. §3509), which exempts the client from withholding income taxes and paying FICA taxes for an independent contractor. California law requires that the terms of the contractor agreement be clear, especially after the passage of Assembly Bill 5 (AB 5) and its subsequent amendments, which introduced stricter criteria (the 'ABC test') to classify workers as independent contractors. The agreement should detail the scope of work, project duration, payment terms, and include clauses on confidentiality, non-solicitation, and dispute resolution. While the basic principles of a contractor agreement remain consistent whether the contractor is an individual, sole proprietor, single-member LLC, corporation, or multi-member LLC, the specific terms may vary based on the business structure of the contractor entity.