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What Contractors Need to Watch Out for Before Signing a Contract

Becoming a contractor can be exciting—it gives you the flexibility to choose projects and work with different businesses. But it also means you need to protect yourself, especially when it comes to contracts and payment. I recently had an experience that reminded me just how careful contractors need to be, and I’d like to share some lessons learned.

I took on a project for a small business. When I signed the contract, I noticed there was no section about payment. During the interview, the owner casually mentioned the rate would be $350 per project, so I assumed it was fine. Only after I completed the work did he ask if he could pay me $300 instead. That’s when I realized how important it is to have payment terms written clearly in the contract.

Another red flag came up when I tried to verify the business. I couldn’t find their ABN (Australian Business Number) on the government register, even though they had a website. As contractors, it’s important to check this—because if the business isn’t properly registered, you might run into trouble getting paid or protecting your rights.

Then came the request that made me stop in my tracks: he asked me to send over not just my ABN details, but also copies of my passport and driver’s license. That’s a big no. A business only needs your ABN and bank details (listed on an invoice) to pay you. Sharing unnecessary personal ID documents can expose you to identity theft.

Finally, after finishing the project, I asked when I would get paid. Only then did he tell me to send an invoice with my bank details. While it’s normal to issue invoices as a contractor, that conversation should have happened upfront—not after the work was already completed.

Key Takeaways for Contractors

If you’re signing a contract as a contractor or freelancer, here are a few things to always double-check:

  • Payment terms – Make sure the rate, due dates, and method of payment are written in the contract.
  • ABN check – Verify that the business has a valid ABN through the Australian Business Register.
  • Privacy protection – Never hand over personal ID like a passport or driver’s license unless it’s legally required.
  • Clear process – Agree in writing on how invoicing and payments will be handled before you start work.

The Bottom Line

As contractors, we have to be our own safety net. Don’t rely on verbal promises, and don’t be afraid to ask questions before signing. A little extra caution upfront can save you a lot of stress later.

What Can You Do if You End Up in a Bad Situation?

1. Send a formal invoice and payment request

Even if the contract was vague, you can still issue an invoice for the agreed amount ($350). This gives you a written record of your claim. Clearly state:

  • The work completed
  • The amount owed
  • Your ABN and bank details
  • A payment due date (e.g., within 7 or 14 days)

If he refuses to pay the full amount, ask him to confirm in writing why. That written record will help if you escalate the matter.

2. Check the ABN and business registration

Since you couldn’t find his ABN, the “business” might not be registered at all. You can:

  • Search again on the Australian Business Register (ABR) to confirm
  • Check ASIC’s business name register if he operates under a trading name

If there’s no registration, that strengthens your case that this person may not be operating legally.

3. Escalate politely but firmly

If payment isn’t made by the due date, send a follow-up email/letter stating that you will pursue recovery through formal channels if necessary. Keep your communication professional and factual.

4. Use small claims/debt recovery

Even without a watertight contract, you can still claim money owed for work completed. In Australia:

  • You can lodge a minor debt claim in your local court (e.g., Magistrates Court or Local Court) for amounts under a certain threshold (often up to $10,000–$20,000, depending on the state).
  • You don’t necessarily need a lawyer—many contractors handle this themselves.
  • Evidence such as emails, the contract (even if incomplete), and the invoice can all support your claim.

5. Report concerns

If you suspect the business isn’t legitimate:

  • Report to the Australian Competition and Consumer Commission (ACCC) or Fair Trading in your state.
  • If identity theft is a concern (since he asked for passport/driver’s licence), monitor your accounts and consider contacting IDCARE, Australia’s national identity support service.

Remember:

  • Always invoice.
  • Always keep written records.
  • You can still pursue debt recovery, even with a flimsy contract.