RIGHT OF SUBSTITUTION is the simplest of the rules, if needed could you provide a substitute to the client to continue the delivery of the work. And will the client accept a suitable replacement? Having this listed in the contract is one thing, having a client follow through on taking a substitute is another. To pass this test, both the contract and the client need to agree that this is possible.
MUTUALITY OF OBLIGATION (MOO), this a funny one as it’s based around what can happen, let me explain. MOO in simple terms means, is the client obligated to provide work to you if, for example, the project you are working on is cancelled (like an employee)? And are you obligated to take on this work the client has provided? If not, then MOO doesn’t exist. However, the rules do not state that you cannot accept additional work, and the client cannot offer it. It’s all based around the obligation on both parties to provide and accept the work.
Financial Risk, in short, do you have significant Financial Risk while working this contract. These risks involve:
- Non-payment for the time you are not working
- You will have to correct any errors or failures at your own cost
- Are you required to hold insurance to cover the work you provide as your own cost?
If these elements exist, you can then display that you hold significant Financial Risk within the contract.