I'm going to hire a contractor on either Elance or Guru soon, been googling around for a good contract but can't seem to find any that caters to my needs.
The project is quite complex and I want to protect myself from contractors that promises the moon and stars but later fails to deliver after awarding them the project.
Something along the lines of the contractor guarantees the website will be delivered in full specification, in the event that they fail doesn't necessarily mean the project fails/ends. I will try and emphathize if certain functions can't be developed and willing to compromise but if that function is crucial to the project and could make or break the project, I will want them to issue a full refund, and it will be up to my discretion to decide whether the function that they fail to develop makes or break the project.
What would be a good clause for this?
Yes, it's always good to have a claus, however most sites (not sure about the ones you mentioned) but others such as Freelancer have a report system i think, so if people don't deliver then a new case will be made. Check that the person who is doing the job has a good reputation, ie has plenty of jobs behind them, that way they're more likely to deliver the work as promised, more so than someone who has only one or two projects.
No one worth hiring is going to agree to a contract giving you unconditional review rights, that's simply unreasonable.
It sounds like what you need is a fairly detailed specification agreement and a contract to govern the acceptance of your project with milestones, mid-points and review cycles along the way that both you and the firm developing can check off. You are entitled to get things to right but you also have to accept that you'll be limited to a certain amount of changing (i.e. pushing outside of scope or redefining within it) before it costs you more. Deals have to make sense on both sides.
I'd suggest looking for a network that has some sort of specification / delivery terms to help protect you if not available counsel (which you'd of course pay for) to customize an agreement.
Given that this is a complex project, and that you demand high standards of the contractors (and rightly so), I would question whether the likes of Elance and Guru are the best places to look for these people.
For a project of this type, you need a high degree of mutual trust, with both parties being able to understand the other's needs, and to communicate effectively with each other (more development projects fail because of poor communication that for technical reasons). I believe the only way you can achieve that is by working with people directly - not through an intermediary - and on a face-to-face basis.
If I was in your position, I would first try to find the right contractors by asking the people I trust for recommendations. I would also expect to meet the prospective contractors, and get to know them and understand how they work (and, remember, that's a two-way street). Only when I'd done that would I start talking about contract clauses and guarantees.
I also agree with Ted that no-one worth hiring is going to agree to those particular clauses you mentioned. But finding the right people is at least as important as getting the contract right.
I agree with the previous posters that your specifications are so rigid and risky for the contractor that you'll have trouble finding someone who's both capable and willing to accept your terms. I think you could absolutely find someone who's new to the field and willing to accept an unfavorable contract, but that person is the most likely to bungle your project through inexperience or ineptitude.
I think you can definitely hammer out an agreement close to what you've specified, one that will work with a more experienced and trustworthy contractor, but you should probably expect to make few rounds through each others' lawyers. If your contractor doesn't have a lawyer or accepts a really stringent contract off the bat, I'd take that as a sign of inexperience—for better or worse—and keep it in mind as I make my choice.
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