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What is a consultancy agreement?
A consultancy agreement is a legally binding contract entered into by a consultant to deliver specific consultancy services to an individual or company referred to as the client. It is also referred to as a consulting agreement, consultancy services agreement, or independent contractor agreement in some jurisdictions.
The consultant is often regarded as an independent contractor rendering services to or on behalf of a client. This is why a consultancy agreement falls under the category of services agreement; after all, consulting is a service.
The agreement is expected to spell out the terms governing the delivery of consultancy services and the performance of both parties' obligations. It outlines the objectives of the agreement and the guidelines to be followed for the entire duration thereof.
When should I use a consultancy agreement?
Regardless of the scope of project deliverables or project duration, you should have a consultancy agreement when hiring the services of a consultant or contractor. A consultancy agreement allows you to outline the requirements and expectations regarding the services to be rendered and the exchange of value and resources between both parties. So you should use a consultancy agreement before agreeing to hire the services of a consultant.
You should know that it is crucial to specify whether the consultant will operate as an employee of the client due to the implications of employee-employer relations. This is to nullify the existence of any entitlement to employment benefits, workers' compensation, or other similar levies.
Also, know that intellectual property and confidentiality clauses are among the most controversial aspects of a consultancy agreement. This is because the consultant is the creator and author of the work product or its derivatives and elements and owns the related copyright. So the client can only own such copyright if granted license by the consultant or copyright is assigned or transferred.
What should be included in a consultancy agreement?
Though the construct of a consultancy agreement often depends on the specifics of each contract such as services, industry, and clients, it should have the following among other things:
- Name of parties
- Specific consultancy services
- Duration of agreement
- Scope and delivery of services
- Compensation and payment
- Warranties and restrictions
- Taxation and Insurance
- Employment status
- Non-compete and non-solicitation
- Intellectual property, license, and confidentiality
- Substitution, subcontracting, and assignment
- Termination of agreement
- Governing law and jurisdiction
- Schedule to the agreement (e,g, timetable, deliverables, and materials)
Is a consultancy agreement legally binding?
A consultancy agreement is a legally binding agreement between the consultant and the client. It is regarded as a valid and legally enforceable representation of both parties' intentions to be bound by the terms of the agreement.
While a consultancy agreement generally retains its legally binding effect for the entire duration of the contract, some specific clauses further survive the contract's expiration and termination. This may include intellectual property, confidentiality, non-solicitation, and non-competition clauses.
Such contractual document serves as reliable evidence if disputes arise from a breach or non-fulfillment of obligations under the agreement. As a result, having the signed legal documentation of your contract with a consultant can help prove your case and avoid liability for damages. Ultimately, it protects your interests and your company or business.
You should ensure that you give the other party enough time to review the content of the agreement and have the opportunity to negotiate the terms before signing the agreement. This will help your case and increase your chances of getting damages at the end of the day. You should also make sure that the appropriate parties append their signatures and that all other related undertakings or understandings are contained in the appendix to the consultancy agreement.
Finally, ensure that your consultancy agreement complies with the relevant state laws and regulations guiding such agreements. Different states have different provisions and guidelines for consultancy services and some specific consultancy agreement clauses like intellectual property and non-competition or non-solicitation.
How do I write a consultancy agreement?
Though you can write your consultancy agreement, it is a service agreement that requires some level of legal contract drafting expertise in the review of specific clauses of the agreement. Having a well-written and detailed agreement covering relevant clauses and legal issues will help reduce ambiguity and controversy and be on the safer side of the law if a dispute arises.
At Easy Legal Docs, we offer free and easy templates that provide you with a fast and reliable alternative to creating a consultancy agreement from scratch. You can download and edit our generic agreement and customize it to suit your needs.
All our templates are available for Microsoft Word (.doc), Adobe (.pdf), or using your Google Docs account. You can also print an online copy from your browser. All you have to do is answer just a few simple questions, and we will generate your consultancy agreement in minutes.