A consultancy agreement is a legal document that is drawn between any company and an external consultancy firm or individual consultant. The said company may choose to employ such a consultant for a short-term program or project. A company chooses to hire an external consultant as they are experts in a particular field. A field which is important to a company for a particular project. When the nature of employment is contractual, it is always best that a consultant agreement is signed by the two concerned parties. The agreement stands as a legal proof between the said company and consultant based on the initial criteria.
CONSULTANT AGREEMENT REQUIREMENTS
A Consultant Agreement is needed when a company/organization uses the services of a consultant for some project. A company may contract work in a domain/field that is different from their regular work requirements. In such a case, a company chooses to take the help of a consultancy agency/consultant rather than hiring full time employees for this project. Such a consultant will have in depth focused knowledge in that area, which will help the firm for this said project/s. This kind of hiring arrangement helps the company/organization keep long-term costs in check. It also helps the company/organization to work on other varied projects. In such a case, to protect the interests of both parties they enter into a consultant agreement. A consultant agreement for services provided ensures there is no miscommunication/cheating from either side. This agreement binds both parties via a legal document.
PARTIES INVOLVED IN A CONSULTANT AGREEMENT
The consultant agreement is made between the company and the consultant/consultancy agency. The agreement covers the scope of work/length of employment/payment and salary concerns/and any other terms and conditions. A consultant agreement is quite similar to a service agreement.
SALIENT POINTS OF A CONSULTANT AGREEMENT
- SCOPE OF WORK: The consultant agreement will specify all the duties/requirements/ responsibilities/and functions the said consultant has to execute. The method of working may not be defined though, but the target expectations of the consultant should be mentioned. Thus, the employer usually gives the consultant the freedom to work as per their choosing
- TERM: The Term sub-clause mentions the timeframe; the company needs the services of the consultant. The term also helps the consultant determine the timeframe they have to contribute to a project. This could be quantified in years/or project completion time
- PAYMENT TERMS: The payment terms include all the compensation details; the consultant will receive from a company/organization. It also specifies the manner in which the payment will be made such as what payment method will be used/whether the consultant is eligible for any extra allowances
- CONFIDENTIALITY: In some cases, the work a company has hired the consultant for may be secretive. Thus, a confidentiality clause will be added in the consultant agreement to ensure all the data they share remains private. Such a provision ensures that the confidentiality aspects of the work between the company and the consultant
- TERMINATION: The termination clause describes the circumstances under which the said company is allowed to terminate the consultant’s employment. This clause also mentions how much notice has to be given/under what situations the consultant can leave the job contract mid-way
- NON-COMPETITION: This section deals with how much time a consultant has to wait before they can engage with other competitors of the company. It details that during the stipulated time frame, the consultant cannot engage with competing companies in any manner
- NON-SOLICITATION: The non-solicitation clause states that the consultant cannot solicit any customers from the parent company post project completion. It also states that the consultant cannot recruit/hire any of the company’s employees as well
- INDEMNIFICATION: This clause protects the consultant from lawsuits that may arise, due to the Client’s business activities
GENERAL TERMS IN REGARDS TO A CONSULTANT AGREEMENT FOR SERVICES
- The client refers to the organization/company/firm/employer who/which is hiring the consultant, and with whom the consultant enters into the Consultant Agreement
- Confidential information states that confidential information owned by the Client, which the consultant has access must be kept private. In most cases, this will include product details/formulae/business models/records/business plans/price information/client data.
- Force Majeure clause refers to any cause/event beyond the entity’s control which might impact the deal. This usually includes situations such as Acts of God/War/Riots/Arson related accidents/Restrictions laid down by government authority
CONSIDERATIONS BEFORE SIGNING A CONSULTANT AGREEMENT
- A consultant should go through the consultant agreement for services, and correct any mistakes/ and clear all their doubts. It’s advisable for an individual to have his or her lawyer read the contract and explain every clause to them in detail. A consultant must ensure the consultant agreement is well understood between the company and him or her is regards to the expectations about the work
- A consultant must not assume the company will be upset if he or she voices concerns over individual sections or clauses in the consultant agreement. Any company/organization knows how negotiations work. They will not have reservations discussing the clauses with a consultant if he or she wants
- The consultant agreement must be used to define a consultant’s relationship with the company. This helps prevent any disputes in the future. It also makes the work process a smooth and productive equation for both parties involved
- In case a consultant is employed by a consultancy firm, they have to ensure the consultant agreement does not violate any of their agency’s policy. Since most companies have policies in regards to conflict of interest/commitment, a consultant should ensure the consultant agreement does not jeopardize any such policies
- A consultant should go through the confidentiality clause and ensure he or her understand what is expected of them. They should ensure the agreement protects their rights/Internet Privacy and data concerns
- It is always advisable to get help from a legal expert from ACE ALLIANCE to understand all the terms in the contract. Our team can help with you with issues that you don’t understand in the agreement. Our team will also help protect your best interests.