What is a consultancy agreement?
A consultancy agreement is a contract between a client and an independent consultant (i.e. the individual or company delivering the work), by which the client engages the consultant to provide services. It may also be referred to as a freelancer agreement or a services agreement.
The consultancy agreement sets up the rights and obligations of both parties relating to the consultancy services. The exact content will depend on the nature of the services. However, all consultancy agreements should at least be used to (i) protect the client’s confidential information from unauthorised disclosures to third parties by the consultant, and (ii) ensure that the client owns the intellectual property rights in the work done by the consultant.
Who is a consultant?
A consultant is an independent contractor or worker who is not the client’s employee and not protected by employment law. Therefore, the relationship between the consultant and the client is regulated by whatever the parties establish in their consultancy agreement.
When do you need a consultancy agreement?
You need a consultancy agreement to govern your working relationships with your freelancers, agencies, or other service providers that you are appointing, but not hiring as your employees.
What a strong consultancy agreement should include?
A strong consultancy agreement should include the following:
1. the duration of the services being provided in the agreement;
2. detailed rights and obligations for both parties:
a) consultant’s responsibilities during the agreement, e.g. to deliver the services diligently and to a high standard, duties to report the status of the consultancy’s work, minimum amounts of time required to deliver the services;
b) client’s responsibilities, e.g. responding promptly to queries, paying the fees, providing its information security policy;
3. fees and payment terms;
4. expenses, i.e. whether the consultant is reimbursed for some specific expenses;
5. confidential information and non-disclosure obligations relating to the client’s information which the consultancy may see or find out when providing the services;
6. intellectual property rights, i.e. the client is the owner of any intellectual property rights that come up in the course of the consultancy services;
7. consultant substitution, i.e. that the consultant can substitute itself with another qualified professional with the client’s consent (keep in mind that the substitute must have at least equivalent skills and qualifications as the consultant);
8. consultant’s insurance and liability for any breach of the contract or negligence;
9. how to terminate the agreement, e.g. if the consultant breaches a term of the agreement or is declared bankrupt.
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This Basic Training article was written by Silvia Dal Cin for Legal Sidekick. Legal Sidekick is the legal platform for startups. We offer automated contracts and loads of startup legal resources and guides. For support with consultancy agreement and other legal queries, contact us if you need help.