Consulting Agreements is an engagement between a consultant and a client for availing certain specified services for a specified period of time. It sets out the services and obligations that exist between the company and the consultant.
This agreement will set out clearly that the consultant is not an employee of the company. The Consultant will provide only specific service to the business for the specified term. Once the contract term has expired the relationship will end.
Benefits of entering into Consulting Agreement
Execution of standard agreement is an important tool for managing a consulting business. Consulting agreements varies across different services and sectors.
Written description of the services is always a welcome option to avoid the disputes
Written agreement provides clarity between the parties in respect of the job and work assigned
Executing agreement before performing prevents disappointment or confusion between the parties of what kind of work is to be don or not done
Executing agreement helps in building relationship because Consulting Agreement clearly spells out that the consultant is an independent consultant and not an employee.
Signing of Consulting Agreement
Consulting Agreements are signed by the prospective consultant and an authorized representative of the company.
What Does A Consultancy Agreement Usually Cover?
Before entering into any kind of Agreement, parties needs to be cautious in order to avoid the uncertainties in future. So, following are the terms that should be incorporated into any consulting agreement at the initial level only.
1. Scope of the services
This is one of the important clause that must be incorporated in a Consulting agreement which defines what services will be provided and not provided by the consultant for their business. It needs to specific. The more detailed consulting contract is, the lesser wil be the chances of dispute in the future.
2. Terms of Payment
Everyone wants to be paid for their services. By clearly defining that whether payment is to be in lump sum or made in installments, you are avoiding the situation which could lead to disputes in future
3. Reimbursement of Expenses
While executing an agreement ensure for incorporating a clause for reimbursement of all the expenses reasonably incurred in the performance of the services provided by the consultant.
4. Duration and it renewal
The time from which the consultant will start providing the services should be clearly defined. It should also provide that the same may be renewed on mutually acceptable terms.
5. Dispute resolution or mediation
The parties should always pay careful attention to insert a dispute resolution clause in your consulting agreement that requires both the parties to pursue mediation and dispute resolution mechanism in case of dispute before proceeding for legal action.
6. Liability Clause
This clause must be stated in detail that to what extend the consultant will be liable to the misconduct due to his carelessness or negligence.
7. Termination Clause
In case of breach of confidentiality, or conduct of illegal activity, the company/ client has a right to terminate the services of consultant by giving a notice period. By inserting this clause the parties shall be relieved from future performance of their rights and obligations under this agreement .
8. Confidentiality
This is the most important clause of any agreement which clearly spells out on the part of consultant that all confidential information related to financial status, projections etc of the client shall be kept confidential without their knowledge and consent. In case if disclosed under the requirement of law/regulation or any order of any court/ authority it should be clearly specified in the agreement.
9. Governing Law
Agreement must provide that the agreement shall be governed by and interpreted in accordance with the laws prevailing and subsisting in India