When a consultant is called to provide services to an individual or a business organisation, he or she will create a consultancy agreement, which defines the terms of service between the consultant and the client. The agreement helps both parties to protect their interests and ensure the agreement is followed by clarifying all the agreed-upon demands.
How should a consultancy agreement be structured?
A consultancy agency’s diversity attracts a variety of clients with varying needs, so it is wise to say that each consulting agreement is tailored to meet the needs of the client, and therefore isn’t a fixed template. It is possible, however, to make your consultancy agreement india more comprehensive and useful by including the following clauses.
Name of the parties
As the first and foremost requirement of the agreement, it must be clear who is being drafted, that is, the consultant and client, as well as the exact nature of their business relationship.
Scope of work
As one of the most important clauses of the agreement, this part of the contract specifies the nature and scope of the work that must be performed. Specifically, it specifies what services will be provided by the consultant and how they will be provided. It specifies, for instance, whether a consultant will assist you in resolving productivity issues, or how he will assist you in raising money for your business and facilitating fund mobilisation. A detailed description of the services is provided in the agreement. Thus, this clause helps ensure clarity during the transaction by preventing confusion prior to or during the completion of the work.
The clause specifies the duration of the services. This includes the start date as well as the completion date. It is also recommended to include timelines that can be used to track progress.
Usually, an agreement is terminated when either party breaches it, but some agreements may also permit the termination under other circumstances. As part of this clause, the parties specify the circumstances, if any, in which they may terminate the contract. It also specifies how to terminate the contract in such a case and provides the notice period, if any.
As one of the most important clauses, the compensation clause specifies the exact amount of money that the client will pay the consultant before consulting services are provided, as well as the method of payment and the date of payment.
Relationship of the parties
Consultants typically do not work for client organisations, but rather are independent individuals or organisations that work independently. This clause defines the business relationship between the consultant and the client. Although they have some powers, they are not entitled to the company’s employee benefits. In addition, they must pay their own taxes. To determine the factors that go into determining these factors, it is necessary to determine the relationship between the parties.
Information such as client lists, operations strategies, future plans, etc., should be kept confidential for every business. Whenever two organisations work under contract, such as a consultant and a client, they receive sensitive information about one another. Therefore, every contract contains a confidentiality clause, which obligates each party to protect the other party’s confidential information against competitors and general public disclosure.
Intellectual property rights
A number of provisions are included in this clause to protect the intellectual property rights of both parties. Usually, these types of works are considered “work for hire”, and the rights to them belong to the client. Aside from that, the clause also prohibits the consultant from improperly using the client organisation’s trademarks.
Indemnification clauses define the parties’ obligations towards each other if an unexpected problem arises, as well as the level of protection each party will receive from negligence on the part of the other. In other words, if one party loses, harms, or is held liable for anything by the other, the latter will compensate the former accordingly. In this way, the parties are protected from potential financial burdens.
There is the potential for the results to not come out as planned when a client and consultant work together. It is possible, for example, that you hired a consultant to increase the productivity of your company, but the productivity has not increased as much as you had hoped. The consultant may want to sue you in such a case, just as you may want to sue him in certain circumstances. But both parties would like to minimise their liability. Having a clear and detailed clause determining each party’s liability toward the other is, therefore, the best solution.
It is inevitable that parties to an agreement will have disputes. The dispute resolution clause determines how such disputes will be resolved. It describes the mediation process that the parties should opt for, which is more time- and cost-effective than court proceedings – especially in small disputes.
Conflict of interest
Consultants are prohibited from providing their services to competitors of the client while working with the client through this clause, which prevents conflict of interest.
During the period in which the consultant provides services to the client, he is responsible for any expenses which he incurs for the performance of the work and which the client is responsible for paying. As a result, this clause establishes this principle and specifies how the consultant’s expenses will be reimbursed.
A clause in this agreement states that modifications to the existing terms of service must be made in writing and officially approved, in order to prevent parties from using unscrupulous or unfair methods to gain an advantage over others.
Signature of both parties
The document must be signed by both parties and dated when it was signed. As a result, it gives legal value to the document. The signature indicates that the parties have read the terms of service and agree to them. Once the agreement is signed, the parties cannot later refuse to follow the rules outlined in it.