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A Consultancy Agreement is a contract under which the terms of service between a Consultant (the person or entity providing the service) and the Client (the person or entity receiving the service) are defined. This Agreement can be used when availing the services of the Consultant or independent contractor by an individual or a business entity.
A properly drafted Consultancy Agreement is essential to avoid any disputes or settling the disputes between the Consultant and the Client.
This Consultancy Agreement can be used in different scenarios including in the following:
1. Management Consultant: Also known as Business Consultants, they manage the strategic and variety of field in management.
2. Strategy Consultant: the Consultant looks after the corporate and organizational strategy, economic policy, government policy and so on.
3. Financial Advisory Consultant: the Consultant provides focuses on analytical, M&A, Corporate Finance and so on.
4. Human Resource Consultant: the Consultant helps in managing internal human resource as well as implementing new HR policies. HR Consultant also provides training programs to the employees of the Client.
5. IT Consultant: also known as ICT, Technology, Digital Consultants focus on the development and implementation of new technologies. They help the business entities with project management, process management, system integration and so on.
This Agreement defines the business relationship between the parties. In comparison to the normal employment agreement, the relationship between the Client and Consultant shall be of an independent contractor. In comparison to an employee, the Consultant will have more flexibility in completing the assigned tasks. On the other hand, the employee is bound to strictly follow the instructions of the employer and will have more control over the employee. An independent contractor is not entitled to benefits that are given to employees pursuant to various provisions of central and state laws such as provident fund, pension fund, insurance schemes, employee state insurance, workman's compensation, gratuity, bonus, maternity benefit, leaves and holidays. For more information on the difference between these two agreements, please check our guide: What is the difference between an Employee and an Independent Contractor?
How to use this document
This Agreement can be either used by a Client planning to get the Consultancy Services from a Consultant or a Consultant willing to provide the Service to a Client.
This Agreement can be used for entering into a Client-Consultant relationship. For other types of Services, the Services Agreement can be used. For the purpose of entering into an Employer-Employee relationship, the Employment Agreement can be used.
The details of both the Consultant and Client including office address if any, will be included under this Agreement.
The person filling this Agreement can mention a detailed SoW (Scope of Work). SoW defines the Services for which the parties have entered into this Agreement. It is better to specify the SoW in detail with all significant information to avoid any disputes.
Under the Payment Clause, it is specified how the consulting fee will be calculated (hourly, daily, monthly, etc.), method and period of payment.
The parties can include Confidential Clause or Non-Disclosure Clause in this agreement as per the requirement. This is used to protect the confidential information of the Client. If the parties want to fix more complete provisions concerning the confidentiality obligation (for instance: what should and should not be considered confidential information, for how long should they be kept confidential, etc.), they can sign a separate Non-Disclosure Agreement.
The parties can include a Non-Compete Clause, under which the Consultant will be restricted from competing with the Client for a particular period in a specific region. A Non-Solicit Clause can be added under this Agreement, under which Consultant will be barred from soliciting or recruiting the customers and employees of the Client. If the Client needs an exclusive Non-Compete and Non-Solicit Agreement, a separate Non-Compete Agreement can be used.
The parties can also include the Arbitration Clause in this agreement. Under the Arbitration, any dispute if arises between the parties will be referred to a third neutral person ("Arbitrator") appointed mutually by both the parties. The Arbitrator will hear both the parties and decide the case on merits. The decision of the Arbitrator will be final and binding on both parties.
To be a valid contract both the Consultant and Client have to duly sign this agreement on an appropriate stamp paper as defined under the Stamp Acts and rules of the concerned states.
Consultancy Agreements are enforceable under the Indian Contract Act, 1872.
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