What is a Consultancy Agreement?
A consultancy agreement is required when the company appoints an external consultant. The company may like to avail their services to do some specific work so they hire someone who has expertise in that field. In such cases, it’s always better to enter into a contract with the consultant.The consultancy agreement is made between the company and the consultant. It outlines the scope of work to be performed by them and other terms and conditions related to their appointment in the company. It is a kind of service agreement only.
What are the major elements of the Consultancy Agreement?
Major elements of the consultancy agreement are:
1. Scope of work: The consultancy agreement clearly specifies the duties, obligations, and services to be performed by the consultant. The methods of work are generally not defined. The consultant can exercise their sole discretion in performing such work.
2. Term: The time period for which the services of the consultant are required by the company is also mentioned in the contract.
3. Payment terms: The payment terms include the amount of compensation to be paid to the consultant when to pay (monthly, quarterly, etc.), and the mode of payment. Also, if any out-of-pocket expenses are allowed to them will be mentioned in the agreement.
4. Confidentiality: The consultant is expected to keep company information confidential except for the information already known to the general public.
5. Termination: The agreement specifies the right of either of the parties to terminate the contract and notice period if required.
What are the benefits of a Consultancy Agreement?
Consultancy agreement benefits both the company and the consultant. It covers all the aspects related to the tasks to be performed within said timelines. The agreement helps to avoid misunderstandings on the part of both the consultant and the company. It also serves as a legal document in the event of any dispute between the consultant and the company.