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Consulting Services Agreement FAQ Canada
The problem with oral agreements is that they are difficult to prove. If a dispute arose, a court would have to hear evidence and decide whose version of the truth to accept. If there is a written agreement, courts will generally be obligated to uphold its terms even if they don't agree with them.
Consulting Services Agreements typically address the following:
In addition, Consulting Services Agreements may also provide specifics on:
The parties to the Consulting Services agreement are the Customer and the Consultant. The Customer is the individual or business seeking the Consulting Services while the Consultant is the individual or corporation providing the Consulting Services.
A Consulting Services Agreement is a type of Service Agreement. Consulting Services Agreements are used to hire Consultants or independent contractors, not employees. A Consulting Services Agreement is limited to a specific project or time period. Employment Contracts are used to hire employees.
Independent contractors are individuals who provide services for a fee but are not considered to be employees because they work for themselves and do not have an employer. Examples of independent contractors include those who operate their own practice or trade in fields such as plumbing, carpentry or graphic design or in more specialized technical settings such as accounting, engineering or computer programming.
The law treats employees and independent contractors differently, but it is not always easy to establish which category an individual falls into. In cases of dispute, courts will determine the appropriate category by examining a number of factors. Some factors will be considered more important than others. Examples of relevant factors are:
No. If you need a Master Service Agreement as well as subordinate agreements, you should consult a lawyer qualified in your jurisdiction.
The end date is the date when the Consulting Services under the agreement are no longer provided or needed.
Notice refers to the amount of time that is provided by one party to another when they wish to end their obligations under the agreement prior to the agreed end date. The purpose of notice is to allow the Consultant to find other employment or the Customer to find a replacement Consultant. In most jurisdictions, the law does not offer independent contractors the same minimum notice protection that is typically offered to employees (unless the notice is expressly provided in the agreement). However, courts may award notice (or pay in lieu of notice) to an independent contractor if he/she can show that he/she was economically dependent on the Customer. In those circumstances, courts may impose a reasonable notice period or damages.
The Consultant can be paid or compensated in many different ways. If the Consultant will be paid a certain amount (rate) for each time period, use "Hourly", "Weekly", "Monthly" or "Yearly" as appropriate. If the Consultant is to be paid a certain fixed amount for the complete performance under the agreement, use "Fixed Amount". If the Compensation is several payments or involves the trade of services or goods, use "Other". If you have a certain rate for the services performed together with additional remuneration, use this question for the basic rate and use the "Additional Compensation" question to describe the additional compensation.
Select the form of currency for all monetary amounts (compensation, expenses, etc.) referred to in this agreement.
Additional compensation refers to any compensation the Consultant will be paid in addition to the basic compensation specified under the question "How will the Consultant be paid?".
If the Customer wishes to provide any services, tools, office space, materials, etc. to the Consultant to perform the services, then the Customer should select "Yes" to the question "Will the Customer be providing anything to the Consultant?" and then describe what he/she is providing.
This question refers to whether the Customer will be penalized for failing to pay the Consultant on time. Select "Do not specify" to not mention whether there will be penalties for late payment. Select "No" if the Agreement will expressly state that there are no penalties for late payment. Select "Yes" to be able to expressly state what the penalties will be for late payment.
This question refers to whether the Consultant will be penalized for failing to perform the services on time. Select "Do not specify" to not mention whether there will be such penalties. Select "No" if the Agreement will expressly state that there are no such penalties. Select "Yes" to be able to expressly state what the penalties will be for failing to perform the services on time.
The confidentiality clause prevents the Consultant from using or disclosing the Customer's confidential business information to a third party.
The non-competition clause prevents the Consultant from competing with the Customer.
The non-solicitation clause prevents the Consultant from inducing others to leave the Customer's employment.
A non-competition clause prevents the Consultant from unfairly competing with the Customer after the employment is terminated. This means that when the Consultant's work comes to an end, he or she cannot take a job at a business which is in direct competition with the Customer. A non-solicitation clause prevents the Consultant from inducing other employees or contractors from leaving the Customer or from interfering with the Customer's relationship with other employees in general. This means that the Consultant cannot invite the Customer's employees to move with him or her to another workplace. Courts MAY NOT enforce a non-competition or non-solicitation clause if:
You can only prevent a Consultant from engaging in a business that competes with your business within a geographic area large enough to protect your business. The restriction must be reasonable so that the employee is not restricted from engaging in his or her usual trade in an area that could not affect your business.
Mediation is a process where an impartial 3rd party or mediator facilitates the negotiation of a settlement between parties to a dispute.
Arbitration is a process whereby parties to a dispute mutually agree to an impartial referee who hears and makes a binding decision.
Both processes are superior to the court process when there is a long term relationship involved and the survival of the business relationship is desirable. These processes can be less expensive, more expedient, and more efficient than the court process.
Our standard clauses are those clauses which are most often included when creating a Consulting Services Agreement. Some of the clauses deal with:
If you don't want all these clauses in your agreement, select 'No' and you can pick and choose which clauses to include.
A Corporation is a duly registered corporate entity. An organization can be any other type of business entity such as a sole proprietorship, partnership, or a Limited Liability Company. If you are entering the agreement as the representative of a business then you would select the Corporation/Organization option. If you are acting strictly for yourself then select the Individual option.
The Assignment clause prevents the Consultant from transferring their rights or responsibilities to another party without the Customer's consent.
The Capacity/Independent contractor clause reiterates that the Consultant is hired as an independent contractor or consultant and not as an employee of the Customer. Note that disguising an employment relationship as an independent contractor in order to avoid having to pay employee benefits like holiday pay, pension, worker's compensation and income tax is illegal. A court may find that a work relationship is an employee/employer relationship if the person hired is closely supervised and directed by the hirer. An independent contractor usually provides a skilled service, is paid for a specific result, controls how the services are provided, is free to refuse additional work, and usually bears the cost of repairing faulty work. A court would take all these factors into consideration when deciding if a particular work relationship was a sham contracting arrangement.
The Modification of Agreement clause states that any changes to the agreement must be made by written consent of all the parties to the agreement.
This clause provides that all dates and time limits are strictly enforced.
The Entire Agreement clause confirms that there are no other provisions or terms outside of this agreement.
The Severability clause declares that if the courts find that a particular clause of the agreement is invalid or unenforceable, the validity of the remaining provisions of the agreement will not be affected.
The Return of Property clause states that the Consultant will return all property belonging to the Customer upon termination of the Agreement.
This clause allows the parties to completely absolve the Consultant in the event that any losses, damages or any other liabilities arise out of the services provided.
Where this clause is selected, the contract cannot also have an indemnification clause.
An Indemnification clause is where the Consultant agrees to pay back the Customer for claims made against the Customer by any third party for any damage or loss arising out of the provision of the services.
Where this clause is selected, a limitation of liability clause cannot be selected.
The Legal Expenses clause reiterates that legal costs and fees associated with any legal action will be awarded to the successful party.
The Notice clause indicates how all notices under this agreement will be given.
The Enurement clause declares that any rights and responsibilities of the parties will pass on to their successors.
The Titles/Headings clause states that the titles/headings of each section are inserted for clarification only and are not for purposes of interpretation.
The Gender clause declares that words in the singular or masculine sense also encompass words in the plural and feminine sense, respectively.
The Waiver clause states that if one party waives its rights to enforce a breach by another party, this failure to enforce its rights will not be held as a waiver of any subsequent breaches.
The Ownership of Materials clause declares that materials developed in the course of the services will be the exclusive property of the Customer. The clause further holds that the Consultant will not be held responsible for damages resulting from the use of the mentioned materials for work other than services contracted for in the agreement.