Please keep in mind that this is not legal advice. The information provided herein is for educational purposes only. If you would like to get in touch with a lawyer to help you draft, interpret, negotiate or resolve a dispute about independent contractor/consulting agreements, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers). We have Toronto and Ottawa lawyers who can assist you in this regard.
In this blog, I’ll be discussing a basic structure one could use to put together an independent contractor/consulting agreement.
Parties
Typically, at the beginning of the contract you’ll need to properly identify the parties (e.g. individuals, corporations, etc.). You should make sure that this is done with utmost precision (i.e. hire a lawyer!) because if there are any mistakes here, you’ll be done for in case of a dispute.
Effective Date
You should also mention when the independent contractor/consulting agreement is being entered into.
Recitals
This is the background leading up to the terms and conditions of the independent contractor/consulting agreement. Recitals are part of the agreement and you can include wording in the General Terms (at the end of the agreement) to reflect this. So in this part, you’ll want to include something saying that the parties wish to contract for X and do so on the following terms and conditions.
Agreement – Basics
After the recitals, I like to include provisions which make it clear that the parties acknowledge that the recitals are fair, true and complete and that this agreement supersedes and replaces all other prior agreements of the same nature.
Terms of Engagement
Here, you’ll want to include provisions about the scope of engagement (i.e. what the client is hiring the independent contractor to do), the character of the relationship (i.e. independent contractor/consultant and not employer; you’ll also want to discuss liability for income tax and other withholdings and remittances), and equipment (e.g. the independent contractor/consulting is responsible for supplying and maintaining).
Term and Termination
You’ll also want to discuss the term and method of terminating the agreement. In the latter, you’ll typically find the concept of Just Cause (e.g. which could include serious misconduct or breach of the independent contractor/consulting agreement), which a client can raise to terminate the independent contractor at any time. You’ll also find termination provisions dealing with a party unilaterally ending the contract by simply providing notice, the contract ending because of a breach of a confidentiality provision, or the contract ending because the independent contractor has died, become insolvent/bankrupt, or has attempted to illegally assign its interest in the contract to a third party.
Remuneration
In this part, you’ll want to discuss what the independent contractor/consultant will get paid, how often, how that can be adjusted, etc. You’ll also want to, once again, discuss the implication of withholdings and taxes (i.e. who is responsible).
Representations and Warranties
Here, you’ll want to put provisions in place to try to ensure that the independent contractor/consultant is the right person for your needs. You could include a standard of care provision (e.g. the independent contractor will perform the services equivalent to a qualified, competent, and prudent professional, etc.), a qualifications requirement, and a requirement that the independent contractor/consultant comply with company policies and standards. You could also include a provision whereby the independent contractor/consultant states that there are no known proceedings or investigations against him or her that could result in their losing their qualifications and that there are no restricting arrangements in place that would prevent the independent contractor from executing or properly performing the agreement.
Confidentiality and Non-Disclosure
Here, you’ll want to include provisions dealing with confidential information. You’ll need to define it (also, this includes a section of what confidential information is NOT). You’ll need to place restrictions on the independent contractor/consultant regarding it (e.g. non-disclosure, protection, non-use, etc.). You might also find provisions here dealing with the return and/or destruction of confidential information upon the client giving notice to the independent contractor/consultant.
Proprietary Rights
This section of the agreement deals with who owns proprietary rights and enhancements to those proprietary rights during the course of the engagement. Make sure you get a lawyer to help you understand and draft these provisions (VERY IMPORTANT!).
Indemnification and Limitation of Liability
You should spell out in this section that the independent contractor/consultant will indemnify the client for the client’s failure to deduct expenses or contribute payments (e.g. employment insurance, Canada Pension Plan) on behalf of the independent contractor. With respect to the limitation of liability, this is a great provision to have in place that says, in capital letters, that the independent contractor agrees that the client will not be responsible for special, indirect, exemplary, punitive or consequential damages and then list out some types of damages for which the client will not be responsible (e.g. lost profit or revenue, loss of property, loss of business reputation, etc.). Notwithstanding all of this, you’ll want to include provisions saying that the client’s cumulative liability for breach of contract, commission of a tort, strict liability, negligence, or otherwise is $XXX.
General Terms
Here, you’ll find terms dealing with things like (but not limited to):
- Notice (how do the parties give notice under the agreement for things like termination).
- Assignment (e.g. is this to be done by the parties having to consent in writing?)
- Survival of terms (i.e. if a term is found by a court to be void, should the rest of the agreement survive?)
- Governing Law (which jurisdiction governs the interpretation and enforcement of the agreement?)
- Amendment (how is this to be done?)
- Entire Agreement (i.e. this agreement supersedes all other agreements – whether oral or written – relating to the same subject matters in the agreement)
- Waiver.
- Interpretation
- Independent Legal Advice
- Currency.
Please keep in mind that there are many other kinds of terms and conditions you can find in the general terms section of this agreement. You should consult with a lawyer to address these general terms.
Execution
The final section of the agreement (other than any schedules or exhibits) requires that the parties, or duly authorized representatives of the parties with the power to bind, execute the agreement. It is sometimes a requirement that witnesses be present and sign their names alongside the parties’.
In case you’re a Client and looking to engage the services of an Independent Contractor in Ontario, look no further:
Independent Contractor Agreement (Client) – No Statement of Work
This Agreement can be used by a Client who wants to engage the services of an Independent Contractor (e.g. a consultant, a professional, a general worker, etc.) without creating an employment relationship. The “Client” means that this Independent Contractor Agreement favours the Client – for example, through notice, termination, standards of care, and restrictive covenants, etc. The “No Statement of Work” means that the services to be performed by the Independent Contractor are dealt with in the actual agreement and not in a Schedule (attached and incorporated into the agreement as a “Statement of Work”). There will be different versions of this agreement which favour both the Client and the Independent Contractor and which may include Schedules. Schedules aren’t absolutely necessary. They’re just one way of having an agreement instead of writing things out in the actual agreement, you simply modify the Schedule. Here’s the sample Video Guide that comes with this Independent Contractor Agreement (Client) – No Statement of Work:
Now, if you happen to be looking for an Independent Contractor | Consulting Agreement with a Statement of Work, then you’re in luck. Just go here and scroll down and, voila! The “Statement of Work” means that there is a schedule in this particular Independent Contractor Agreement to describe the services (instead of writing everything out in the actual agreement, it’s included in a Schedule). Here’s the sample Video Guide that comes with this Independent Contractor Agreement (Client) – With Statement of Work:
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Note: this information and these sample video guides are NOT legal advice and are provided for informational purposes only. If you need an Ontario lawyer, go to Dynamic Lawyers and make a post.
