A Brief Introduction About the Termination of Consulting Agreement
A Consultant is not a permanent employee of the company, but it is essential for the human resource department and a business owner to terminate the consultant with complete professionalism for one-time or on-going projects. When the business no longer needs the consultant’s services, or if the consultant is not performing up to the company’s expectations, it may be time to terminate the relationship. It will be necessary to write a termination letter.
Consultants work with a company on a contract basis to help with different types of businesses. Even though the consultant is not a permanent employee of the company, it is important for the human resources department or business owner to terminate the consultant with the same professional politeness and tact that would be used for a permanent employee.
Who Takes the Termination of a Consulting Agreement?
This agreement is a legal contract signed between two parties wherein the consulting services are terminated. These Consultants work for a company on a contract basis so they have a limited working period. The termination of consulting the agreement is formed to show the consultant a proper treatment like a regular employee.
Purpose of the Termination of Consulting Agreement
The purpose of termination of contract agreement is not always to end the partnership. It could also imply that the relationship or services offered have changed or that the contracted services have already been completed. Ending the contract might also open up the discussion for evaluating the services that have been provided so far.
Contents of the Termination of Consulting Agreement
- An offer to give services or a request to have services
- Acceptance of those services
- Valid consideration that both parties promise to uphold
- Mutual assent that both parties agree with the terms of the contract
- A legal purpose
- Effective date from which the contract shall end
- Acknowledgment that such notice is in line with the original contractual terms
- Transfer of all knowledge or other company equipment with the consultant
- NDA or non-compete for a period of time
- The reason for termination
- The date from which the consultant will not be a part of the organization
- The date by which all information has to be transferred
- The settlement of all dues to the consultant
How to Draft the Termination of a Consulting Agreement?
If you wish to draft a termination of the consulting agreement, then you have to provide some specific details. You can use a termination of consulting agreement template. Below are points on how to draft the termination of consulting agreement.
- Includes the legal name of both parties and the intended contract termination date. The contract names should match the names on the original contract.
- Lists the original contract date, the specific clause that allows you to terminate the agreement, and a copy of the original contract.
- Entire Agreement: Agrees that the contract is a mutual agreement.
- Ensures the termination of contract agreement is viewed as an entirety.
- Agrees that from the begin date of the termination agreement, no liabilities are owed.
- Each party agrees that there are no uncompleted liabilities or fees. This is one of the most important parts of the contract.
- You can download sample termination of consulting agreement from the website.
If the remuneration amount from the termination is lower than expected, then they can take the help of the legal team. After that, they can negotiate the remuneration price with the company to receive a better offer.
Benefits & Drawbacks of the Termination of Consulting Agreement
- The major benefit of a consultant termination letter is that a company can give legal notice to the consultant regarding the end of their service.
- This contract can be used as a recruitment tool by offering a form of job security
- Employment contracts can also be a way to have an additional layer of protection with individuals who will be given information that is vital to the company’s success.
- It is not easy to draft and involves complex legal terms
- The party who has been terminated must immediately face the potential financial fallout of their termination.
- Impact on Future Employment Prospects
What Happens in Case of Violation?
When the Termination of Consulting Agreement is violated it constitutes a breach of contract. The place and method of dispute resolution shall be as per the agreement.
It can be violated in multiple ways. When terminating a contract, one party may be happy with the services but no longer requires them. They may say that while the other party’s services were excellent and appreciated, the company has decided not to continue the program, hence, they are terminating the consultant’s contract.
Violation of contract can happen in case of non-transfer of equipment, breach of non-compete clauses or other such ways. In those cases, companies may file for specific performance or an injunctive relief
The termination of contract agreement should be customized to your specific needs. The goal is to have a clear understanding of termination between both parties. The termination of contract agreement can prevent legal disputes, disagreements, and it can help to set expectations going forward.
Sample of Termination of Consulting Agreement
A sample of the agreement Termination of Consulting Agreementcan be downloaded from below.
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