What is the difference between a contractors contract and a consultancy agreement?

A contractors contract and consultancy agreement are similar. A contractors contract is an agreement between a company (usually referred to as the “principal”) and a service entity (usually referred to as the “contractor”) where the contractor agrees to provide a service to the principal for a fee.  The contractor may agree to provide a one-off service for a set fee or continuing services to the principal for a pre-determined length of time for a fee.  An example of a contractor agreement is an agreement between a builder and tradesperson, where the tradesperson is engaged to perform their trade on a building site. A consultancy agreement is an agreement between a company (usually referred to as the “principal”) and a consultant (usually referred to as the “consultant”).

The consultant may be an individual or a company.  The consultant is engaged by the principal and agrees to perform consultancy services to the principal for a fee.  The consultant may agree to perform the consultancy services on a one-off basis for a set fee or on a continuing basis either for a pre-determined length of time for a fee or as required for a set fee.  An example of a consultancy agreement is an agreement between a company and an IT consultant, where the IT consultant has expertise in IT services and is engaged by the company to provide those services to the company. The type of document you decided to use will therefore largely depend on your individual circumstances, and the accepted conventions in the industry you work in. There are few genuine legal differences between the two types of contract, so this is not necessarily an issue you should spend too much time pondering.

If you feel like you need some assistance with making the decision, the LegalVision team of contract solicitors can help.