Consultancy Agreement Between Two Companies Template for England and Wales

When your company needs to engage another business for professional consultancy services, a Consultancy Agreement Between Two Companies provides the essential legal framework. This contract, governed by the laws of England and Wales, establishes clear terms for the business relationship while protecting both parties' interests and ensuring compliance with relevant legislation including IR35 requirements.

When do you need this document?

You need this agreement whenever your business is engaging an external company to provide professional advisory services. This includes situations where you're hiring a specialist consultancy firm for strategic planning, technical expertise, or project management. The document is particularly crucial when the consultancy involves access to confidential information, intellectual property development, or long-term advisory relationships. It's also essential when you need to ensure the engagement complies with IR35 legislation, which determines whether the relationship should be treated as employment for tax purposes.

Key legal considerations

The agreement must clearly define the scope of services to avoid disputes over deliverables and expectations. Payment terms should specify rates, invoicing procedures, and any expenses that will be reimbursed. Intellectual property clauses are critical, determining who owns any work product, methodologies, or innovations created during the consultancy. Confidentiality provisions protect sensitive business information shared during the engagement. Termination clauses should outline notice periods, circumstances for immediate termination, and what happens to ongoing work and payments. Limitation of liability clauses help protect both parties from excessive claims, while indemnity provisions address responsibility for third-party claims arising from the consultancy work.

Legal requirements in England and Wales

Under English contract law, the agreement must contain the essential elements of offer, acceptance, consideration, and intention to create legal relations. The Supply of Goods and Services Act 1982 implies certain terms regarding the standard of service delivery, requiring services to be carried out with reasonable care and skill. If personal data will be processed during the consultancy, compliance with the UK General Data Protection Regulation and Data Protection Act 2018 is mandatory, requiring appropriate data protection clauses and potentially a separate data processing agreement. The Contracts (Rights of Third Parties) Act 1999 may allow third parties to enforce certain contract terms, so consider including exclusion clauses if this is not intended. Copyright, Designs and Patents Act 1988 governs intellectual property rights, while the Trade Marks Act 1994 protects trademark usage. IR35 legislation requires careful consideration of the working relationship to ensure proper tax treatment and avoid creating an employment relationship where none was intended.