Legal Provisions regarding Freelance Agreements
By Bhavneet Vohra July 29, 2016
It is not necessary that every person who is assigned tasks or projects to be accomplished by a particular company or a venture is a permanent employee. There can be many categories in which a person associated with any business venture can be categorized; he may be a permanent employee, an apprentice, an intern and even a Freelancer who in some cases may even be referred to as the Independent Director.
Before moving towards the legal provisions and clauses that are present in the Freelance Agreements, we need to first learn about some basic concepts related to the same which are as follows:
Who is a Freelancer?
When we hear the term “Freelance”, we may interpret from the word ‘free’ that the person contributes his service free of cost and without any consideration. But this is certainly not the case, a freelancer refers to a person who is self- employed and is not devoted or committed to a particular employer at a particular term. But there are also many variations regarding the same. The term freelancer is often used as a synonym for the “Independent Contractor”.
There can be many areas, where the Freelancer can specialize which include the following:
- Content Writing
- App Design
- Web Design etc.
What clauses can be applied to the Freelance Agreements?
In India all the contracts and agreements are governed by the Indian Contract Act, 1872. The term “agreement” is defined under Section 2(e) as the promise or a set of promises which includes the consideration for each other. And when this agreement becomes enforceable by law, it becomes a contract as per the Section 2(h).The clauses in this agreement is as follows:
This usually includes the personal information such as
- Name of the parties
- Address of the parties
- Name of the Organizations
- Agreement’s Scope
In this particular, the tasks of both the parties are mentioned, that is the consideration for the agreement. The term “consideration” is defined under the Section 2(d) of the ICA, 1872.
- The amount of payment and collection procedure
It is very essential for every agreement that the financial statements should be clearly stated. There should be no confusion regarding the consideration in the minds of the parties. It should be clearly stated that whether the freelancer is to be paid on hour basis, work basis, or in any other form.
The form of money that would be paid should also be decided prior to the agreement. For the protection of the companies, one thing must be noted to insert the Cancellation clause in the agreement, which states that if the freelancer backs out before the termination period and the task is accomplished, then the contract will stand as nullified and void.
- Term (Duration)
The agreement of license is for a particular term. So the agreement must specify the termination and commencement date.
Every agreement must contain a termination clause that may vary as per the different agreements. It should specify the obligations that must be fulfilled by the licensee before the termination like making of payments etc.
One thing should be made sure and included in the contract: the deadline that is the date for the submission of the task given.
- Jurisdiction and Dispute Resolution
Jurisdiction depends on the nationality of both the parties to an agreement as the parties can be Indian and can also be a Foreign Party. The jurisdiction varies from the courts of India to the courts of other countries.
For dispute resolution, the parties should apply their best of efforts to solve the dispute through co-operation and consultation.
- Timing of payment and If the fees is paid late
The above can be a clause in order to protect the interest of the Freelancers who in many circumstances can be exploited by the terms of work of the company. So the date of payment of fees should be exclusively mentioned along with the interest or fines that can be levied on the same for late payments.
- Clause of Confidentiality
The information that is provided during the tenure of working as a freelancer should not be disclosed to any third party because of the sensitivity of that information.
This clause brings out the relationship between freelancer and the employer company. It spells out that freelancer has been hired as an Independent Contractor. This implies that neither is responsible and liable for the acts of the other party.
In addition to the above, there are some Boiler-Plate Clauses, which refer to the standard clauses that are present in every Standard Form of Contract which are as follows:
- Waiver- If the party by intention or by oversight fails to enforce its contractual rights, then it will not result in waiver of the breach of that right or remedy.
- Severability-This clause states that if any part of the contract is found to be illegal and unenforceable, then it will not affect the remaining contract, the remainder contract will be applicable in all circumstances.
- Notices- It mentions the handling, payments of notice that are to be made and received.
- Modifications- Specifies the form of amendments of the agreements, whether oral or written.
Companies nowadays because of the changing trends are entering into freelance agreements as they contribute more to the growth by bringing fresh talent and skill rather than employing permanent employees. The Principle of Payment on Work basis has proved to be very much beneficial for the companies, both performance wise and economically which can be applied to the FREELANCERS!
Author- Bhavneet Singh Vohra
Vivekananda Institute of Professional Studies
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