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Client wants me to sign this outside contract. Bad idea?

Active Member
Dave W Member Since: Jan 6, 2016
1 of 33

Hi,

 

First off, sorry for the long post. I'm fairly new to Upwork and I have a potential client I'm about to start working with. They sent me this contract and I'm seeing a few red flags. The 1 year term, the no compete clause, and the payment terms.

 

Are there other things that stand out as deal breakers or that violate Upwork's ToS?

 

CONSULTING AGREEMENT

 

EFFECTIVE DATE: January 5, 2016

 

This Consulting Agreement (the "Agreement") is made by and between ____. ("Client") and ____, an individual ("Consultant").

 

1. Engagement of Services. Client may issue project assignments to Consultant in the form attached to this Agreement as Exhibit A (each, a "Project Assignment"). Subject to the terms of this Agreement, Consultant will render the services set forth in Project Assignment(s) accepted by Consultant by the completion dates set forth therein.

 

2. Compensation. Client will pay Consultant the fee set forth in each Project Assignment for services rendered pursuant to such Project Assignment. Consultant will be reimbursed only for expenses which are expressly provided for in a Project Assignment or which have been approved in advance in writing by Client, provided Consultant has furnished such documentation for authorized expenses as Client may reasonably request. Payment of Consultant's fees and expenses will be in accordance with terms and conditions set forth in the applicable Project Assignment.

 

3. Ownership of Work Product. Consultant agrees that all work product created by Consultant, or to which Consultant contributes, pursuant to this Agreement (the "Work Product") and all intellectual property and proprietary rights thereto will be the sole and exclusive property of Client. All elements in the Work Product that are protected by copyright are "works made for hire" for which Client is the "author" (as such first quoted term is defined by and such second quoted term given meaning by the United States Copyright Act of 1976, as amended). Client will exclusively own the copyright in all such works upon their creation. To the extent that any aspect of Work Product is found as a matter of law not to be a "work made for hire" as contemplated above, Consultant hereby irrevocably and unconditionally assigns to Client all right, title, and interest worldwide in and to such Work Product and all intellectual property and proprietary rights thereto. Consultant understands and agrees that Consultant has no right to use the Work Product except as necessary to perform the services hereunder for Client. Consultant agrees to execute, at Client's request and expense, all documents and other instruments necessary to effectuate such assignment. In the event that Consultant does not, for any reason, execute such documents within a reasonable time of Client's request, Consultant hereby irrevocably appoints Client as Consultant's attorney-in-fact for the purpose of executing such documents on Consultant's behalf, which appointment is coupled with an interest.

 

4. Artist's and Moral Rights. If Consultant has any rights, including without limitation "artist's rights" or "moral rights," in the Work Product which cannot be assigned, Consultant agrees to waive enforcement worldwide of such rights against Client. In the event that Consultant has any such rights, that cannot be assigned or waived, Consultant hereby grants to Client an exclusive, worldwide, irrevocable, perpetual license to use, reproduce, distribute, create derivative works of, publicly perform and publicly display the Work Product in any medium or format, whether now known of later developed.

 

5. Representations and Warranties. Consultant represents and warrants that: (a) Consultant has the right and unrestricted ability to assign the Work Product to Client as set forth in Section 3 (including without limitation the right to assign any Work Product created by Consultant's employees or contractors), and (b) the Work Product will not infringe upon any copyright, patent, trademark, right of publicity or privacy, or any other proprietary right of any person, whether contractual, statutory or common law. Consultant agrees to indemnify Client from any and all damages, costs, claims, expenses or other liability (including reasonable attorneys' fees) arising from or relating to the breach or alleged breach by Consultant of the representations and warranties set forth in this Section 5

 

6. Independent Contractor Relationship. Consultant's relationship with Client is that of an independent contractor, and nothing in this Agreement is intended to, or should be construed to, create a partnership, agency, joint venture or employment relationship. Consultant will not be entitled to any of the benefits which Client may make available to its employees, including, but not limited to, group health or life insurance, profit-sharing or retirement benefits. Consultant is not authorized to make any representation, contract or commitment on behalf of Client unless specifically authorized in writing to do so by a Client officer. Consultant is solely responsible for, and will file, on a timely basis, all tax returns and payments required to be filed with, or made to, any federal, state or local tax authority with respect to the performance of services and receipt of fees under this Agreement. Consultant is solely responsible for, and must maintain adequate records of, expenses incurred in the course of performing services under this Agreement. No part of Consultant's compensation will be subject to withholding by Client for the payment of any social security, federal, state or any other employee payroll taxes. Client will regularly report amounts paid to Consultant by filing Form 1099-MISC with the Internal Revenue Service as required by law.

 

7. Confidential Information

 

7.1 Definition. "Confidential Information" means any and all information related to Client's or any of its customer's business (including trade secrets, technical information, business forecasts and strategies, marketing plans, customer and supplier lists, personnel information, financial data, and proprietary information of third parties provided to Client in confidence) that is disclosed (either directly or indirectly, and whether in writing, orally or by drawings or inspection of parts or equipment) to Client or to which Client has access in connection with this Agreement or any Project Assignment.

 

7.2 Use and Disclosure. During the term of this Agreement and at all times thereafter, Consultant will (a) hold all Confidential Information in strict trust and confidence, (b) refrain from using or permitting others to use Confidential Information in any manner or for any purpose not expressly permitted or required by this Agreement, and (c) refrain from disclosing or permitting others to disclose any Confidential Information to any third party without obtaining Client's express prior written consent on a case-by-case basis.

 

7.3 Standard of Care. Consultant will protect the Confidential Information from unauthorized use, access, or disclosure in the same manner as Consultant protects Consultant's own confidential or proprietary information of a similar nature, and with no less than the greater of reasonable care and industry-standard care.

 

7.4 Exceptions. Consultant's obligations under Sections 7.2 and 7.3 will terminate with respect to any particular information that Consultant can prove, by clear and convincing evidence, (a) Consultant lawfully knew prior to Client's first disclosure to Consultant, (b) a third party rightfully disclosed to Consultant free of any confidentiality duties or obligations, or (c) is, or through no fault of Consultant has become, generally available to the public. Additionally, Consultant will be permitted to disclose Confidential Information to the extent that such disclosure is expressly approved in writing by Client, or is required by law or court order, provided that Consultant immediately notifies Client in writing of such required disclosure and cooperates with Client, at Client's reasonable request and expense, in any lawful action to contest or limit the scope of such required disclosure, including filing motions and otherwise making appearances before a court.

 

7.5 Removal; Return. Consultant will not remove any tangible embodiment of any Confidential Information from Client's facilities or premises without Client's express prior written consent. Upon Client's request and upon any termination or expiration of this Agreement, Consultant will promptly (a) return to Client or, if so directed by Client, destroy all tangible embodiments of the Confidential Information (in every form and medium), (b) permanently erase all electronic files containing or summarizing any Confidential Information, and (c) certify to Client in writing that Consultant has fully complied with the foregoing obligations.

8. No Conflict of Interest. During the term of this Agreement, Consultant will not accept work, enter into a contract, or accept an obligation from any third party, inconsistent or incompatible with Consultant's obligations, or the scope of services rendered for Client, under this Agreement. Consultant warrants that there is no other contract or duty on its part inconsistent with this Agreement. Consultant agrees to indemnify Client from any and all loss or liability incurred by reason of the alleged breach by Consultant of any services agreement with any third party.

 

9. Term and Termination

 

9.1 Term. The initial term of this Agreement is for one (1) year from the Effective Date set forth above, unless earlier terminated as provided in this Agreement. Thereafter, this Agreement will automatically renew on its anniversary date, for one (1) year terms, unless Client provides fifteen (15) days written notice prior to any such anniversary date that the Agreement shall not renew.

 

9.2 Termination by Client. Client may terminate this Agreement or any Project Assignment with or without cause, at any time upon fifteen (15) days prior written notice to Consultant. Client also may terminate this Agreement or any Project Assignment immediately in its sole discretion upon Consultant's material breach of Section 5, Section 7 or Section 8. Upon termination of this Agreement for any reason, Consultant will be paid any unpaid fees owed to Consultant on the basis stated in any then active Project Assignment(s) for work which has been completed.

9.3 Survival. The rights and obligations contained in Section 3, Section 4, Section 5, Section 7, Section 8 and Sections 11 through 16 will survive any termination or expiration of this Agreement.

10. Successors and Assigns. Consultant may not subcontract or otherwise delegate its obligations under this Agreement without Client's prior written consent. Subject to the foregoing, this Agreement will be for the benefit of Client's successors and assigns, and will be binding on Consultant's assignees.

11. Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; or (iii) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth below or such other address as either party may specify in writing.

12. Governing Law. This Agreement shall be governed in all respects by the laws of the United States of America and by the laws of the State of California, as such laws are applied to agreements entered into and to be performed entirely within California between California residents.

 

13. Severability. Should any provisions of this Agreement be held by a court of law to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

 

14. Waiver. The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other or subsequent breach by the other party.

 

15. Injunctive Relief for Breach. Consultant's obligations under this Agreement are of a unique character that gives them particular value; breach of any of such obligations will result in irreparable and continuing damage to Client for which there will be no adequate remedy at law; and, in the event of such breach, Client will be entitled to injunctive relief and/or a decree for specific performance, and such other and further relief as may be proper (including monetary damages if appropriate).

 

16. Entire Agreement. This Agreement constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The terms of this Agreement will govern all services undertaken by Consultant for Client; provided, however, that in the event of any conflict between the terms of this Agreement and any Project Assignment, the terms of the applicable Project Assignment will control. Any capitalized term used but not defined in any Project Assignment will have the meaning given to such term in this Agreement. This Agreement may only be changed by mutual agreement of authorized representatives of the parties in writing.

 


Exhibit A

Project Assignment # 1
Under Consulting Agreement ("Agreement")
between
____
and
____

 

Project:

 

Consultant shall render such services as Client may from time to time request in connection with strategy development, financing matters, and performing business manager functions.

 

Schedule of Work:

 

The work will commence on January 6th, 2015 and shall continue until terminated in accordance with this Agreement.

 

Fees and Reimbursement of Expenses:

 

A. Fee: on a project basis

 

B. Reimbursement for expenses specifically identified by Consultant to Client and approved in writing in advance by Client.

 

Consultant shall invoice Client monthly for services and expenses and shall provide such reasonable receipts or other documentation of expenses as Client might request, including copies of time records.

 

Payment terms: net thirty (30) days from receipt of invoice. Client will be invoiced on the first day of each month for services rendered and expenses incurred during the previous month.

Community Guru
Cairenn R Member Since: Aug 19, 2015
BEST ANSWER
2 of 33

That is the longest and most unnecesary NDA I have ever read. This is why I do not sign outside contracts - I have a client agreement which outlines everything in readable terms and includes an NDA. I do not sign outside contracts because they may have pulled it off the internet. 

Unless they are a big company with an attorney that drew this up for them, they yanked it from somewhere. 

I provide a contract to my clients because most of them do not understand why it is even neceassary. I also do it because I am running my business, they aren't running my business. I'm more proactive that way - not everyone is which may work for them.

 

Overall, I do not see anything glaring about it, but they would be signing my contract, not the other way around.  


 

Community Guru
Melanie H Member Since: Nov 2, 2017
3 of 33

That's nutty.

 

I'm not an employee of the client, they are contracting work through me. I'm not about to go making payment, etc. agreements with them, personally beyond the agreements I am already committed to via Upwork's TOS. If that latter isn't enough then probably nothing will be and I feel I 'd be expecting a world of pain from this client. Smiley Very Happy

 

I can see trying to dot all one's i's, but this is kind of beyond the beyond. Smiley Very Happy

Community Guru
Tiffany S Member Since: Jan 15, 2016
4 of 33

Cairenn R wrote:

That is the longest and most unnecesary NDA I have ever read.

 

That's probably because it's not an NDA.

 

Community Guru
Jennifer M Member Since: May 17, 2015
5 of 33

lol tell them no non-compete. 

 

At least, that's what I tell people. An NDA is usually 1 page and basically just says blah blah can't share info blah. People think their ideas are worth something. I've only had 1 NDA where the developer I was working for had tangible ideas for customers that he needed to protect. Of the other tons of NDAs I've signed, they're completely unneeded but I sign them anyway. People think ideas are the hard part and yeah, ideas are cheap.

Community Guru
Cairenn R Member Since: Aug 19, 2015
6 of 33

Yup! 

I could have drawn up all that legalese - but I don't because most people can't read it. 

The old K.I.S.S. rule applies (keep it simple stupid). Protect yourself, yes, but this "Contract" is over-the-top cray-cray for Upwork projects. 

Ace Contributor
Michelle T Member Since: Mar 28, 2018
7 of 33

Jennifer M wrote:

blah can't share info blah. People think their ideas are worth something.


^^^THIS ... 

 

I sign the simple NDAs because it doesn't list anything that I wasn't going to do anyway. 

Community Guru
Daniel C Member Since: Nov 21, 2010
8 of 33

Net 30 means you won't get paid for up to 2 months after completing the work.  You invioce on the 2nd and it's 30 days from the 1st of the month.   

 

I signed a contract like that once and it was the worst decision ever.  I don't sign outside NDA contracts anymore EVER.  It's like a trap.

Active Member
Dave W Member Since: Jan 6, 2016
9 of 33

Thank you for all of the replies! 

Community Guru
Ronald T Member Since: Sep 14, 2009
10 of 33

I totally agree with Cairenn R. In addition, the proposed contract appears entirely too restrictive..."they will own you"!

 

When it is a very good job opportunity, I have often edited a copy of a prospective client's business agreement in a manner that suits both parties--both client and freelancer. Also, I always ensure that Upwork policies take precedence in the event of any conflict between the requirements of business agreements outside of Upwork and Upwork policies; in their entirety and including any changes Upwork might make subsequent to business agreements agreed to outside of Upwork.

 

Now, would I have taken the time to review and edit a copy of the business agreement included in the original post? Certainly! That is, if the contract was for $154 per hour and up!

 

I'm not kidding either. I have had clients (very few, however) that imposed controls flowed-down from the Sarbanes–Oxley Act of 2002 and other stringent regulations. If that is the level of work they require (i.e., additional administrative overhead in my case), then, they have to pay accordingly.

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