These clauses serve a similar purpose to Partnership and Agency Clauses.
They expressly state the intended nature of the legal relationship.
Independent Contractor clauses are frequently used in consultancy agreements to make it clear that the contractor is not intended to be an employee.
Whether an employment relationship exists depends largely on the relationship and level of integration of the person within the business itself - regardless of what a contract declares to be the case.
- vicarious liability, where one party is found to be an agent of the other, under principles of the law of agency, and
- joint and several liability.
Those consequences generally arise to third parties to the contract.
Independent Contractor clauses:
- are an attempt to avoid legal consequences arising from those sorts of legal relationships.
- create a contractual remedy viz-a-viz the contracting party themselves for breach of the term.
Read alone though, without reference to the rest of the contract (ie the whole contract) you might say, "Big deal".
Here's the deal.
Uses of Independent Contractor Clauses
Sometimes they're used to work with indemnity clauses.
If liability does arise under the contract, the party giving the impression to a third party that they are entitled to bind the other contracting party (ie apparent authority) will be liable for that breach of contract, or under an indemnity set out in the contract (which might read something like these indemnification clauses).
That can give rise to significant liability for apparently innocuous acts, or unintentional acts and omissions.
Example: Independent Contractor Clause
The Consultant is an independent contractor and nothing in this Agreement shall render it an employee, agent or partner of the Customer and the Consultant shall not hold itself out as such.