Independent Contractor Agreement (UK)
Independent contractor agreement for business services in England and Wales
INDEPENDENT CONTRACTOR AGREEMENT
England and Wales
This Agreement is entered into between:
(1) [client full legal name], a company registered in England and Wales under company number [client company number], whose registered office is at [client registered office address] (the "Client"); and
(2) [contractor full legal name or trading name] ([contractor company number, or the words 'sole trader' if unincorporated]) whose address for service is [contractor address for service] (the "Contractor").
Together, the Client and the Contractor are referred to as the "Parties" and each individually as a "Party".
This Agreement is effective as of [effective date] (the "Effective Date").
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions. In this Agreement, the following words and expressions have the meanings given to them below:
"Agreement" means this Independent Contractor Agreement including all Schedules, as amended from time to time in accordance with Clause 13.2.
"Background IPR" has the meaning given in Clause 6.2.
"Business Day" means any day other than a Saturday, Sunday, or public holiday in England and Wales.
"Change Order" means a written amendment to the Services or Deliverables agreed in accordance with Clause 2.4.
"Confidential Information" has the meaning given in Clause 7.1.
"Contractor Personnel" means any employee, officer, subcontractor, or agent engaged by the Contractor to perform any part of the Services.
"Data Protection Legislation" means the UK General Data Protection Regulation (as defined in section 3(10) of the Data Protection Act 2018) ("UK GDPR"), the Data Protection Act 2018, and any subordinate legislation made under them, each as amended or replaced from time to time.
"Deliverables" means the outputs, reports, works, and materials to be produced by the Contractor as specified in Schedule 2 Part B.
"Engagement IPR" has the meaning given in Clause 6.1.
"Fees" means the fees payable by the Client to the Contractor as set out in Schedule 1 Part D and Clause 5.
"Force Majeure Event" has the meaning given in Clause 11.2.
"IR35 Determination" has the meaning given in Clause 4.1.
"Personal Data" has the meaning given in Article 4(1) UK GDPR.
"Relevant Tax Authority" means HM Revenue & Customs.
"Schedule" means a schedule to this Agreement.
"SDS" has the meaning given in Clause 4.2.
"Services" means the services to be provided by the Contractor as described in Schedule 2 Part A.
"Term" has the meaning given in Clause 10.1.
1.2 Interpretation. In this Agreement: (a) headings are for convenience only and do not affect interpretation; (b) references to a statute include all subordinate legislation made under it and any amendment or re-enactment; (c) the singular includes the plural and vice versa; (d) 'includes' and 'including' are without limitation; (e) references to 'writing' include email unless expressly stated otherwise; (f) references to 'Clauses' are to clauses of this Agreement; (g) references to 'Schedules' are to schedules to this Agreement.
2. SERVICES
2.1 Performance. The Contractor shall perform the Services described in Schedule 2 with reasonable skill and care, in accordance with: (a) the standards of a competent professional in the Contractor's field; (b) any reasonable instructions issued by the Client from time to time; and (c) all applicable laws and regulations.
2.2 Progress reporting. The Contractor shall provide progress reports to the Client at the intervals specified in Schedule 2 Part C, or as otherwise reasonably requested by the Client.
2.3 Working arrangements. Subject to Clause 3, the Contractor shall determine the manner, timing, and location of performing the Services, save as specified in Schedule 2 Part C. The Client shall provide the Contractor with access to its premises, systems, and information as reasonably necessary to enable the Contractor to perform the Services.
2.4 Additional services and change control. Any change to the scope of the Services or Deliverables must be agreed in writing by both Parties by way of a Change Order. Neither Party is obliged to agree a Change Order.
Note: Time-of-the-essence option: if you require a change to be completed by a fixed deadline, include the following wording in the relevant Change Order: 'Time is of the essence in respect of the completion date specified in this Change Order.' Do not include a general time-of-the-essence clause for all Services — English courts construe such clauses strictly and a minor delay would constitute a repudiatory breach.
2.5 Client dependencies. The Contractor's obligations under this Agreement are conditional on the Client providing in a timely manner the inputs, materials, approvals, and access specified in Schedule 2 Part D. The Client acknowledges that the Contractor's ability to meet any agreed timescales depends on the Client fulfilling its obligations under this Clause 2.5.
3. CONTRACTOR STATUS
3.1 Independent contractor. The Contractor is engaged as an independent contractor and not as an employee, worker, agent, or partner of the Client. Nothing in this Agreement creates, or shall be construed as creating, a relationship of employment, worker status, or agency between the Client and the Contractor or any Contractor Personnel.
Note: English law distinguishes three categories of 'worker': employee (ERA 1996 s.230(1)), limb (b) worker (ERA 1996 s.230(3)(b)), and genuinely self-employed contractor. Limb (b) workers are entitled to National Minimum Wage, holiday pay, and whistleblowing protection. Courts look at the reality of the working relationship, not the label in the contract. Risk factors that may indicate worker or employee status include: personal service obligation (no genuine substitution right), integration into the client's business, client control over how work is done, mutuality of obligation, and economic dependency on a single client. If any of these factors are present, seek employment law advice before engagement.
3.2 Tax and National Insurance. The Contractor is solely responsible for accounting to the Relevant Tax Authority for all income tax, National Insurance contributions, VAT, and other taxes and levies arising from sums paid under this Agreement, subject to any withholding obligations imposed on the Client under Clause 4.
3.3 No employee benefits. The Contractor is not entitled under this Agreement to any benefits provided to the Client's employees, including but not limited to statutory sick pay, holiday pay (save to the extent required by law if the Contractor is held to be a worker), pension auto-enrolment, or redundancy payments.
3.4 Substitution.
Note: Substitution right: a genuine and unfettered right of substitution is strong evidence that the Contractor is not a worker. Option A includes a substitution right; Option B removes it. If Option B is selected, the engagement is more likely to involve personal service and may attract worker status. Option A is generally recommended for genuine independent contractor engagements. Practical Law precedent includes a qualified substitution right requiring only client approval not to be unreasonably withheld — this is the preferred formulation.
Option A — Substitution permitted: The Contractor may, with the prior written consent of the Client (not to be unreasonably withheld or delayed), appoint a suitably qualified substitute to perform the Services on its behalf, provided that: (a) the substitute possesses qualifications and experience no less than those of the Contractor; (b) the Contractor remains fully responsible for the substitute's performance; and (c) the Client shall not be required to pay any additional cost in respect of the substitute.
Option B — Personal service: The Contractor shall perform the Services personally and may not appoint a substitute without the Client's prior written consent.
Note: If Option B is selected, the personal service obligation is a significant indicator of worker or employee status. Review the overall working arrangements carefully against the ERA 1996 s.230(3)(b) limb (b) worker test.
3.5 Insurance. The Contractor shall maintain throughout the Term the insurances specified in Schedule 1 Part C, and shall provide evidence of such insurance to the Client on request.
3.6 Other clients. Subject to Clause 7 (Confidentiality), the Contractor is free to provide services to other clients during the Term.
Note: Exclusivity: if an exclusivity obligation is required, add it as a separate clause. Blanket exclusivity for a genuinely self-employed contractor is an additional indicator of worker or employee status. If exclusivity is commercially necessary, limit it to competing clients or specific sectors and obtain employment law advice on the implications.
4. OFF-PAYROLL WORKING — IR35
Note: IR35 / off-payroll working: the rules in ITEPA 2003 Chapter 10 (ss.61A–61W) (the 'off-payroll working rules') apply where (a) the Client is a medium or large organisation, (b) services are provided through an intermediary (typically the Contractor's personal service company), and (c) the hypothetical direct employment test is met. Where Chapter 10 applies, the Client (as 'client' within the chain) must issue a Status Determination Statement and operate PAYE. Chapter 8 (ss.48–61) applies where the Client is a 'small' organisation (see Clause 4.1 Option A) — in that case the Contractor's intermediary remains responsible for its own IR35 assessment. Select Option A or Option B in Clause 4.1 to reflect the Client's size.
4.1 Client size determination (IR35 Determination).
Option A — Small client (Chapter 8 applies): The Client confirms that, at the date of each engagement under this Agreement, it meets at least two of the following conditions and therefore qualifies as a 'small company' for the purposes of section 382 of the Companies Act 2006, as amended by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303) (which apply to financial years beginning on or after 6 April 2025), with the resulting categorisation flowing through to off-payroll working status from the first tax year beginning on or after 6 April 2026: (a) annual turnover of not more than £15 million; (b) balance sheet total of not more than £7.5 million; (c) not more than 50 employees. Where the Client is a small company, the off-payroll working rules in ITEPA 2003 Chapter 10 do not apply and the Contractor's intermediary is responsible under Chapter 8 for determining whether the deemed employment provisions apply to payments made under this Agreement (the 'IR35 Determination'). The Client shall notify the Contractor promptly if it ceases to meet the small company conditions.
Option B — Medium or large client (Chapter 10 applies): The Client confirms that it does not meet the conditions for a 'small company' within the meaning of section 382 of the Companies Act 2006 (as amended). Accordingly, the off-payroll working rules in ITEPA 2003 Chapter 10 apply to this engagement and the Client is responsible for making the IR35 Determination in accordance with Clause 4.2.
4.2 Status Determination Statement and disagreement process (Chapter 10 only). Where Option B in Clause 4.1 applies, the Client shall, before the Contractor begins providing Services or at the start of each renewal period: (a) make a determination under section 61NA ITEPA 2003 of whether the hypothetical direct employment test is met (the 'Status Determination Statement' or 'SDS'); (b) provide the SDS in writing to the Contractor and, where applicable, to any agency in the contractual chain; (c) state the reasons for the determination in the SDS. If the Contractor disagrees with the SDS, it may raise a written disagreement with the Client. The Client shall operate the client-led disagreement process required under section 61T ITEPA 2003 and shall respond in writing with its conclusion within 45 days of receiving the disagreement notification.
Note: section 61NA ITEPA 2003 (inserted by Finance Act 2020) requires the client to take 'reasonable care' when making a status determination — failure to take reasonable care passes the PAYE liability to the client. section 61T imposes a mandatory disagreement process: if the client fails to respond within 45 days, the PAYE liability transfers to the client. The SDS must be provided to both the Contractor and any intermediary in the chain. If the determination is 'inside IR35', the fee-payer in the chain (often the client) must operate PAYE and employee NICs on the deemed employment payment.
4.3 PAYE withholding (inside IR35). Where the IR35 Determination is that the engagement is 'inside IR35' under Chapter 10, the Client (or such other person as is the fee-payer for the purposes of ITEPA 2003 Chapter 10) may deduct from amounts otherwise payable to the Contractor's intermediary such income tax and National Insurance contributions as are required by law. The Contractor consents to such deductions.
4.4 Notification of material change. Each Party shall promptly notify the other if it becomes aware of any change in circumstances that may affect the IR35 Determination or the Client's qualification as a small company, including: (a) the Client undergoing a change of control; (b) the Client entering an accounting period in which it no longer meets the small company conditions; or (c) a material change in the nature of the Services.
4.5 No warranty as to status. Nothing in this Agreement constitutes a warranty by either Party as to the tax or employment status of the Contractor or any Contractor Personnel. Each Party remains responsible for taking independent tax advice on its own position.
5. FEES AND PAYMENT
5.1 Payment obligation. The Client shall pay the Fees to the Contractor in accordance with this Clause 5.
5.2 Fee structure.
Note: Select Option A (fixed project fee) or Option B (time and materials). For ongoing retainer arrangements, Option B is usually appropriate with a monthly cap. Include fee rates in Schedule 1 Part D.
Option A — Fixed fee: The Contractor shall be paid the fixed fee specified in Schedule 1 Part D for each project or phase of Services, payable in the instalments and upon the milestones set out in Schedule 1 Part D. Unless the Parties agree a Change Order in writing, no additional Fees are payable.
Option B — Time and materials: The Contractor shall be paid at the daily / hourly rate(s) specified in Schedule 1 Part D for time actually spent performing the Services, up to the maximum spend (if any) stated in Schedule 1 Part D. The Contractor shall maintain accurate time records and provide them to the Client with each invoice.
5.3 Invoicing and payment. The Contractor shall submit invoices to the Client at the frequency specified in Schedule 1 Part D. Each invoice shall be a valid VAT invoice (if the Contractor is VAT-registered) and shall identify the Services to which it relates. The Client shall pay each undisputed invoice within [payment period in business days (e.g. 30)] Business Days of receipt of a valid invoice. The Client shall raise any dispute in relation to an invoice in writing within [invoice dispute notification period in business days (e.g. 10)] Business Days of receipt, and shall not withhold payment of the undisputed portion of any invoice.
Note: Payment terms: 30 days from receipt of a valid invoice is the statutory default under the Late Payment of Commercial Debts (Interest) Act 1998 for B2B contracts. Some SME engagements use 14 days. Practical Law precedent uses 30 days. If the Client wishes to dispute part of an invoice, it should only withhold the genuinely disputed portion — withholding undisputed sums triggers late payment interest.
5.4 VAT. All Fees are exclusive of VAT. Where VAT is chargeable, the Client shall pay VAT in addition to the Fees, provided that the Contractor has issued a valid VAT invoice in respect of the relevant supply.
5.5 Set-off. Subject to any right of set-off expressly provided for in this Agreement, each Party shall pay all sums due under this Agreement without deduction or set-off.
5.6 Expenses. The Contractor is not entitled to reimbursement of expenses unless the type and limit of expenses has been approved in advance in writing by the Client and specified in Schedule 1 Part D. Pre-approved expenses shall be invoiced with supporting receipts.
5.7 Late payment. Without prejudice to any other right or remedy, if the Client fails to pay any sum due under this Agreement on the due date, the Contractor may charge interest on the overdue amount under the Late Payment of Commercial Debts (Interest) Act 1998 at the rate of 8 per cent per annum above the official dealing rate (as fixed by reference to the official dealing rate on the preceding 30 June or 31 December pursuant to The Late Payment of Commercial Debts (Rate of Interest) (No.3) Order 2002 (SI 2002/1675)), accruing daily from the due date until actual payment.
Note: Late payment interest: the statutory rate under SI 2002/1675 Art.4 is 8% per annum above the 'official dealing rate' set by the Bank of England, fixed for six-month periods by reference to the rate in force on the preceding 30 June or 31 December — it is not a floating rate that tracks day-to-day changes. The Parties may agree a different contractual rate provided it is a 'substantial remedy' for the purposes of the 1998 Act; a rate below the statutory rate is unlikely to qualify. In addition to interest, the Act provides for fixed debt recovery charges of £40 (for debts up to £999.99), £70 (£1,000–£9,999.99), or £100 (£10,000+) per invoice.
6. INTELLECTUAL PROPERTY
6.1 Ownership of Engagement IPR.
Note: CDPA 1988 s.11(1): copyright vests automatically in the author (here, the Contractor) unless created by an employee in the course of employment (s.11(2)). Independent contractors are NOT employees for this purpose, so copyright in Deliverables belongs to the Contractor unless expressly assigned. Assignment must be in writing signed by the assignor (CDPA 1988 s.90(3)). Option A below is the Practical Law recommended formulation for bespoke deliverables: present and future assignment with full title guarantee. Option B (licence) is appropriate where the Contractor uses its own standard tools or frameworks — a licence back to Background IPR is mandatory in Option A if the Deliverables incorporate pre-existing materials.
Option A — Full assignment (recommended for bespoke deliverables): The Contractor hereby assigns to the Client, with full title guarantee, by way of present and future assignment, all right, title, and interest in and to all Intellectual Property Rights in the Deliverables created or arising in the course of this Agreement ('Engagement IPR'), including all copyrights, database rights, patents, trade marks, design rights, and all other intellectual property rights in any jurisdiction, whether now known or created in the future. 'Intellectual Property Rights' means all intellectual property rights of any nature, whether registered or unregistered, for the full period of those rights, including all renewals and extensions.
Option B — Licence (for service engagements; Contractor retains ownership): The Contractor grants to the Client a non-exclusive, royalty-free, perpetual licence to use the Deliverables for the Client's internal business purposes ('Engagement IPR licence'). The Contractor retains all Intellectual Property Rights in the Deliverables.
6.2 Background IPR. Each Party retains all Intellectual Property Rights in materials created or owned prior to this Agreement or developed independently of this Agreement ('Background IPR'). Nothing in this Agreement transfers ownership of any Party's Background IPR.
6.3 Background IPR incorporated in Deliverables. Where the Contractor incorporates any Background IPR into the Deliverables, the Contractor grants the Client a non-exclusive, royalty-free, sub-licensable, perpetual licence to use such Background IPR to the extent necessary to use the Deliverables for the purpose for which they were created.
6.4 IP warranty. The Contractor warrants that: (a) the Deliverables are the Contractor's original work or that the Contractor has the right to use and assign or licence them as provided in this Clause 6; (b) use of the Deliverables by the Client in accordance with this Agreement will not infringe the Intellectual Property Rights of any third party; and (c) the Contractor has not granted and shall not grant to any third party rights inconsistent with the rights granted to the Client under this Clause 6.
6.5 Moral rights.
Note: Moral rights waiver: under CDPA 1988 ss.77–84, individual authors have moral rights (right of attribution, right of integrity). These rights cannot be assigned but can be waived. A corporate Contractor does not hold moral rights (they vest in individual authors). If the Contractor is an individual or sole trader, add the waiver below. If the Contractor is a company, this clause can be omitted.
Option A — Waiver (for individual / sole trader contractors): To the extent permitted by law, the Contractor irrevocably and unconditionally waives all moral rights under the Copyright, Designs and Patents Act 1988 in respect of the Deliverables.
Option B — No waiver / Contractor is a company: [delete this clause 6.5 where the contractor is a limited company — moral rights do not vest in corporate persons.]
Note: AI-generated content: if the Contractor uses generative AI tools to create any part of the Deliverables, add a disclosure clause requiring the Contractor to notify the Client of AI-generated content. Under current CDPA 1988 s.178 ('computer-generated work') analysis, copyright in AI-generated works vests in the person who made the arrangements necessary for the creation of the work — the ownership position for AI-assisted works (where a human is also involved) is unsettled. If AI use is anticipated, consider adding a representation that the Contractor owns or has the right to use any AI-generated outputs incorporated into the Deliverables.
7. CONFIDENTIALITY
7.1 Obligation. Each Party (as receiving party) shall keep confidential all information that it receives from the other Party (as disclosing party) in connection with this Agreement, including information relating to the disclosing party's business, clients, technology, finances, and know-how, whether disclosed orally, in writing, or by any other means, where such information is identified as confidential or should reasonably be understood to be confidential given its nature and the circumstances of disclosure ('Confidential Information'). Each Party shall: (a) not disclose Confidential Information to any third party without the disclosing party's prior written consent; (b) use Confidential Information only for the purposes of performing or enforcing this Agreement; and (c) take reasonable steps to protect Confidential Information from unauthorised disclosure.
7.2 Exclusions. The obligations in Clause 7.1 do not apply to information that: (a) is or becomes publicly available through no act or omission of the receiving party; (b) was in the receiving party's lawful possession before disclosure; (c) is lawfully disclosed to the receiving party by a third party free of any confidentiality obligation; or (d) is required to be disclosed by law, by a regulatory authority, or by a court of competent jurisdiction, provided that the receiving party gives the disclosing party prompt written notice (to the extent permitted by law) and reasonable assistance in seeking a protective order.
7.3 Protected disclosures. Nothing in this Agreement prevents either Party (or any individual employed or engaged by either Party) from making a protected disclosure within the meaning of the Employment Rights Act 1996 Part IVA or from reporting a criminal offence, wrongdoing, or regulatory breach to the appropriate authority. Any provision of this Agreement that purports to prevent or restrict such a disclosure or report is void to that extent.
Note: Protected disclosures (whistleblowing): ERA 1996 Part IVA protects 'workers' who make qualifying disclosures in the public interest. A confidentiality clause that could be construed as preventing a protected disclosure is void (ERA 1996 s.43J). This carve-out is a BLOCKER requirement — it must appear in every engagement agreement. The Practical Law precedent includes equivalent wording. Omitting this clause exposes the Client to potential liability for detriment or dismissal of a whistleblower.
7.4 Survival. The obligations in this Clause 7 shall survive termination or expiry of this Agreement for a period of three (3) years in respect of Confidential Information generally and indefinitely in respect of information that constitutes a trade secret within the meaning of the Trade Secrets (Enforcement, etc.) Regulations 2018.
7.5 Return and deletion of Confidential Information. On termination or expiry of this Agreement, or on request by the disclosing party at any time, the receiving party shall: (a) promptly return to the disclosing party or securely destroy all Confidential Information (including all copies, extracts, and summaries) in its possession or control, at the disclosing party's election; (b) immediately revoke all access to the disclosing party's systems, accounts, premises, and credentials; and (c) on request, provide the disclosing party with written certification confirming that all Confidential Information has been returned or destroyed and all access revoked.
Note: Return and deletion obligation: Practical Law precedent includes a specific obligation to delete all copies and certify deletion on request — this is the preferred formulation and a BLOCKER requirement in the playbook. The three-step obligation (return/destroy; revoke access; certify) provides the strongest protection. If the Contractor is required to retain copies for statutory purposes (e.g., tax records), add a carve-out for statutory retention obligations.
8. DATA PROTECTION
8.1 Compliance. Each Party shall comply with its respective obligations under the Data Protection Legislation in connection with any Personal Data processed under or in connection with this Agreement.
8.2 Role of the Parties.
Note: UK GDPR Art.28: a written controller-processor contract is mandatory whenever one party processes personal data on behalf of another. Option A is for engagements where the Contractor does NOT process personal data on behalf of the Client (e.g., a pure consulting engagement with no client data access). Option B is for engagements where the Contractor does process client personal data — in that case all eight Art.28(3)(a)–(h) items must appear in the written contract. If in doubt, select Option B.
Option A — No client personal data processing: The Contractor shall not process any Personal Data on behalf of the Client in connection with the Services. If it becomes necessary for the Contractor to process Personal Data on behalf of the Client, the Parties shall amend this Agreement (or enter a separate data processing agreement) before such processing commences.
Option B — Processor engagement: To the extent that the Contractor processes Personal Data on behalf of the Client in connection with the Services, the Contractor is a 'processor' and the Client is a 'controller' for the purposes of the Data Protection Legislation. The processing details are set out in Schedule 1 Part G. The Contractor shall:
8.3 Processor obligations (Option B only). Where Option B in Clause 8.2 applies, the Contractor shall:
8.3.1 (a) Process Personal Data only on documented instructions from the Client, including with regard to transfers of Personal Data to a third country or international organisation, unless required to do so by applicable law (in which case the Contractor shall, to the extent permitted by law, inform the Client before processing);
8.3.2 (b) Ensure that all Contractor Personnel authorised to process Personal Data are subject to appropriate confidentiality obligations;
8.3.3 (c) Implement and maintain appropriate technical and organisational measures to ensure a level of security appropriate to the risk of processing, in accordance with Article 32 UK GDPR;
8.3.4 (d) Not engage a sub-processor without the Client's prior specific or general written authorisation. Where general written authorisation is given, the Contractor shall inform the Client of any intended changes and give the Client the opportunity to object. Any sub-processor shall be subject to equivalent data protection obligations to those in this Clause 8;
8.3.5 (e) Taking into account the nature of the processing, assist the Client (by appropriate technical and organisational measures) in fulfilling the Client's obligations to respond to requests from data subjects exercising their rights under Articles 15 to 22 UK GDPR;
8.3.6 (f) Assist the Client in ensuring compliance with the Client's obligations under Articles 32 to 36 UK GDPR (security of processing, notification of personal data breaches, communication of personal data breaches, data protection impact assessments, and prior consultation). As a contractual addition to this obligation, the Contractor shall notify the Client without undue delay and in any event within 48 hours of becoming aware of a personal data breach affecting Client Personal Data;
8.3.7 (g) At the Client's choice, delete or return all Personal Data to the Client at the end of the provision of services relating to processing, and delete all existing copies unless applicable law requires their retention;
8.3.8 (h) Make available to the Client all information necessary to demonstrate compliance with the obligations in this Clause 8, and allow for and contribute to audits and inspections, including by the Client or a mandated auditor, of the Contractor's data processing activities under this Agreement.
Note: UK GDPR Art.28(3): all eight items (a)–(h) above are mandatory in a controller-processor contract. The most commonly missed item is (h) — the right of audit. Sub-clause 8.3.6 adds a 48-hour breach notification obligation as a contractual addition to the Art.28(3)(f) assistance obligation; this exceeds the statutory 72-hour requirement under Art.33 (which applies to the controller, not the processor). Schedule 1 Part G must contain the five mandatory processing-detail fields required by Art.28(3): subject matter, duration, nature and purpose of processing, type of Personal Data, and categories of data subjects. Without these fields, the Art.28 written contract is incomplete.
9. LIMITATION OF LIABILITY
9.1 Uncapped liabilities. Nothing in this Agreement limits or excludes either Party's liability for: (a) death or personal injury resulting from that Party's negligence (Unfair Contract Terms Act 1977 section 2(1)); (b) fraud or fraudulent misrepresentation; (c) any other liability that cannot be limited or excluded under applicable law.
Note: UCTA 1977 s.2(1): a person cannot, by reference to any contract term, exclude or restrict liability for death or personal injury resulting from negligence. This prohibition is absolute — any term purporting to do so is void. This clause also reflects the Practical Law precedent which retains fraud as an uncapped liability. Do not remove items (a) or (b) from Clause 9.1.
9.2 Excluded loss types. Subject to Clause 9.1, neither Party shall be liable to the other for any: (a) indirect or consequential loss; (b) loss of profits; (c) loss of revenue; (d) loss of business or business opportunity; (e) loss of anticipated savings; (f) loss of goodwill; or (g) loss of data or corruption of data; in each case, whether direct, indirect, or consequential and whether arising in contract, tort (including negligence), breach of statutory duty, or otherwise, even if that Party was advised of the possibility of such losses.
Note: Loss type exclusions: UCTA 1977 s.3 (standard terms) requires exclusions to satisfy the reasonableness test (s.11 and Schedule 2). The exclusion of indirect and consequential loss is a standard market formulation and is generally upheld in commercial contracts between businesses. However, in a bespoke or negotiated agreement, the reasonableness test still applies. Ensure the excluded losses list does not inadvertently exclude the Client's right to recover Fees — that would be caught by Trap 3.
9.3 Aggregate liability cap.
Note: Liability cap: UK SME services agreements typically cap aggregate liability at 1x the total Fees paid in the preceding 12 months. A 2x cap is common for higher-risk or embedded-resource engagements. The cap MUST carve out (a) the Client's obligation to pay undisputed Fees and (b) the uncapped liabilities in Clause 9.1 — failure to carve these out is Trap 3. The Practical Law precedent uses a 12-month lookback period.
Option A — 12-month fees cap (recommended): Subject to Clauses 9.1 and 9.2, each Party's total aggregate liability to the other Party under or in connection with this Agreement (whether arising in contract, tort, breach of statutory duty, or otherwise) shall not exceed the total Fees paid or payable by the Client in the twelve (12) months immediately preceding the event giving rise to the claim. The cap in this Clause 9.3 does not apply to: (a) the Client's obligation to pay undisputed Fees properly invoiced under this Agreement; or (b) any liability that cannot be limited or excluded under Clause 9.1.
Option B — Fixed monetary cap: Subject to Clauses 9.1 and 9.2, each Party's total aggregate liability to the other Party under or in connection with this Agreement (whether arising in contract, tort, breach of statutory duty, or otherwise) shall not exceed [liability cap amount in £ (e.g. £100,000)]. The cap in this Clause 9.3 does not apply to: (a) the Client's obligation to pay undisputed Fees properly invoiced under this Agreement; or (b) any liability that cannot be limited or excluded under Clause 9.1.
9.4 Additional contractor carve-outs (optional).
Note: Consider whether to carve out of the aggregate cap any additional high-risk scenarios specific to the engagement — for example, IP indemnities, data breaches, or wilful misconduct. Including carve-outs above the general cap increases the Contractor's exposure and may affect the price. The Practical Law precedent recommends carving out IP infringement indemnities from the aggregate cap in engagements involving material IP deliverables.
Option A — IP indemnity carve-out: The aggregate cap in Clause 9.3 does not apply to the Contractor's obligations under Clause 6.4 (IP warranty) in respect of wilful infringement of third-party Intellectual Property Rights by the Contractor.
Option B — No additional carve-outs: [delete clause 9.4 if no additional carve-outs are required.]
10. TERM AND TERMINATION
10.1 Duration.
Note: Choose Option A (fixed term) for project-based engagements with a defined end date. Choose Option B (rolling) for ongoing retainer or services engagements. Both options should specify a start date in Schedule 1 Part B.
Option A — Fixed term: This Agreement commences on the Effective Date and continues until the completion of the Services or [fixed term end date (dd/mm/yyyy)], whichever is earlier, unless earlier terminated in accordance with this Clause 10 (the 'Term').
Option B — Rolling term: This Agreement commences on the Effective Date and continues until terminated by either Party in accordance with this Clause 10 (the 'Term').
10.2 Termination for material breach. Either Party may terminate this Agreement by written notice with immediate effect (or such longer period as specified in the notice) if the other Party: (a) commits a material breach of this Agreement that is incapable of remedy; or (b) commits a material breach of this Agreement that is capable of remedy and fails to remedy that breach within 20 Business Days (or such longer period as the non-breaching Party may specify) of receiving written notice requiring it to do so.
10.3 Termination for insolvency. Either Party may terminate this Agreement immediately by written notice if the other Party: (a) in the case of a company: (i) passes a resolution for voluntary winding up or a court makes a winding-up order; (ii) has an administrator appointed, or notice is filed of an intention to appoint an administrator, under Schedule B1 to the Insolvency Act 1986; (iii) a receiver, administrative receiver, or manager is appointed over any of its assets; (iv) is subject to a moratorium under Part A1 of the Insolvency Act 1986; (v) proposes or enters a company voluntary arrangement, scheme of arrangement, or restructuring plan under Parts 26 or 26A of the Companies Act 2006; or (vi) is unable to pay its debts as they fall due within the meaning of section 123 of the Insolvency Act 1986; or (b) in the case of an individual or sole trader: (i) presents or has presented against them a bankruptcy petition under section 264 or section 267 of the Insolvency Act 1986; (ii) has a debt relief order made against them; or (iii) enters into an individual voluntary arrangement under Part VIII of the Insolvency Act 1986.
Note: Insolvency triggers: Trap 4 requires the insolvency clause to distinguish between company triggers (IA 1986 Schedule B1, Part A1, Part I, CA 2006 Parts 26/26A) and individual/sole trader triggers (IA 1986 ss.264, 267, Part VIII). A generic insolvency clause that refers only to 'winding up' misses key events (administration, moratorium, CVA). The Practical Law precedent uses this multi-event approach. Do not conflate IA 1986 s.123 (cash-flow insolvency test) with wrongful trading under s.214 — s.123 satisfaction does not create any personal liability for directors.
10.4 Termination for convenience.
Note: Termination for convenience: neither Party has an implied right to terminate a services agreement for convenience under English law — this must be expressly provided for. 30 days is standard for SME service agreements; 90 days for large retainers or embedded resource. The Practical Law precedent includes a mutual right of termination for convenience.
Option A — Mutual termination for convenience: Either Party may terminate this Agreement at any time by giving at least [convenience notice period in business days (e.g. 30)] Business Days' prior written notice to the other Party.
Option B — Client-only termination for convenience: The Client may terminate this Agreement at any time by giving at least [convenience notice period in business days (e.g. 30)] Business Days' prior written notice to the Contractor.
10.5 Consequences of termination. On termination or expiry of this Agreement for any reason: (a) the Contractor shall immediately cease performing the Services; (b) the Client shall pay all undisputed Fees accrued up to the date of termination, together with any approved expenses; (c) each Party shall comply with its obligations under Clause 7.5 (return and deletion); (d) any rights or obligations that by their nature should survive termination shall continue in force, including without limitation Clauses 6, 7, 8, 9, 10.5, and 13.
10.6 Survival. Termination or expiry of this Agreement shall not affect any rights or remedies that have accrued prior to termination. Clauses 1, 6, 7, 8, 9, 10.5, 10.6, and 13 shall survive the termination or expiry of this Agreement for any reason.
11. FORCE MAJEURE
Note: Force majeure is not implied under English law — it must be expressly included. The Practical Law precedent uses a definition-based approach that excludes foreseeable events and financial difficulty. COVID-19 litigation confirmed that supply chain disruption and economic downturns are generally not force majeure events under standard English law definitions.
11.1 No breach. Neither Party shall be in breach of this Agreement or liable for any failure or delay in performance of its obligations under this Agreement to the extent that such failure or delay is caused by a Force Majeure Event, provided that the Party affected: (a) notifies the other Party in accordance with Clause 11.3; and (b) uses reasonable endeavours to mitigate the effect of the Force Majeure Event.
11.2 Definition. 'Force Majeure Event' means any event or circumstance beyond the reasonable control of the affected Party, including acts of God, natural disasters, war, civil unrest, terrorism, epidemics or pandemics declared by a relevant authority, strikes or industrial action by third parties, and failure of telecommunications or power infrastructure. A Force Majeure Event does not include: (a) any event that was foreseeable at the date of this Agreement; (b) the affected Party's financial difficulty or inability to pay; or (c) any labour dispute involving only the affected Party's own employees or contractors.
11.3 Notification and mitigation. The Party affected by a Force Majeure Event shall, as soon as reasonably practicable, notify the other Party in writing describing the event, its expected duration, and the steps being taken to mitigate its effect. The affected Party shall use reasonable endeavours to resume performance as soon as possible.
11.4 Long-stop termination. If a Force Majeure Event continues for more than [force majeure long-stop in consecutive business days (e.g. 60)] consecutive Business Days, either Party may terminate this Agreement by giving [long-stop termination notice in business days (e.g. 10)] Business Days' written notice to the other. Termination under this Clause 11.4 shall not affect any rights or obligations that have accrued prior to termination.
12. COMPLIANCE
12.1 Anti-bribery and anti-corruption. Each Party shall comply with all applicable laws relating to anti-bribery and anti-corruption, including the Bribery Act 2010. Each Party shall: (a) not offer, give, request, or receive, or authorise any person to offer, give, request, or receive, any bribe, inducement, or other improper payment in connection with this Agreement; (b) maintain adequate procedures (as referred to in section 7(2) of the Bribery Act 2010) designed to prevent persons associated with it from bribing any person; and (c) promptly report to the other Party any request or demand for any undue financial or other advantage received in connection with this Agreement.
Note: Bribery Act 2010 s.7 (failure of commercial organisations to prevent bribery): this is a strict liability offence for the corporate entity — no intention is required. A corporate entity has a defence if it can demonstrate that it had 'adequate procedures' in place to prevent bribery. The Serious Fraud Office guidance on adequate procedures covers six principles: proportionate procedures, top-level commitment, risk assessment, due diligence, communication and training, and monitoring and review. Both Parties should have a written anti-bribery policy.
12.2 Modern slavery. Each Party shall comply with the Modern Slavery Act 2015 and shall not engage in, or knowingly allow in its supply chain, slavery, servitude, forced or compulsory labour, or human trafficking. Each Party shall notify the other promptly if it becomes aware of any actual or suspected modern slavery in its operations or supply chain in connection with this Agreement.
Note: Modern Slavery Act 2015 s.54: organisations with a global annual turnover of £36m or more must publish an annual modern slavery transparency statement. For organisations below this threshold, s.54 reporting is not required but supply chain due diligence obligations may still arise under contract. This clause imposes a contractual obligation on both Parties regardless of turnover — this is the Practical Law recommended approach.
12.3 Failure to prevent fraud. Where a Party is a 'large organisation' as defined in sections 201–202 of the Economic Crime and Corporate Transparency Act 2023 (annual turnover > £36m, balance sheet > £18m, and more than 250 employees — meeting at least two of the three conditions), it shall have in place reasonable fraud prevention procedures within the meaning of section 199 of that Act (which came into force on 1 September 2025). Each Party shall promptly notify the other if it becomes aware of any fraud committed by a person associated with the other Party in connection with this Agreement.
Note: ECCTA 2023 s.199 (failure to prevent fraud): in force from 1 September 2025 (SI 2025/349). Applies only to 'large organisations' — those meeting at least two of the three thresholds in ss.201–202 (turnover > £36m, balance sheet > £18m, >250 employees). Small and medium organisations are not subject to s.199 but may include this clause contractually for supply chain risk management. The offence is committed where a person associated with the organisation commits a fraud offence intending to benefit the organisation or any person to whom the organisation provides services. The defence is having 'reasonable procedures' in place — similar in structure to the Bribery Act s.7 defence.
12.4 Tax evasion facilitation. Each Party shall not commit a UK or foreign tax evasion facilitation offence within the meaning of sections 45–46 of the Criminal Finances Act 2017 and shall maintain reasonable prevention procedures designed to prevent persons associated with it from committing such offences in connection with this Agreement.
13. GENERAL PROVISIONS
13.1 Entire agreement. This Agreement (together with any Schedules) constitutes the entire agreement between the Parties in relation to its subject matter and supersedes all prior agreements, arrangements, representations, and understandings between the Parties, whether oral or written, relating to such subject matter. Each Party acknowledges that in entering into this Agreement it has not relied on any representation, statement, or warranty that is not set out in this Agreement, other than any representation made fraudulently. Nothing in this Clause 13.1 limits or excludes liability for fraudulent misrepresentation.
Note: Entire agreement clause: under the Misrepresentation Act 1967 s.3, a term that excludes liability for pre-contractual misrepresentation is only effective if it satisfies the UCTA 1977 reasonableness test. An entire agreement clause does not automatically negate pre-contractual representations. The Practical Law formulation — used above — includes an express carve-out for fraudulent misrepresentation and acknowledges that the clause does not prevent reliance on fraudulently-made representations. This is Trap 6 — the carve-out must appear in the operative text of the clause, not just in a helpText note.
13.2 Variation. No variation of this Agreement shall be effective unless it is in writing and signed by authorised representatives of each Party.
13.3 Assignment. Neither Party may assign, transfer, sub-contract, or deal in any other manner with all or any of its rights or obligations under this Agreement without the prior written consent of the other Party, such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing, the Client may assign this Agreement to any member of the Client's group (as defined in section 1159 of the Companies Act 2006) on written notice to the Contractor.
13.4 Waiver. No failure or delay by a Party to exercise any right or remedy under this Agreement shall operate as a waiver of that right or remedy. No single or partial exercise of any right or remedy shall preclude any further exercise thereof or the exercise of any other right or remedy.
13.5 Severance. If any provision of this Agreement is held to be unlawful, invalid, or unenforceable, that provision shall be modified to the minimum extent necessary to make it lawful, valid, and enforceable. If such modification is not possible, the relevant provision shall be deemed deleted. The modification or deletion of any provision under this Clause 13.5 shall not affect the validity or enforceability of the remaining provisions.
13.6 Notices. Any notice or other communication required under this Agreement shall be in writing and shall be delivered: (a) by hand; (b) by first class post or recorded delivery to the address specified in Schedule 1 Part E; or (c) by email to the address specified in Schedule 1 Part E, provided that the sender receives an automated or manual acknowledgement of receipt (out-of-office replies do not constitute acknowledgement). Notices shall be deemed received: in the case of hand delivery, when delivered; in the case of post, two Business Days after posting; and in the case of email, when the acknowledgement is received.
13.7 Governing law and jurisdiction. This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales. Each Party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any such dispute or claim.
13.8 Third-party rights. No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to it. The Parties may vary or rescind this Agreement without the consent of any third party.
13.9 Counterparts and electronic signatures. This Agreement may be executed in any number of counterparts, each of which when executed shall constitute a duplicate original. A counterpart executed by electronic signature (including DocuSign or equivalent) shall be as effective as a counterpart executed by handwritten signature for the purposes of section 7 of the Electronic Communications Act 2000.
EXECUTED as an agreement on the date first written above.
Signed by the Client:
Signature: ___________________________ Name: [client authorised signatory full name]
Title: [client authorised signatory title] Date: [date signed by the client (dd/mm/yyyy)]
Signed by the Contractor:
Signature: ___________________________ Name: [contractor authorised signatory full name]
Title: [contractor authorised signatory title] Date: [date signed by the contractor (dd/mm/yyyy)]
SCHEDULE 1 — KEY COMMERCIAL TERMS
Part A — Party Details
Client's full legal name: [client full legal name]
Client's company number: [client company number]
Client's registered address: [client registered office address]
Contractor's full legal name / trading name: [contractor full legal name or trading name]
Contractor's company number (if applicable): [contractor company number, or 'n/a' if sole trader]
Contractor's address for service: [contractor address for service]
Contractor's VAT number (if applicable): [contractor vat registration number, or 'n/a' if not vat-registered]
Part B — Contract Structure
Effective Date: [effective date (dd/mm/yyyy)]
Term / End Date (Option A) or Rolling (Option B): [fixed end date in dd/mm/yyyy format, or the word 'rolling']
IR35 Client Size (Option A small / Option B medium-large): [ir35 client size: 'option a — small' or 'option b — medium or large']
Part C — Insurance
Professional indemnity insurance — minimum limit: [professional indemnity limit in £ per claim and in aggregate (e.g. £2,000,000 per claim, £4,000,000 aggregate)]
Public liability insurance — minimum limit: [public liability limit in £ per occurrence (e.g. £5,000,000)]
Employer's liability (if applicable): [employers' liability limit in £, or 'n/a' if contractor has no employees (statutory minimum is £5,000,000)]
Part D — Fee Schedule
Fee structure (Option A fixed / Option B T&M): [fee structure: 'option a — fixed fee' or 'option b — time and materials']
Fee amount / Rate(s): [fee amount or rate in £ (e.g. £25,000 fixed for the project; or £750 per day; or £95 per hour)]
Maximum spend (Option B only): [maximum spend in £ for time and materials engagements, or the word 'uncapped']
Invoicing frequency: [invoicing frequency (e.g. monthly in arrears; on completion of each milestone; other)]
Payment terms: [payment terms (e.g. 30 business days from receipt of a valid invoice)]
Approved expense types and limits: [approved expenses, e.g. 'none'; or 'travel up to £500 per month and pre-approved subsistence at hmrc scale rates']
Milestone schedule (Option A): [milestone schedule (e.g. discovery — £5,000 on effective date; build — £15,000 on uat sign-off; launch — £5,000 on go-live)]
Part E — Notice Details
Client notice address: [client notice address (full postal address)]
Client notice email: [client notice email address]
Contractor notice address: [contractor notice address (full postal address)]
Contractor notice email: [contractor notice email address]
Part F — IR35 Working Practices Summary
This Part F summarises the key working practices that support the IR35 Determination. It should be completed before the commencement of the engagement and updated when any material change occurs under Clause 4.4.
Does the Contractor have a genuine and unfettered substitution right?: [yes (clause 3.4 option a) / no (option b)]
Is the Contractor integrated into the Client's business and management structure?: [yes / no — describe]
Is there mutuality of obligation beyond individual assignments?: [yes / no]
Does the Client have the right to control how (not just what) work is done?: [yes / no — describe]
Does the Contractor use their own equipment, tools, and materials?: [yes / no]
Is the Contractor financially dependent on the Client (sole or dominant client)?: [yes / no]
Overall IR35 assessment: [inside chapter 8 / inside chapter 10 / outside ir35]
Note: This working practices summary forms part of the written record supporting the IR35 Determination under ITEPA 2003 s.61NA. Where Chapter 10 applies, it should be attached to or referenced in the SDS. It should be reviewed at the start of each renewal period and whenever there is a material change in working arrangements.
Part G — Data Protection: Art.28 Processing Details (Option B only)
Complete this Part G where Clause 8.2 Option B applies. These fields are required by Article 28(3) UK GDPR to constitute a valid controller-processor written contract.
Subject matter of processing: [subject matter of processing (e.g. 'hr data for payroll processing'; 'customer support enquiries')]
Duration of processing: [duration of processing (e.g. 'for the term of this agreement and for 6 months following termination, after which all personal data will be deleted')]
Nature and purpose of processing: [nature and purpose of processing (e.g. 'collection, storage, use, and disclosure by transmission to authorised recipients, for the purpose of [insert purpose]')]
Type(s) of Personal Data: [types of personal data (e.g. names, work email addresses, telephone numbers, employment records, financial data)]
Categories of data subjects: [categories of data subjects (e.g. the client's employees; the client's customers; the client's suppliers; website visitors)]
Note: Art.28(3) UK GDPR requires the contract to set out the subject matter, duration, nature and purpose of the processing, the type of personal data, and the categories of data subjects. All five fields must be completed — a template that leaves these blank is a BLOCKER. The processing description should be specific enough to define the permitted scope — a generic description ('any personal data shared by the Client') creates ambiguity about permitted use and may breach the data minimisation principle (Art.5(1)(c)).
SCHEDULE 2 — SERVICES AND DELIVERABLES
Part A — Services Description
The Contractor shall provide the following services ('Services'):
[detailed description of the services to be provided (describe by reference to activities, outcomes, or a statement of work — avoid language that implies employment, e.g. 'reporting to', 'carrying out duties as directed')]
Note: Services description: be specific — a vague scope is a significant source of dispute in independent contractor engagements. Describe the services by reference to activities, deliverables, or outcomes rather than job title. Avoid language that implies employment (e.g., 'reporting to [name]', 'carrying out all duties as directed'). The Practical Law precedent recommends describing services by reference to a Statement of Work (SOW) attached to the Schedule rather than in the body of the Agreement — this allows scope to be updated without amending the core Agreement.
Part B — Deliverables
The Contractor shall produce the following Deliverables by the dates specified:
Deliverable 1: [deliverable 1 description] — due: [deliverable 1 due date (dd/mm/yyyy)]
Deliverable 2: [deliverable 2 description] — due: [deliverable 2 due date (dd/mm/yyyy)]
Deliverable 3: [deliverable 3 description and due date — add further rows below as required]
Part C — Working Arrangements
Location(s) of performance: [location(s) of performance (e.g. 'remote'; or 'client premises at the client's registered office'; or 'hybrid — at least 2 days per week remote')]
Days / Hours of availability: [availability (e.g. monday to friday, 9am–5pm uk time; or as mutually agreed for each engagement)]
Progress report frequency and format: [progress reporting cadence and format (e.g. weekly written summary by email each friday; bi-weekly stand-up call)]
Key contacts: [client key contact name and role] / [contractor key contact name]
Part D — Client Inputs
The Client shall provide the following inputs, materials, access, and approvals ('Client Inputs') in a timely manner to enable the Contractor to perform the Services:
Client Input 1: [client input 1 (e.g. access to specified systems or platforms by a target date)]
Client Input 2: [client input 2 (e.g. approval of design brief within a specified number of business days of submission)]
Client Input 3: [client input 3 (e.g. provision of specified data, materials, or specifications by a target date — add further rows as required)]
Note: Client dependencies: the Contractor should include in Schedule 2 Part D all information, decisions, and access they reasonably need from the Client. If the Client fails to provide these inputs on time, the Contractor may rely on Clause 2.5 to adjust timescales. Without a clear Client Input list, the Contractor may have difficulty demonstrating that a delay was caused by the Client rather than the Contractor.
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