Relationship of Parties Clause

Summary

This clause on relationship of parties provides that the parties to an agreement are not partners or agents of the other and that they are acting as independent contractors. The clause includes practical guidance and drafting notes. A relationship of the parties clause, also referred to as an independent contractor clause, is often used in commercial agreements, including supply of goods and services contracts. The purpose of the provision is to minimize the risk of a court finding that the agreement created an unanticipated employer/employee, partnership, joint venture or agency relationship between the parties, as such relationships will invoke a host of fiduciary, tax and other unwanted liability consequences. Clear wording is required in an agreement to avoid creating an unintended legal relationship between the parties. A well-drafted relationship of parties clause can prevent a party being unexpectedly responsible for the liabilities, acts or omissions of another party due to the...