Here’s another categories-of-contract-language issue that I’ve been mulling over:
It’s commonplace for consulting agreements to contain a provision regarding the consultant’s status as an independent contractor rather than an employee. But what category of contract language should you use for such provisions?
Obviously, it wouldn’t make sense to use language of obligation—The Consultant shall be an independent contractor.
You could use language of policy—The Consultant will be an independent contractor. But whether the Consultant is an independent contract isn’t something the parties decide by contract, as if they were stating the governing law. Instead, whether someone is a consultant or an employee depends on the nature of the services performed, not on the label the parties elect to apply to the relationship.
You could use language of declaration—The Consultant acknowledges that she will be an independent contractor. But language of declaration is for statements of fact, and whether someone is an independent contractor isn’t an established fact that a consultant can declare at the outset of the relationship.
So here’s what I’m left with—The parties intend that the Consultant will be an independent contractor. In other words, that’s what they’re planning, but whether that’s how it pans out will depend on the details of the relationship.
That creates a little awkwardness, in that the proposed provision doesn’t fall within any of the categories of contract language outlined in MSCD. Do I need to acknowledge an additional category, language of intention? Generally, the place to express intention is in the recitals, but the body of the contract seems a more suitable place for the provision under discussion.
If the consultant’s status depends on the totality of the circumstances rather than on what label the parties apply, why not omit the provision? Because the label the parties use is one factor that courts might consider in determining whether someone is an employee or an independent contractor. See 19 Williston on Contracts § 54:2 (4th ed.), which includes in a list of factors “whether the parties believe they are creating the relation of master and servant.”
It appears that I’ll never run out of nuances to explore …