Most consultants read a services agreement for three things: the rate, the scope and the start date. Those are the terms you already agreed on the phone. The terms that move money sit in the pages you skim — and a client’s template was written by the client’s lawyer, for the client.
Take the late-payment clause. A great many agreements say overdue invoices bear interest at 1.5% per month. Under section 4 of the federal Interest Act, when a written contract states interest for a period shorter than a year and does not also state the equivalent yearly rate, no more than 5% a year is recoverable. The clause looks like 18%. A court will read it as 5%.
Statistics Canada counted nearly 1.9 million own-account workers in 2023 — self-employed people with no employees, 9.4% of everyone working. Most of them sign the client’s paper, and the clauses below are the ones that most often decide what that paper is actually worth to the contractor.
The clauses at a glance
| Clause | What client templates often say | What to ask for |
|---|---|---|
| IP assignment | Everything you create during the term belongs to the client, from the moment it is created | Only the deliverables in the statement of work, assigned when the invoice is paid; your pre-existing materials listed and licensed |
| Moral rights | A blanket worldwide waiver | A waiver in favour of the client and its successors, if you choose to give one at all |
| Payment | Net 60 or 90, acceptance at the client’s “satisfaction”, a right of set-off | Deemed acceptance, undisputed amounts paid on time, late interest stated as a yearly rate |
| Liability | An uncapped indemnity for any breach or claim | A mutual cap at twelve months’ fees; indemnity only for your own negligence or wilful misconduct |
| Termination | The client may end it on short notice; you may end it only for breach | Payment for work done and committed costs; the same notice right for you |
| Restrictive covenants | A non-compete in your field for 12 to 24 months | A short non-solicit of clients you actually dealt with, plus confidentiality |
| Law and forum | Foreign law, foreign courts or foreign arbitration | Your province’s law and courts, or at least the right to sue for unpaid fees where you are |
Who owns what you create
Copyright starts with you. Under section 13 of the Copyright Act the author is the first owner, and the rule that gives an employer the copyright in an employee’s work does not reach an independent contractor. Section 13(4) makes an assignment invalid unless it is in writing and signed by the owner. That is why every client template contains one — and why its wording deserves more of your attention than anything else in the document.
Three things usually go wrong. The assignment covers “all work product created during the term,” which can reach the templates, code libraries, frameworks and methods you brought with you and will need for the next client. It takes effect on creation rather than on payment, so a client who never pays still owns the work. And it comes paired with a moral-rights clause written for US law. In Canada, moral rights — the right to be credited and the right to the integrity of the work — cannot be assigned at all, only waived, and an assignment of copyright is not by itself a waiver (Copyright Act, s. 14.1(2) and (3)).
Ask for three changes: an assignment limited to the deliverables named in the statement of work, effective when the related invoice is paid in full; a schedule of your pre-existing materials, licensed to the client rather than transferred; and a moral-rights waiver you have decided to give that runs to the client and its successors rather than to the world.
Scope, acceptance and change orders
A services agreement is usually two documents — the master terms and a statement of work. Read the order-of-precedence clause first. It decides which document wins when they disagree, and client templates nearly always say the master terms do, so a fee or scope point you negotiated in the statement of work can be overridden by a paragraph you never discussed.
Then find out what “done” means. A clause that makes payment depend on the client’s “satisfaction”, or on acceptance with no deadline, gives the client a way to hold the last invoice indefinitely. A deemed-acceptance rule fixes that: deliverables are accepted unless the client gives written reasons for rejecting them within, say, ten business days. A change-order clause does the same for scope — work outside the statement of work is quoted and approved in writing before you start it, at your current rates. Without one, scope creep costs the client nothing.
Getting paid: payment terms, interest and GST/HST
Check when you can invoice, how long the client has to pay, what happens when the client disputes an invoice, and whether the client can set off amounts it says you owe against what it owes you. Net 60 and net 90 are common in large-company templates and you may not move them, but you can usually require the undisputed part of an invoice to be paid on time and any dispute to be raised within a fixed window. If you are paid in US dollars, the agreement should say so and say who bears the wire fees.
Late interest is where the Interest Act matters. If the clause says 1.5% per month, add the yearly equivalent — “1.5% per month (19.56% per year)” — or state the rate annually to begin with. A monthly rate with no annual statement caps what you can recover at 5% a year.
On tax, you must register for GST/HST once your taxable supplies pass $30,000 in a single calendar quarter or over four consecutive quarters. The agreement should say the fees are exclusive of GST/HST, so the tax is added on top rather than carved out of your rate. Services supplied to a non-resident business are often zero-rated, but not always — check before you leave the tax off an invoice to a US client. If you are deciding whether to invoice personally or through a company, the trade-offs are in incorporating versus staying a sole proprietor.
Liability caps, indemnities and insurance
An agreement from a large client often contains an indemnity — your promise to cover the client’s losses — for any breach, any third-party claim and any intellectual property infringement, with no ceiling. Your fee for the engagement might be $40,000. The exposure has no number at all.
Canadian courts generally enforce limitation-of-liability clauses between commercial parties, and they use the three-step test from Tercon Contractors Ltd. v. British Columbia, 2010 SCC 4: does the clause apply on its words, was it unconscionable when the contract was made, and is there an overriding public-policy reason not to enforce it. That cuts both ways. A cap you negotiate will probably hold, and so will the absence of one. The detail is in how Canadian courts treat limitation of liability clauses.
The usual ask is a mutual cap equal to the fees paid in the twelve months before the claim, a mutual exclusion of indirect and consequential losses, and indemnities limited to claims caused by your own negligence or wilful misconduct. Confidentiality breaches and IP indemnities are often carved out of the cap; if they are, ask for a separate, higher cap rather than none. Then read the insurance clause. Minimum limits for professional liability, commercial general liability and cyber cover can cost more each year than a small engagement pays, and the agreement may require you to name the client as an additional insured.
What happens if the client ends the contract early?
Many templates let the client terminate for convenience on short notice — ten days is not unusual — while you can terminate only if the client breaches. At minimum you want payment for work performed up to the termination date and for costs you have already committed, and the same right to end the engagement on notice.
Ontario courts recognise a middle category between employee and independent contractor: the dependent contractor, who is owed reasonable notice of termination much as an employee is. The hallmark is economic dependency, usually shown by complete or near-complete exclusivity, which the Court of Appeal for Ontario in Thurston v. Ontario (Children’s Lawyer) described as substantially more than a majority of your income coming from one client. In Keenan v. Canac Kitchens (2016) the same court upheld an award of 26 months’ notice to a couple it found to be long-service dependent contractors. A clear contractual notice period will often limit that entitlement, which is one reason clients include one.
If one client is most of your income, work out how long it would take you to replace it, and negotiate that notice period now. Statistics Canada found that in March 2025 only 25.3% of self-employed workers had disability insurance, so for many contractors the termination and payment terms are the main income protection they have.
Is a non-compete in a contractor agreement enforceable?
Ontario’s ban on non-compete agreements, added to the Employment Standards Act, 2000 in 2021, protects employees. It does not cover genuine independent contractors, so a non-compete in your consulting agreement is tested under the common law — is it reasonable in duration, territory and the activities it covers, and does the client have a legitimate interest to protect? Courts have refused to enforce many broad ones, as when non-competes are enforceable in Canada explains. That is not a reason to sign one. Finding out would cost you a lawsuit, and in the meantime the client can tell your next client you are bound.
Offer a non-solicitation clause aimed at the client’s customers you actually dealt with, for a short period, together with a confidentiality clause; between them they protect what the client genuinely needs. Watch for exclusivity during the term as well. Apart from capping your income, exclusivity is evidence that you are an employee or a dependent contractor — which a client that wanted a contractor should not want either.
Does the agreement make you an independent contractor?
No. In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, the Supreme Court of Canada framed the central question as whether the person is performing the services as a person in business on their own account. Who controls how and when the work is done, who supplies the tools, whether you can hire help, and whether you carry the chance of profit and the risk of loss all feed the answer. The CRA applies the same approach for CPP and EI. Its long-standing guide RC4110 was cancelled on 30 January 2026 and replaced by an online page, Employment status: Employee or self-employed, and either party can still ask the CRA for a formal ruling.
Read the agreement for terms that cut against you: set hours, a requirement to work on site under a manager’s direction, client equipment, a bar on subcontracting. If you work through your own corporation, the stakes go up. Where you would be the client’s employee but for the corporation, the CRA can treat it as a personal services business, taxed at a 33% federal rate with most deductions denied. Other clients, your own tools and a right to send a substitute are the facts that help. A business on the other side of this relationship should read the independent contractor checklist; the factors are the same.
Governing law, forum and arbitration
A US client’s template will often choose Delaware or California law and courts, or arbitration in New York. Ask a practical question: if this client does not pay a $15,000 invoice, where would you have to sue, and what would it cost? In Uber Technologies Inc. v. Heller, 2020 SCC 16, the Supreme Court of Canada struck down an arbitration clause in Uber’s driver contract that required arbitration in the Netherlands with about US$14,500 in up-front fees. That was a standard-form contract signed by an individual driver; a court is likely to be slower to rescue a consulting business that could have negotiated. Ask for your province’s law and courts, or at least the right to sue for unpaid fees where you are.
Read what the agreement pulls in
Most agreements incorporate other documents by reference: the client’s supplier code of conduct, information-security policy, privacy terms, travel and expense policy, and sometimes online terms the client can change without telling you. Ask for copies and read them before signing. Security policies in particular can require background checks, specific software or audit rights over your systems, and a breach of a policy you have not read is still a breach.
How to raise the changes
Many large clients expect a contractor to push back on some of this, and their legal teams often have pre-approved fallbacks for the liability cap and the IP assignment. Ask in writing, attach the wording you want, and keep the list short — the sections above run in rough order of what they are usually worth. A consulting agreement review at Smutylo Law+ is done on a fixed fee quoted before any work starts, and returns tracked changes with a note ranking each one; the same applies to other agreements through fixed-fee contract review.
The rate is the term you negotiated. The rest of the agreement decides whether you collect it.
Common questions
Do I own the work I create as an independent contractor in Canada?
Generally yes. The Copyright Act makes the author the first owner of copyright, and the rule giving employers the copyright in employees’ work does not apply to independent contractors. An assignment is valid only if it is in writing and signed, so check how broad the assignment in your agreement is, when it takes effect, and whether your pre-existing materials are excluded.
Can I waive or assign my moral rights?
Moral rights can be waived in whole or in part, but under s. 14.1 of the Copyright Act they cannot be assigned, and an assignment of copyright does not by itself waive them. If a client asks for a waiver, you can limit it to the client and its successors and to the deliverables.
Can I charge interest on late invoices?
Yes, if the agreement provides for it. State the rate as a yearly rate, or state the yearly equivalent of any monthly rate (1.5% per month is 19.56% per year). Under s. 4 of the Interest Act, a rate stated only for a period shorter than a year limits recovery to 5% a year.
What is a reasonable liability cap in a consulting agreement?
A common position is a mutual cap equal to the fees paid in the twelve months before the claim, with a mutual exclusion of indirect and consequential losses. Clients often carve confidentiality and IP claims out of the cap; if so, ask for a separate, higher cap rather than unlimited liability. Canadian courts generally enforce negotiated caps between businesses under the Tercon test.
Is a non-compete in an independent contractor agreement enforceable in Ontario?
It may be. Ontario’s Employment Standards Act ban on non-competes covers employees, not genuine independent contractors. A contractor non-compete is judged under the common law for reasonableness in duration, territory and scope. Courts often refuse to enforce broad ones, but a narrow non-solicit and a confidentiality clause are the safer thing to agree to.
What am I owed if a client terminates my contract early?
Whatever the agreement says, which is why it should provide for payment for work done to the termination date and for committed costs. If you earn substantially more than a majority of your income from one client, Ontario courts may treat you as a dependent contractor entitled to reasonable notice, unless a clear contractual notice clause applies.
Does signing an independent contractor agreement make me self-employed for CRA purposes?
No. The CRA and the courts look at the whole working relationship, following 671122 Ontario Ltd. v. Sagaz Industries: control, tools, the ability to hire help, and the chance of profit and risk of loss. The CRA’s former guide RC4110 was replaced in January 2026 by its online page Employment status: Employee or self-employed, and either party can request a CPP/EI ruling.
Should I sign a US client’s agreement governed by Delaware law?
Consider what it would cost to enforce. A foreign governing-law and forum clause can make an unpaid invoice uneconomic to collect. Ask for your province’s law and courts, or at least the right to sue for fees where you are. The Supreme Court of Canada struck down Uber’s Netherlands arbitration clause in Uber v. Heller, but that involved an individual driver on a standard form; a business contractor should not count on the same result.