Profit Sharing Agreement Independent Contractor Template for India

The Profit Sharing Agreement Independent Contractor is designed for businesses operating in India who wish to engage independent professionals on a profit-sharing basis rather than fixed compensation. This document is particularly relevant in scenarios where companies want to align contractor incentives with business success, common in sales, business development, and consulting relationships. The agreement ensures compliance with Indian legal requirements while clearly establishing the contractor's independent status to avoid employment misclassification risks. It includes essential provisions for profit calculation, payment terms, service scope, confidentiality, and intellectual property rights, making it suitable for various business arrangements where performance-based compensation is desired. The document is structured to comply with the Indian Contract Act, 1872, and addresses tax implications under the Income Tax Act, 1961.

1. Parties: Identification of the contracting parties including full legal names, addresses, and registration details if applicable

2. Background: Context of the agreement, nature of the business relationship, and purpose of the profit sharing arrangement

3. Definitions: Clear definitions of key terms including 'Profits', 'Revenue', 'Services', 'Intellectual Property', and other relevant terms

4. Scope of Services: Detailed description of services to be provided by the independent contractor

5. Independent Contractor Status: Clear statement of independent contractor relationship and disclaimer of employment relationship

6. Profit Sharing Structure: Detailed mechanism for calculating and distributing profits, including calculation periods and payment terms

7. Payment Terms: Timeline for payments, method of payment, currency, and handling of expenses

8. Obligations and Responsibilities: Specific duties and responsibilities of both parties

9. Term and Termination: Duration of agreement and conditions for termination by either party

10. Confidentiality: Protection of confidential information and trade secrets

11. Intellectual Property Rights: Ownership and rights to intellectual property created during the engagement

12. Representations and Warranties: Standard representations and warranties from both parties

13. Indemnification: Mutual indemnification provisions and liability limitations

14. Dispute Resolution: Process for resolving disputes, including jurisdiction and governing law

15. General Provisions: Standard boilerplate clauses including notices, amendments, and severability