B2B contracts are popular in many industries. There are instances where it is the employer who imposes this type of collaboration to avoid obligations arising from the employment law. However, it is often the candidates themselves who want to enter into a B2B contract. The reasons are, of course, well-known – it is mainly to share a smaller part of the salary with the government. Whatever the reasons for the choice, B2B cooperation is based on a contract. Usually, from legal point of view it is service contract. Since, unlike in the case of employment contracts, the law does not regulate the rules of service contracts so precisely, it pays for the collaborator entering into a B2B contract to verify several issues.
1. Remuneration rules
This is a fairly key issue that everyone will probably pay attention to. It makes sense to verify whether remuneration is to be conditioned on e.g. unilateral acceptance of the results of the services (so, the client can deny payment of the remuneration until the client accepts results of services).
Sometimes remuneration is billed on an hourly basis, which obviously makes sense in a B2B relationship. However, if the contract does not guarantee a certain number or value of assignments, this may lead to a situation where the associate does not receive any assignments, in which case they will not have performed any services and will not be entitled to remuneration at all. Contractor will, however, remain bound by the other provisions of the contract.
2. Non-compete clauses
Non-competition clauses are a common feature of B2B agreements. A person providing services under a contract is not protected in the same way as an employee under an employment contract. It is even permissible to apply a non-compete without compensation for the time after the contract expires or is terminated. A non-compete can, in practice, block the ability to perform one’s profession for anyone else than the client with whom the B2B contract has been signed for a significant period of time
Moreover, if it is not combined with a guarantee of earning from the particular client (e.g. if there is no guarantee of assignments for the contracts), it may lead to a situation when the contractor does not ear anything based on the particular B2B contract, but is not allowed to work for anyone else (although such a situation could be considered a breach of the law).
Non-competition clauses effective after the contract expires are also dangerous, if they prohibit contractor to work in their profession for any entity anywhere (contractors should negotiate requesting that effects of such clauses should be limited to e.g. only clients of the entity that they signed the B2B contract with).
3. Duty to remain on standby
Generally, with an ongoing relationship, the contractor is expected to be ready to act all the time. This is normal. The problem may be a contract that at the same time does not guarantee assignments and imposes that the contractor must always be ready to perform services. Even without a non-compete obligations, this can lead to a situation where the associate is not earning money but cannot find other assignments because the client can always call on the contractor to perform services. Such a situation is all the more dangerous if a possible delay in the execution of the contract threatens a contractual penalty.
Copyright issues are a standard part of B2B contracts. They are usually addressed in great detail, covering rights as broadly as possible under current legislation.
The client is most often unlikely to be willing to discuss at all to limit the scope of the transfer of rights in a typical B2B contract. In contrast, one important aspect that a contractor may be interested in is the issue of the use of works owned by others. In many industries, it is normal practice to use off-the-shelf elements such as source code, graphics and finished assets (e.g. in video games), etc. Contracts often do not address this issue with sufficient precision.
Many standard copyright provisions, when used, make the Contractor ensure that what he presents as the result of his work has been created entirely “from scratch” by that Contractor. This, of course, does not reflect the reality of work in many industries, which is something to look out for when negotiating a B2B contract. The solution is to introduce, for example, provisions indicating under what conditions the Contractor has the right to use works protected by third-party rights.
Provisions regarding copyright may also influence possibility of using some beneficial tax options, like IP Box (allowing to lower taxation to 5%). However, this should always be individually verified with an attorney or tax advisor.
5. Written consents
In addition to written consents to incur costs, pay attention to any written form requirements in the contract. This may include consents to break the contract, acceptance of work results and even the submission of further assignments. It is worth remembering that the written form in Polish law usually means a handwritten signature (although it is possible to replace it with a qualified electronic signature, but this is not always clear). It is worth avoiding a situation in which the text of the agreement sets back the cooperation between the parties by several decades compared to the current state of technology.
These are just some of the important issues to consider when entering into B2B contracts in Poland. However, the legal issues can be complex and variable depending on the industry and context. While we mostly deal with drafting contracts for our corporate Clients, we have also helped many B2B contractors by analysing their contracts and indicating provisions that are risky.Should you have any question, you may contact author of this post: email@example.com, reach out to him on Linkedin or check website of JWMS Law Firm.