Consulting Agreement Template
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Free Consulting Agreement Template Samples
To help you grow your Business we have made a quite simple yet reliable Consulting Agreement template in Word and PDF versions so you can use it repeatedly.
- • Scope of work
- • Indemnity
- • Payment terms
What is a Consulting Agreement?
A consulting agreement is a contractual document that describes a working relationship between a business and a consultant providing that company with their services. Other terms that are used to refer to a consulting agreement include:
- Business consulting agreement
- Independent contractor agreement
- Freelance agreement
- Consulting contract
The consulting agreement explains the terms of the professional relationship as a method for keeping both parties accountable when it comes to the type of work and compensation expected. Having a consulting agreement when contracting the services of an outside advisor or specialist is a standard part of running a business and helps protect your
What is a consultant?
Why do I need a Consulting Agreement?
It is always a good idea, when hiring a consultant, to insist that it be done on paper, in the form of a contract. Or instead if you are a consultant yourself it would also protect you along, both the parties will be protected equally. Hence why not give it a go?
- It protects the Client:
By getting everything down in writing, from rates to the scope of the project, to the expected timeframe, it would create a baseline for the project.
If there are any deviations from that baseline on the part of the consultant you have hired, the client can query that, and if necessary, they can have legal recourse.
- It protects the Consultant:
Many consultants have been burned by clients who did things in a more casual, gentlemen’s agreement type of manner.
Once they had accepted a project, they ended up having to complete tasks they had not included in their price, or had no access to promised resources, staff or equipment.
In fact, many good consultants will flat out refuse a project that does not require a formal consulting proposal, as well as a written contract, outlining the project, their responsibilities, role players and fees and rates.
- It helps ensure project success:
Many projects use the contract as a basis for progress meetings. Since the contract sets out the exact requirements of the project, costs, timeframes and other details, it can form the basis of progress meetings.
Simply by addressing the various requirements, as set out in the contract, or any new items that may have arisen that do not already form a part of the project, you have a comprehensive meeting agenda.
Not only are contracts useful in meetings, but they usually contain provisions for non compliance or non performance on the part of the consultants you have hired. They can therefore be used in the case of a dispute, to resolve the dispute, or even if disciplinary action or termination become a requirement
It’s clear that from the perspective of all parties involved, as well as on a project level, contracts are a smart move.
They give everyone a clear picture of what’s happening, when, how and why, and what to do if a deliverable is not met, or one of the parties reneges on a promise.
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What should be included in a Consulting Agreement?
A legally binding contract makes it convenient for both of the parties in order to avoid any misunderstandings or conflicts later on. A contract may save the parties time and money. The agreement can also help you and your lawyer prove that you fulfilled your obligations and should not be held liable for any damages.
Following are the essential elements that should be included by you being a consultant in any consulting contract:
- The scope of the work: A consulting contract should offer a detailed description of the duties you will perform and the deliverables you promise the client. The agreement may also explain how much work you will perform at the client’s office and how often you will work remotely. If you believe that you will need special equipment or other resources to do your job, make that clear in the agreement. Projects change, and a client may decide to alter the scope of your duties at any given time, potentially adding more responsibilities. In such cases, it’s a good idea to modify and re-sign the agreement so you don’t end up doing additional work without pay and the client has a written record.
- Pay and invoicing rates: A consulting agreement should specify your hourly rate or how much you will charge to complete a project. Regardless of the fee structure, make it clear how often you plan to invoice the client like monthly, quarterly, or upon the completion of a job. If you expect that the consulting project will involve travel, hotel stays, or other incidentals, the contract might specify that the client will reimburse you for these expenses.
- Timelines and deadlines: If you are advising a client on a specific project, include a timeline for the completion of your work. If a client retains your consulting services on an ongoing basis, detail your minimum or maximum billable hours each week, month, or quarter. Work with the client to establish deadlines for deliverables so that expectations are clear. You might also stipulate that you are not responsible for any missed deadlines if the client fails to provide you with the resources you need to successfully complete the job or doesn’t respond to questions in a timely manner.
- Termination clauses: It’s advisable to have an exit strategy in place if a project or client relationship doesn’t go according to plan. For instance, your business’s consulting agreement might state that you will suspend work if you are not paid on time. If a client is dissatisfied with your services, you could stipulate that they give you two weeks’ notice before terminating your contract. Or you might state that either party can end the relationship at any time for any reason.
- Dispute Resolution: It’s unlikely that you or a client will need to pursue legal action against the other party, but it’s better to have a safeguard in place. For example, if a client terminates your contract for any reason, you might hold them liable for payment on work already performed. If the client fails to compensate you within a designated amount of time and you had to file a lawsuit, you could require them to cover your legal fees and court costs.
How do I write a consulting contract?
- Basic Information:
First of all you will have to write the basic information such as the title of the contract and the parties that are involved in the contract. When writing this section, be sure to include detailed descriptions of the parties.
For example, if the parties are people, you will include first and last names. If a party is a company, you will want to provide the company’s name, address, and tax identification number if possible. Be sure to clearly indicate how each party to your contract will be referred to in the rest of your contract as well (e.g., “hereinafter referred to as consultant”).
- Role of each party:
Detail the consideration each party is providing. In short, clear, readable paragraphs, explain what each party is providing under your contract.
At this point, there is no need to get incredibly detailed. Most of the time you only have to state that one party is providing consulting services and the other party is providing compensation.
For example, an acceptable provision may state: “The customer is of the opinion that the consultant has the necessary qualifications, experiences and abilities to provide services to the customer. The consultant is agreeable to providing such services to the customer on the terms and conditions set out in this agreement. In consideration of the matters described above…” This type of language is used to ensure that the requirement for valid consideration is met.
- Services that will be provided by the consultant:
Specify exactly what the consultant will be required to do under your contract. Be detailed in your specifications and include as much information as possible.
This section may start with something like this: “The customer hereby agrees to engage the consultant to provide the customer with services consisting of (x, y, and z). The services will also include any other tasks the parties may agree on. The consultant hereby agrees to provide such services to the customer.”
Common services include litigation support, asset management, process improvement, and second opinions.
- Compensation provision:
Include a compensation provision. It must be decided how the consultant will get paid. Some contracts may require periodic payments while others may require one lump sum payment at the end of the consulting. When the decision is made, it should then be clearly mentioned in the contract.
If paying periodically, think about including something like this: “For the services rendered by the consultant as required by this agreement, the customer will provide compensation to the consultant of $XX.XX per hour.”
If paying in one lump sum, try something like this: “The compensation will be payable upon completion of the services.”
- Deciding for the Consultant to be an Employee or Independent Contractor?
This distinction is important and you should spell out how the consultant will be treated in your contract. Most of the time a consultant will be an independent contractor. If you are making the consultant an independent contractor, make that relationship clear by spelling out how and why the consultant will keep his or her independent status. Include language that the consultant will waive his or her right to regular employee benefits such as sick leave, vacation time, health benefits, and anything else you can think of that a full-time employee would receive.
Consultants are most often going to be categorized as independent contractors. This ensures that the company or the individual hiring the consultant has a minimum level of responsibility over the consultant. This can be a good thing and it often means there will be less hoops to jump through in order to start and maintain the contractual relationship (i.e., less tax and reporting responsibilities). For instance, if you characterize the consultant as an independent contractor, the independent contractor may not have to report their income, up to a certain amount, to the IRS for tax purposes.
- Duration of Contractual Agreement:
Here you will include a section defining when the consulting services will begin and when they will end.
An acceptable provision may state: “The term of this agreement will begin on the date of this agreement and will remain in full force and effect until the completion of the services, subject to earlier termination as provided in this agreement. The term of this agreement may be extended by mutual written agreement of the parties.”
- Termination provision:
This section will provide information on how you can terminate the agreement before the total completion of services. Include how much notice will have to be given and how termination will affect compensation.
- Miscellaneous information:
Include any miscellaneous information and boilerplate provisions. Towards the end of your contract you will include any standard provisions that are usually found in contracts. Most of these provisions you can simply take from a form contract you find, but make sure you read over them and ensure they say what you want them to. Some of these provisions may include:
- Severability provisions
- Modification provisions
- Indemnification provisions
- Choice of law provisions
- Entire agreement provisions
At the very end of the contract you will make space for all parties to sign the contract. This area should have spaces for your signatures and dates.
How do I protect myself as a consultant?
Here are five tried and tested ways to avoid some of the more common mistakes made by new consultants in order to protect you as a consultant.
- Put your guidelines in writing and stick by them. Have a very clear discussion laying out your professional boundaries and ask your client to do the same. Come to an understanding about working hours and response times and agree on how you will schedule calls, meetings, and Skype sessions. Once you are in agreement, put all of this information into your contract and have both parties sign it. If you are going on vacation or going to be unavailable on certain days, let your clients know as far ahead of time as possible. Ask them to do the same.
- Being afraid to put a contract in place. The most common reason for not offering up a formal agreement? Consultants were worried that doing so would cost them a gig. The best way to move past this costly concern is to understand that quality contracts are put into place to protect both parties, not for one to strong-arm the other. This is done by making responsibilities and timelines clear, securing payments and fees, and putting a formal agreement in place if the relationship does not work out.
- Protect yourself: Make it legal. For most professionals, a contract is a basic step in the process of doing good business. Put bluntly, anyone who is unwilling to put his signature where his mouth is isn’t someone you want to be in business with. Paying a few hundred dollars to have a lawyer look over your verbiage (to ensure that you have covered everything properly and are fully protected) is a worthwhile investment.
- Mistake: Not holding clients accountable. Whether it is allowing clients to hand in deliverables late, jumping through hoops to complete tasks by unreasonable deadlines, or working with an unpaid invoice, many freelancers help create a culture of chaos by not drawing a line in the sand when clients behave badly.
- Protect yourself and Create consequences. Though revisions and delays are inevitable on most large-scale projects, there needs to be a clear understanding as to who is doing what and when it is due. It is also important to remember that accountability goes beyond checking items off a list. If a client schedules a call and goes missing, doesn’t pay an invoice on time, or crosses a line, you need to have a system in place to deal with it. Charging the client for a percentage or the full amount of time you set aside for the call is not inappropriate and stopping all work until an invoice is paid is acceptable. Just be clear to have these guidelines laid out in the contract beforehand. Once they are in place, it is up to you to abide by them.
- Remember that boundaries are a good thing. As a consultant, you are not privy to the benefits of a full-time employee, nor are you involved in the day-to-day running of the business. You have been contracted to do a specific job because of your talent, not to get caught up in office politics or drama or to feel anxiety about the mood or shifting decisions of your client every day. Additionally, when on-site, you are not there to “jump in and be a team player” on tasks that are not outlined in your contract.
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Frequently Asked Questions
FAQs about our Consulting Agreement Templates
We recognize that your contract layout conditions may need to be changed to be in line together with your client’s needs. That’s why we have made Contract in Word format as well so that you’ll be able make adjustments as you like. If you want to make important changes to the template, we propose you to get help of a lawyer or conveyancer to make sure you still have protection.
Every contract has three key elements that must be present for the contract to be valid:
- The contract must contain an offer. An offer is simply something proposed by a person or business. For example, an offer for one of John Riddle’s fundraising clients may include language like this: “. . . JR will act on behalf of the XYZ nonprofit organization as a fundraising consultant to raise the necessary funds required for . . .”
- Each contract must contain acceptance. Acceptance is when one party accepts the terms offered in the contract. It’s usually a good idea to put a time limit on any contract or letter of agreement you offer a client. For example, you might state that the offer will expire in a set number of days unless it is signed and accepted.
- Each contract must contain consideration. This is the amount you’ll be paid. For example, the contract language could say something like “. . . in exchange for a monthly payment of $5,000.”
If you need to cancel a service contract or consultant agreement, you want to do so as politely as possible, while remaining forceful. Failing to use clear language can put you in a legally vulnerable position, but being too forceful can cause the relationship to end on bad terms, meaning you wouldn’t be able to work with the consultant or service provider again in the future.
If you want to terminate a service contract, you should closely read the agreement to make sure you understand its terms. Find out if there is a set end date for the agreement, and determine if there are any fees required for early termination. While a service provider ‘the Consultant’ won’t be able to force you to fulfill the agreement, it can sue you for breach of contract and may be awarded damages.
Before you cancel your contract, you should find a new provider so that there won’t be a gap in your services. You shouldn’t, however, sign a contract with your new provider until you’re sure that you can terminate your existing contract. Also, you may not want to end your current agreement if the penalties and fees are so expensive that they would make it difficult to enter into a new contract.
If you’re ready to terminate your service agreement, you should be sure to do so in writing. You can either send an email to your service provider or compose a termination letter on business stationery. You should sign this notification using both your official title and the name of your company. Signing using only your personal name may open you up to a lawsuit. Sending this notice by certified mail will provide proof that the service provider has received the termination notice.
You should begin your letter by stating clearly you are contacting the service provider in order to terminate the agreement. Include the contract number, if you have one, and state when you want the agreement to end. If the contract includes terms that allow for early termination, point your service provider to these terms.
You may be tempted to reassure your service provider that they’ve done a good job, or that his or her actions have nothing to do with why you want to end the contract. Resist this temptation, because anything that you say in the termination notice can be used against you in a future lawsuit. You should also avoid trying to justify the termination by stating that the service provider failed to perform their duties. If the provider can actually prove that they did uphold their end of the agreement, he or she may have grounds to sue you for breach of contract.