Four Essential Aspects of a Consultancy Contract

Many companies turn to outside consultants for additional, expert help as needed. Like any other business agreement, both the consultant and the client sign a contract that defines the details of the agreement. While there are several elements to a contract, some key elements of a consulting contract are essential to ensure that both the client and the consultant benefit from the business relationship. The contract description details the scope of the project and the purpose of the contract.

This section usually answers several questions, such as what work the consultant will do, what the company wants, and what problem needs to be solved. It also outlines the method used by the consultant to meet the needs of the company. The schedule element of a consulting contract details the project deadline and any agreed schedule for completing deliverables or key tasks. This element also addresses the repercussions of any delay in work by the consultant and details when the project will be recognized as complete and the criteria for accepting completion.

The consultant fees section outlines all relevant information about payment, such as the amount and form of payment, and any opportunities for incentives or bonuses. This item also details the basis for charging, any budgetary restrictions, the definition of expenses, and whether the consultant charges an advance, a fixed consultant fee, an hourly rate, a daily rate, or a fee based on completion of the task. The warranty element details any warranty given by the consultant to the client regarding their work. For example, clients have a certain number of days to notify consultants of any errors or problems with their work.

This section also details associated costs with warranties. The confidentiality clause details terms of confidentiality that consultants must respect. This clause is essential as consultants can learn about a client's trade secrets while working for them. The confidentiality clause generally defines legal penalties consultants will face for disclosing confidential information about their client's company.

The cancellation terms detail what actions are necessary for either party to cancel the contract, as well as penalties they will face if either party cancels it. This information includes notification requirements, cancellation fees, and cancellation mechanisms. Contracts also specify how conflict resolution and litigation prevention will be handled. A consultation agreement can help lawyers establish that clients have fulfilled their contractual obligations should they be involved in a civil lawsuit. You can use an existing template to create a custom form that you can use for future consulting needs.

You can also hire an expert to draft a customized legal contract for you. For B2B representatives and sales teams who want to turn completely unknown people into paying customers, scope of work refers to a detailed description of services consultants are expected to provide. It is a protective measure that holds consultants accountable for their performance and whether they have fulfilled their part of the deal when term covered by agreement ends. Consulting agreements also often include expectations about duration of commitment between both parties. Similar to establishing scope of work, setting firm time constraints holds consultants accountable for their responsibilities and helps guide more efficient and effective work.

In most cases this section will be established in months or years. The agreement also defines duration of consulting agreement and consultant's compensation. If clients don't set clear conditions for consulting contract, their consultant could end up working with confusing objectives, operating on incorrect schedule or doing any other activity that could undermine goals or principles. A consulting agreement is legally binding document that confirms client's request for consultant assistance. As experts in their field, consultants have knowledge on particular topic that client needs to improve their business. Your company may be flexible in some aspects of consulting relationship but it's important to know in advance what requirements you won't give in.

A consulting agreement must also include an agreement that clarifies that consultant involved must keep information about your client's company or product confidential. During provision of Consulting Services parties acknowledge that Consultant may come into contact or become familiar with information that Company or its subsidiaries or affiliates may consider confidential. These components usually create an agreement but each consulting contract is unique to any type of consultant. In certain situations person hiring consultant may need to provide support services to help facilitate consulting process. A consultant is outside professional who provides experience and advice to improve company's operations in some way. Consultants provide specialized expert advice that helps clients significantly improve their businesses. For legal purposes consulting agreement should clarify that consultant will operate as independent contractor. As name suggests non-compete clause prevents consultant from competing with client such as starting competing business or working with direct competitor. Consultants can also train other staff members and oversee implementation of new business tactics, evaluate results and make necessary adjustments. Have your consultant sign consulting agreement before hiring them for job so you can start professional relationship on right foot.