The consulting contract is a formal, written, legal agreement that outlines the relationship and terms that are to exist between you and your consultant for the duration of time that the two of you will be working together. Consulting agreements are essential documents, and if they are drafted using the correct kind of template, it can save you from plenty of hassle in the future.
The Business-in-a-Box consulting agreement template holds all the essentials you need to form a secure relationship with your consultant.
The Essential Components of the Consulting Agreement.
Consulting statement opens by providing the name and address of both the consultant, whether they are an individual or a firm, as well as that of your company.
Following this are:
Recitals: This portion of the consulting agreement is a declaration of sorts that both parties agree to make when they begin to work together. The Recitals highlight some important parts of the consultancy relationship, one of which is that the consultant is not an employee of the company. This is important to note as consultants are not to be held to the same terms as employees are, and will not be paid the same either.
Another point to note under the recitals is that of exchanging proprietary information. Proprietary information is any classified information about your company that you may have to disclose to the consultant during the course of the consultancy. Protecting this private information from being disclosed is a key component of any strong consulting agreement.
Services: This is a vital section of your consultancy agreement. It lists out the services that the consultant will perform for you. Since these services can vary depending on what situation you are using the template in, we have given you the option to attach a detailed list of your services in appendix A, found at the very end of the template.
Consulting Period: This is simply the amount of time that the consultant will be working for you. The agreed upon date of the contracts termination should be written in the brackets of [APPLICABLE DATE]. This section also mentions that the consulting period may end in case of contract termination, the details of which are given later. Another part of this section is contract renewal. Keep in mind that the agreement mentions automatic renewal of the contract UNLESS you send a notice beforehand of contract termination.
Duties and Responsibilities: This section contains the declarations of the consulting agency. The consultant agrees to perform the duties outlined in Exhibit A to the best of their ability. Some important points to note about this section:
This section is written in a way that the consultant being hired is an organization, and not an individual. If you are hiring an individual, you will want to edit the wording of this section in order to hold an individual accountable, not a company.
This section allows you to replace your consulting agent with another agent from the same consultancy firm, in case of incompetency or any other reason.
This section once again mentions that the consultant is not an employee of the firm, and will not receive employee benefits or anything of the sort from the company.
Compensation, benefits, and expenses: The amount you pay to the consultant is to be mentioned in the [AMOUNT] brackets. If you wish to give your consultant additional benefits, they should be mentioned under the benefits heading. This section also agrees to give the consultant any reimbursement for expenses they incur during the term of consultancy.
Invoicing: This section relates to the schedule and method of payment.
Termination of contract. This section and the consultancy period section are closely related, it would be best to go back and forth between the two when filling them out. Termination is commonly done by either the consultant, the company, or due to either party facing bankruptcy or receivership. Generally, both parties can terminate the contract without giving any reason at any point, as long as they give prior notice in an agreed upon number of days. Some situations absolve the company from sending notice. In case of termination due to bankruptcy, this section also absolves the company of paying the consultant any more compensation. The Termination Obligations are also listed; they ensure that any property given to the consultant during the consultancy is to be returned upon termination of the contract.
The Assignment; Successors and Assigns sections details what is to happen to the consultancy agreement in case of a merger, takeover, or similar event happening to the company.
The place of work section specifies if the consultant is to work at the company's offices or in their own space. Following this, the time devoted to work section determines how much time the consultant will put into the work. Since the consultant is not a full time employee, they are given flexible work timings, as long as they are completing the necessary amount of work in the given deadlines.
The Confidential Information section is important, as it once again reiterates that proprietary information handed to the consultant must not be disclosed, and any property of the company must be returned upon termination of the consultancy.
The services for others section restricts the consultant from working for others during the consultancy, and the services after termination section can be used to keep the consultant from providing similar services to other clients in a specific area for an agreed upon period of time.
The status of consultant clause defines the relationship between the consultant and the company. There are several obligations that the company and the consultant have towards each other detailed in this clause, and it should be read carefully and edited according to your needs. Note that this clause also prevents either party from hiring the other company's employees for a certain period of time after termination of contract, unless written permission is taken first.
The use of work product section protects the intellectual property of the consultant which is developed during the consultancy. The consultants intellectual property can be things such as written documents, graphics etc. The consultant holds copyright and patent rights over their intellectual property, but the company is granted a license to use these materials. Determining who will own and handle the intellectual property is an important clause of this agreement, as many legal clashes between consultants and companies can result from unfair use of intellectual property.
Company representatives: The name of the person who will be present while this contract is made should be added in the [NAME] bracket.
Disputes: This clause enlists a third party to mediate any disputes arising between the client and the consultant. This third party, known as the arbitrator, will make the final decision, which is to be enforced through the courts of the region where both parties operate.
Taxes: This clause determines who will pay any and all taxes incurred during the agreement.
Liability: This section holds a warranty on behalf of the consultant that the materials and services he or she provides will be up to par with the company's standards. This section also gives the user an option to attach an additional exhibit of specific standards and formats that the consultant must be held up to. There is a specific amount of liability that the consultant will owe to the company in case of any damage or loss, which is to be entered in [AMOUNT].
Non-competition: This section restricts the consultant from communicating with the company's clients/customers for 2 years after termination of contract, and binds the consultant to a non-disclosure agreement regarding the company's trade secrets.
Other Consulting Contract Clauses
There are a few other clauses included in the consulting agreement, in order to ensure that you are not skipping over any term or obligation during the consulting period. Other important sections include the representations and warranties section, which includes declarations from the consultant. The injunctive relief section states that the company can legally stop the consultant from disclosing information if the need arises. The complete agreement clause states that this consulting agreement is the full agreement, no other contract or term is to be followed.
The indemnification clause limits the liability owed by you to the consultant following any damage or expenses, including attorney fees or court costs. Next, the attorney fees clause decides who pays this cost, should the need for it arise. The non-waiver clause determines what is to happen in case of issuance of a waiver. The remedy for breach section is in case of a breach in contract by the consultant. The applicable law section states that the consultant will operate under the laws of the region where the company and the consultant reside. The severability clause states that even if some sections of the contract are considered inapplicable, the others will still be legally binding. The scope of agreement clause agrees that every aspect of the agreement shall be enforced to the maximum extent permitted by the law. The Additional work clause states that the company shall compensate the consultant in case he or she has to do additional work not listed in the services exhibit.
Lastly, the notices section agrees that all further communication will be written and delivered to the stated company address or the consultants address. The last clause requires both the company representative and the consultant’s signatures in the given blank, alongside their names and titles.
The Benefits of Having a Consulting Agreement
Having a consultant for your business can be a very beneficial transaction. The consultant can bring an outsider perspective that can allow you to see your business's proceedings from a fresh, innovative point of view. Consultants are also considered cost saving, considering the only other option would have been to hire a permanent employee with a fixed salary.
Having the flexibility and efficiency of a consultant at your disposal may give your business a competitive edge, but you may not be getting the most out of this relationship without a properly drafted consulting agreement. Drafting your consulting agreement can help you get a clear outline of your goals and expectations from the relationship. From a legal standpoint, understanding every clause of your consulting agreement and making it as detailed as possible can help you in case of future disputes or breaches made by either party. Since it is a binding formal contract, it ensures that the consultant will give you the best possible results in their capacity. The consulting agreement template covers all areas which might affect your consulting relationship, from proprietary information to non-disclosure to termination.
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