Draft Contract For Consultancy Service

A Consulting Agreement or a contract for consultancy service is a contract which is signed between a consultant and his or her client outlining the terms of their arrangement. Such a document shall be created when a client appoints an expert for some specific area or industry to advise them.

Consulting Agreements include terms related to:

• Description of services
• Payments to be made
• Intellectual property, if any
• Confidentiality
• Termination
• Expenses
• Indemnity

Who is a consultant ?

A consultant is called a professional who has experience and specialises in a particular field. They provide advice as well as expertise to assist their clients improve their business operations.

They would often observe a company and make recommendations as to how to make improvements. In case the consultant is appointed for a long-term or for an ongoing arrangement, they may continue to offer their services as their plan is carried out and observe if any adjustments are necessary.

Consulting Agreement can be used

A clearly written contract would establish the terms and conditions of the service agreement and would ensure that the interests of both parties remain protected. Having a written contract would  also guarantee that each party is aware of what’s expected of them. In case when a dispute does arise, the consultant and client could refer to the agreement so as to clarify any misunderstandings regarding the arrangement.

Would a Consulting Agreement be legally binding?

Consulting Agreements are legally binding documents which provide some protection for each party in case the other party breaches the agreement. A written record of the arrangement will save time and money when a misunderstanding or dispute occurs.

Consulting Agreement- Important Points

Following points would help you draft an ideal consulting agreement, or to be aware of what to look for when signing such an agreement.

Step 1: Specify the time period for which the Agreement would last

Start your Consulting Agreement by specifying how long the agreement will last between the consultant and client. Different options for the same are:

• Single project till the project gets completed
• For a fixed term till some specified date
• Indefinitely service is ongoing

Step 2: Details about the consultant services

The services provided by the consultant to the client are required to be mentioned. The description must be clear and specific and must include any critical dates or deadlines as per the requirement.

The parties would have to be referred to as “Consultant” and “Client” as these defined terms shall be used consistently throughout the agreement.

Step 3: The details about the consultant and the client

Details about the consultant and client must be mentioned  in the agreement. It must be explained if  each party is an individual or company and include shall names and addresses.

Step 4: The billing details

The Consulting Agreement is required to outline important billing details such as the: 

• Rate of Pay Payment to be made on an hourly, weekly, monthly basis or all together etc. The rate of payment shall depend upon the duration of the contract.
• Payment Schedule If the consultant would be paid weekly, monthly or at the end of the contract, the appropriate schedule for the payment would depend on the duration of the contract.
• Interest rate on late payments Acceptable allowed late payment charges are up to 25% per year on the sums not paid.

Step 5: Written notice required to end the agreement early

A Consulting Agreement for a single project or a fixed term must specify about the time period before which notice is required to end the agreement early. Contracts signed for an indefinite period would require a clause  outlining the conditions necessary to terminate the arrangement.

Seven days are generally considered to be sufficient notice for most short-term contracts. In case  the arrangement is for more than a few months, 15-30 days’ notice is more appropriate.

Step 6: Detail as to how expenses would be handled

If a client needs to reimburse the consultant for work-related expenses, the agreement would also need to clarify whether the consultant  would need the client’s pre-approval before making respective purchases.

Step 7: Must be specified who owns any intellectual property

If the client would receive ownership of an intellectual property which is created under the contract or if the consultant would retain complete ownership.

Intellectual property is the result of a creation of the mind (such as music, logos, blueprints, software, etc.).

Step 8: Confidentiality clause

As a consultant would receive privileged information about the client due to services offered, it is sometimes appropriate for a Consultant Agreement to include confidentiality or non-disclosure clauses.

Confidential information is a client’s business or such personal information which is not publicly available.

Step 9: Additional clauses

Any other additional clauses in the agreement which are relevant to the services the consultant will be providing to the client.

Step 10: Signing the agreement

After having finished your agreement, you would have to mention the date and sign it at  the bottom.

An agreement does not require witnesses, However it would be a good idea to include them if the contract’s validity is challenged.

Conclusion

As could be understood from the above discussion, it is most important to have a properly drafted agreement signed when appointing a consultant for your business. A  consultant would provide advice and expertise to help you improve your business operations. Thus, a watertight agreement must be prepared so that you won’t have to face any harm in your business in the near future.  It therefore becomes important that you have such documents drafted or reviewed from a professional. 

Lead India offers you a team of experienced advocates who have years long experience with corporate law, and could help you prepare a proper contract for the same. In case you wish to talk to a lawyer or seek free legal advice online, you may contact us.