Last updated March 26, 2024
Written by
Zack Dean Zack Dean, BComm
Zack Dean is a professional writer, editor, and communications specialist with six years of experience. He graduated from Canada’s MacEwan University with a Bachelor of Communication St...
Reviewed by
Alan Collins Alan Collins, BCL
Alan Collins is a Legal Writer and Custodian of Records for LawDepot and a member of the Alberta Law Society. Interests in literature, language and history are what prompted him to stud...
|
Fact checked by
Rebecca Koehn Rebecca Koehn, BSc, MFA
Rebecca Koehn has been working in content creation and editing for over ten years and search engine optimization for over five years. Koehn is the Content Marketing Manager for LawDepot...
What is a Consulting Agreement?
A Consulting Agreement is a contract between a consultant and client that outlines the terms of their arrangement. These documents are created when a client hires an expert in a specific area or industry to advise them.
Consulting Agreements should include terms regarding:
- Description of the services
- Payments
- Intellectual property
- Confidentiality
- Termination
- Expenses
- Indemnity
What is a consultant?
A consultant is a professional with experience who specialises in a particular area. They provide advice and expertise to enable clients to improve their business operations.
They will often observe a company and make recommendations on how to make improvements. If the consultant is hired for a long-term or ongoing arrangement, they might continue to provide their services as their plan is rolled out to see if any adjustments are necessary.
Consultants operate in a wide range of fields, including:
- Advertising and marketing
- Computers and technology
- Compliance (i.e., ensuring companies meet industry regulations and standards)
- Diversity training
- Finances
- Human resources
- Leadership
- Legal
- Real estate
- Taxes
When should I use a Consulting Agreement?
A clearly written contract establishes the terms and conditions of the service agreement and ensures that the interests of both parties are protected. Having a written contract also guarantees everyone knows what's expected of them. If a dispute occurs, the consultant and client can reference the agreement to clarify any misunderstandings about their arrangement.
Is a Consulting Agreement legally binding?
Yes, a Consulting Agreement is a legally binding document that provides some protection for each party if the other breaches the agreement. Having a written record of the arrangement can save time and money if a misunderstanding or dispute arises.
How do I write a Consulting Agreement?
You can easily create a customised Consulting Agreement by filling out LawDepot's questionnaire. Using our template will ensure you complete the necessary steps:
Step 1: Specify how long the Consulting Agreement will last
Start your Consulting Agreement by specifying how long the agreement will last between the consultant and client. Your options are:
- Single project: until the project is complete
- For a fixed term: until a specified date
- Indefinitely: service is ongoing
Step 2: Provide details about the consultant’s services
Description of the services the consultant is providing the client. It helps to be clear and specific when providing details and include any critical dates and deadlines.
Refer to the parties as "Consultant" and "Client" as these defined terms are used consistently throughout the agreement.
Step 3: Provide the consultant’s and client’s details
Provide details about the consultant and client in your agreement. State whether each party is an individual or company, and include names and addresses.
Step 4: Outline the billing details
Your Consulting Agreement needs to outline important billing details like:
- Rate of Pay: Flat rate or hourly, weekly, monthly, etc. The appropriate rate depends on the duration of the contract.
- Payment Schedule: Whether the consultant will be paid weekly, monthly or at the end of the contract. The appropriate schedule depends on the duration of the contract.
- Retainer: A reasonable amount is usually 10-50% of the total contract amount
- Interest rate on late payments: Reasonable late payment charges are up to 25% per year on unpaid sums.
A retainer is a payment the client makes upfront to the consultant before the work begins.
Step 5: Specify the written notice necessary to end the agreement early
A Consulting Agreement for a single project or a fixed term should specify how much notice is required to end the agreement early. Contracts for indefinite periods require a clause that outlines the conditions necessary to terminate the arrangement.
Seven days is typically considered sufficient notice for most short-term contracts. If the arrangement is for more than a few months, 15-30 days' notice is more appropriate.
Step 6: Detail how expenses will be handled
Decide if the client needs to reimburse the consultant for work-related expenses. If so, the agreement also needs to clarify if the consultant requires the client's pre-approval before making purchases.
Step 7: Specify who owns any intellectual property
State whether the client will receive ownership of any intellectual property created under the contract or if the consultant will retain complete ownership.
Intellectual property is any work that's a creation of the mind (e.g., music, logos, blueprints, software, etc.).
Step 8: Decide if the agreement needs a confidentiality clause
Because consultants can receive privileged information about a client due to the services provided, it's sometimes appropriate for a Consultant Agreement to include a confidentiality or non-disclosure clause.
Confidential information is any client's business or personal information that's not publicly available.
Step 9: Write additional clauses into the agreement
Include any additional clauses in your agreement that are relevant to the services the consultant is providing the client.
Step 10: Sign the agreement
Finish your agreement by dating and signing it at the bottom.
The agreement doesn't require witnesses, but it can be a good idea to include them in case the contract's validity is ever challenged.
