What is a consulting service agreement?

A consultant is either an individual or business who will provide professional advice or services to a company or client in exchange for compensation. The main reason for hiring a consultant is to take advantage of their knowledge in a certain field, which you need to deal with an issue in your company.

Generally, you and the consultant will enter into a consulting agreement that involves a written document called a consulting contract template that outlines the terms of a provided service between you and the consultant.

It’s recommended for a consultant to have this contract before rendering their services to your business in exchange for monetary compensation. If you’re the customer, you should also have this agreement with a consultant who will perform the required service for your business.

Downloadable Templates:

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What to include?

A handshake might seem enough to seal the deal between you and a consultant, remember that without a solid consulting agreement template that’s signed by both parties, you might put your business at risk. You will feel safer with an official simple consulting agreement on-hand.

When dealing with new consultants, they might underestimate the importance of how much needs they need to cover in a consulting contract template. For instance, consider these situations:

• What will happen if you want to add more work in the middle of the project?
• What will happen if you decide that you want to end the agreement?
• Should you differentiate between ongoing and one-time setup services in your agreement?

The answers to all of these questions must be definitely addressed in the document. It should cover all of the key components to make your contract rock-solid. An effective contract should have a number of components, a few of which are strictly legal considerations.

If you’re running a consulting business, it would be to your advantage to look through these components when making a plan as you might encounter challenges you never even considered.

Those who have been in this line of business for many years already know that some of the most annoying issues with clients can actually be quickly solved directly in the agreement. Here is the full list of the components to include in the document:

• Names of the parties involved.
• List of all the services the consultant will provide.
• List of the client’s required contributions.
• Payment and compensation details.
• Deadlines and timeline details.
• Details about contract termination.
• Ownership of materials.
• The use of materials and other proprietary information.
• Terms for any additional services.
• Handling of disputes.
• Limitation of liability.
• Communication details.
• “Entire Agreement”
• “No Guarantee”
• “Headings”
• “Interpretation and Enforcement”
• “Severability”
• The signatures of all the parties involved.

How do I write a consulting contract?

You would usually hire a consultant to help solve issues relevant to their specialized fields or areas of study. Before you hire a consultant, you must first create a consulting contract template and execute it. This document outlines all the duties and roles of both parties.

The creation of the consulting agreement template entails an understanding of the contract law of your state, considering all of the details of the contract, writing the content, and executing the agreement. Here are some tips for you to create a highly effective business consulting contract:

• Think about what to include
  First, determine if you really need a consulting services agreement. Remember that a contract is a legally binding enforceable agreement. You will create this contract if you’re going to hire a consultant or if you’re a consultant looking to get hired.
  Determine if you have the ability to enter into this agreement. You have to make a decision on whether you have the legal capacity to enter into an official contract. This involves knowing what you’re getting yourself into by entering into the agreement. You should also find out what you need to create a legally binding document.
  Make sure that the terms and conditions you want to include in the document are in compliance with the laws of your state. Since contract law is always going to be the law of the state, you must meet all of your state’s requirements.
• Write the contract
  Contracts usually begin with basic details, the title of your contract, and the parties involved in the agreement. Make sure that when composing this section, include detailed descriptions of all of the parties.
  Next, explain what each of the parties will provide under the agreement. Write these in clear, readable, and short paragraphs. At this point, there is no need to get into too many details. Simply state that one party will provide consulting services and the other party will provide compensation.
  The next thing to do is to provide a definition of the consulting services to perform. The contract should specify exactly what the consultant will do. Be as detailed in your specifications and include as many details as possible. Common services include asset management, litigation support, second opinions, process improvement, and more.
  Include a provision for compensation. Your contract should also specify how you plan to compensate the consultant. For instance, some contracts specify that consultants will be periodically paid while others require a lump sum at the end of the contract. Whichever you choose, you should clearly detailed this in your document.
• Decide on the type of contractor and add all of the required information
  This decision is very important and you should clearly explain how you will treat the consultant in the document. In most cases, the consultant is an independent contractor. If you’re making a consultant an independent contractor, make that relationship clear by defining how and why the consultant should maintain their independent status.
  Also, include a clause that the consultant will waive their right to regular employee benefits like health benefits, vacation time, sick leave, and anything else you can think of that your regular employees receive. Also, include the following:
  Establish the length of the agreement
  Include a section that specifies when the consulting services will start and end.
  Include a provision for termination
  This section provides information on how the agreement can get terminated before the total completion of services. The contract specifies how much notice you or the consultant should give and how the termination will affect their compensation.
  Include boilerplate provisions and other necessary information
  Towards the end of the contract, you can include any standard provisions that are typically found in consulting agreements. You can copy most of these provisions from templates online.
  Just make sure to review the templates first and edit them as needed. Some examples of boilerplate provisions are modification provisions, severability provisions, choice of law provisions, indemnification provisions, and entire agreement provisions.
  Leave space for signatures
  Reserve space at the very end of your document where all of the involved parties will affix their signatures and the date.

Should you draft your own contract?

If you need a business consulting contract, you might consider whether you will make it yourself or ask a lawyer to help you out. For this, you need to consider things carefully. For one, a badly-drafted consulting contract template might not get accepted by the consultant you want to hire.

Small-scale and simple consulting agreements are generally low-risk and more often than not, the parties involved won’t even read the document before signing it. However, this isn’t always the case. Also, there are cases when this document ends up as a subject of court proceedings.

If you don’t think you can write an effective document, it’s best to ask for help from a professional. If you want a lawyer to write the contract for you, you will have to pay for their services. For a consultancy contract, the fees would depend on its complexity. If you need to make a simple contract for a one-time consultancy, you might not need the help of a lawyer.

Often, consultancy contracts are relatively straightforward and if you’re smart enough to create other official documents for your business, it will be very likely you can also make a good contract by yourself.

To serve as your reference, you can download a template online. Some of these templates come free of charge while others require a modest license fee. With these templates, you don’t need to start from scratch and waste too much time. You may consider creating your own contract if:

• Your contract’s subject matter is low-risk.
• The value of your contract isn’t very high.
• You have found a well-written template to start.
• You’re planning to include simple and straightforward contract terms.

However, for other cases, you should consider seeking the services of a lawyer. These situations include:

• If there can be a potentially serious loss due to failure of performance.
• If your contract will be worth a lot of money.
• If you can’t find a template that fits your situation.
• If your situation involves significant legal or factual complexity.

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