A consulting contract is typically required when a client wishes to enlist an expert or a specialist in a particular field to give them advice on certain projects and/or occurrences. The consultant, for legal purposes, is considered an independent contractor who provides their input in exchange for monetary compensation. They may be paid by the hour or may choose to receive a lump sum in exchange for their input.
Some clients may want to retain their services, and so they will require a retainer. This essentially functions as a method of โpre-payingโ for their services and will require the consultant to approximate the number of hours for which the client will have to pay them in advance. Retainers can last for as long as the client wishes, but they typically range from a few months to a year.
Free Templates
When Will I Need a Consulting Contract?
A consulting contract is needed when a client wishes to enlist an expert for advice and/or consultancy with regard to a particular project. The expert functions as an independent contractor, and so all proprietorship of the work will go to the owner. In exchange, the expert is paid a flat fee or is paid by the hour.
What Does a Retainer Do?
A retainer allows the client to hold on to the expertโs services for an extended period. In return, the client typically has to pay for an approximate number of hours, allowing them to hold on to the expertโs services for the period of the retainer agreement. Additionally, some contracts require the client to pay a down payment or a deposit as a token of good faith before the commencement of the contract. Clients should keep in mind that they may add clauses that entitle them to refunds in case the approximated number of hours isnโt fulfilled by the expert.
Additionally, the client may also choose to add additional clauses, such as a satisfactory performance clause, which allows them to terminate the contract at any point, exclusivity clauses, and, in some cases, non-disclosure clauses as well.
Other clauses to keep in mind
While a satisfactory performance clause may not be necessary, many clients will insist on a number of other stipulations to guarantee their protection, at least in legal terms. Here are a few clauses that are typically embedded into the body of a consulting contract:
- Confidentiality Clause: A confidentiality clause binds the expert and the client to non-disclosure regarding any particulars, details, or events that take place during their working relationship. It also prevents the consultant from disclosing any confidential information regarding the job after the term of the contract, which is why many clients insist on such a clause.
- Non-compete Clause: Essentially, a non-compete clause prevents either party, i.e., the client and the consultant, from competing with each other directly, both during and after the term of the contract.
- Indemnification Clause: An indemnification clause holds the consultant liable in the instance that he or she performs any action that, intentionally or not, hurts the interest of the client during the term of the consulting contract.
- Termination Clause: This allows the client to prematurely terminate the contract if they are unsatisfied with the consultantโs work. In the event of premature termination, they will have to pay the consultant for the hours worked but will not have to pay for any unworked hours.
Drafting a Consulting Contract with a Retainer
To help you draft a consulting contract, weโve come up with a template so that you can understand the ins and outs of drafting such a document. Additionally, weโve also developed a retainer clause and attached it to the contract. If you donโt require a retainer, you can simply remove that section and move forward with the rest. The template can be modified easily by adding or removing clauses and stipulations that apply to you and can be found below:
CONSULTING AGREEMENT TEMPLATE (with Retainer)
This consulting agreement, dated __ (date), is hereby enforceable upon signature from all of the contingent parties.
I. THE PARTIES
The parties include โThe Consultantโ (Consultant Name) with a mailing address located at
____________________________________________
(and)
โThe Client” (Client Name) with a mailing address located at
____________________________________________
Collectively, they will hereby be referred to as โThe Parties.โ
II. THE SERVICES
In the capacity of the role of consultant, the consultant agrees to provide the following services as requested by the client:
III. TERM
The Consulting Agreement is hereby scheduled to commence on _ (START DATE) and subsequently terminate on _ (END DATE). The agreement is enforceable and active upon signature from both parties.
IV. PAYMENT
For the services provided by the consultant, the client agrees to pay
(a) An hourly rate of $__/hr
(b) A total sum of $__ for the entirety of the term of the consulting agreement.
(c) Other (Please explain)
V. DEPOSIT
(a) For the purposes of enlisting the consultant, the client agrees to pay a deposit of $__.
(b) The client and the consultant agree that there will be no deposit made before the commencement of the consulting agreement.
VI. RETAINER
The client agrees to enlist the services of the consultant on a retainer basis for _ amount of time. For this retainer, the client will pay:
(a) a deposit of $_;
(b) an hourly rate of $_/hr.
(c) A total sum of $__ for the entirety of the project.
(d) Other __ (Please explain.)
VII. EXPENSES AND REIMBURSEMENT
In the capacity of the role of consultant, the consultant is hereby entitled to the following (Check the options that apply):
(a) Reimbursement for all expenses, including, but not limited to, travel, work-related expenses, supplies, equipment, operational expenses, payments to third parties that relate to the job on hand, insurance, and unemployment insurance.
(b) The consultant is not entitled to reimbursements.
VIII. ADDITIONAL CLAUSES
Here, the client and/or the consultant may insert any additional clauses that they believe are integral to their needs. Additionally, any other terms and conditions may be added here.
IX. THE AGREEMENT IN ITS ENTIRETY
The agreement explicitly detailed above hereby represents the entirety of the arrangement between the parties and hereby overrides any previous or existing agreement, contractual or not, that may have been in place prior to the signing of this contract. No additional clauses will be binding unless agreed upon by both parties.
The parties hereby agree to the aforementioned terms and conditions.
CLIENT NAME ________
CLIENT SIGNATURE ________ DATE ________
CONSULTANT NAME ________
CONSULTANT SIGNATURE DATE ________
Frequently Asked Questions
A consulting contract should generally include the details of both parties, i.e., the client and the consultant, the services offered by the consultant, the terms of the arrangement, payment-related specifics (amount, method of payment, schedule, etc.), terms and conditions, a retainer, if needed, and any other additional clauses, such as non-disclosure, exclusivity, and right-to-terminate clauses.
A client may insert a right-to-terminate clause, which gives them the ability to prematurely end the contract if they are unsatisfied with the performance and abilities of the consultant. They will have to pay the consultant for the hours worked, but they will not have to pay the remainder of the amount. They may also be entitled to a complete refund if no work has been done.
A retainer allows a client to hold on to the services offered by a consultant for extended periods of time. Typically, they pay the consultant in advance for an approximate number of hours. In some cases, they may also choose to pay a deposit at the start of the contract as a token of good faith, but that isnโt absolutely necessary. A retainer may be signed for any amount of time, but the general convention dictates that it is usually signed for a few months to a year. Clients may also add extra clauses, such as non-disclosure, indemnity, right-to-terminate, and exclusivity clauses, to further protect their interests.