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What is a Consulting Agreement?
A Consulting Agreement, also known as a consultancy agreement, is a contract between a consultant and a client that outlines the terms of their professional relationship. With this agreement, both parties can clearly define their rights and responsibilities during a work project, including details of the services provided and payment information.
What is the purpose of a consultant?
Clients often hire consultants for their expertise and knowledge in a particular field, including, but not limited to, product sales, information technology (IT), workplace safety, and business management. A consultant often provides guidance to companies looking to improve their processes and expand their business.
How do I write a Consulting Agreement?
You can use LawDepot’s Consulting Agreement template to quickly create a document that’s unique to your situation but also covers important legal terms for professional service providers. You can be as comprehensive or straightforward as you’d like. Simply answer a set of questions to customise your Consulting Contract.
The information you’ll need to write a Consulting Agreement includes:
1. Consulting details
Write a description of the consultant’s services. For example, a business management consultant might identify projects, scope potential business solutions, and coordinate sales efforts between sales representatives.
You should also include the consultant’s name (or their company name if applicable) and address.
2. Client details
Include the client’s name (or company name if applicable) and address.
Give details about the consultant’s remuneration or payment (a flat fee or an hourly rate) and whether or not they require a retainer fee. You can also specify when payments are due, such as when services are complete or at certain stages (e.g., project milestones).
The consultant may also address late payments by setting an interest rate on unpaid sums.
4. Expenses and ending the contract early
A client may agree to reimburse a consultant for expenses during a project. In this case, you can specify if the expenses need to be pre-approved and set guidelines for submitting expense claims. For instance, travel costs are often included in a client’s expense budget, but guidelines might set a limit of $750 for a given period.
If the Consulting Agreement has a fixed term, the parties can also address whether either party can end the contract early. If so, you must specify how many days of notice are needed.
5. Intellectual property and confidentiality
Many consultants produce or need access to intellectual property (IP) (i.e., a product of the mind that has commercial value). For example, creative works such as blueprints, custom software, logos, or advertisements are considered IP. As such, it’s important to state whether the client or the consultant will retain exclusive ownership rights to the IP.
Without an agreement, the client that paid for the work will typically keep ownership rights. However, some consultants may choose to retain ownership if the IP is a “tool of the trade” (i.e., a skill or piece of equipment needed to complete a job).
For example, a software developer may use a unique computer program to build a new app for a client. The computer program gives the developer a competitive edge, so they keep rights to the program but surrender the rights to the newly designed app. In this case, the consultant owner of the intellectual property may retain ownership but grant the client a limited licence to use the computer program to implement the app.
Furthermore, you should specify whether any IP or other sensitive information is confidential. If so, state how long the duty of confidentiality should last (e.g., until the end of the agreement or indefinitely).
6. Additional clauses
If there are any terms that are unique to your situation, you can address them using the additional clause section of LawDepot’s Consulting Agreement template.
How do I protect myself as a consultant?
A written contract is an essential tool for protecting both the client’s and the consultant’s best interests in a business agreement. To help prevent disputes, a contract addresses important terms of engagement that could easily be overlooked in a verbal agreement. Further, if a legal dispute arises, either party can use the contract as evidence in court to prove their rights and responsibilities.
For freelance consultants or for those who specialise in business management, be sure to register for the appropriate certifications, licences, or permits to run your business in Singapore. Having the right legal qualifications safeguards your reputation and allows you to operate your business smoothly.
Can a consultant terminate a contract?
If—for whatever reason—you need to exit the agreement before its end date, you can specify the terms for the termination in your Consulting Agreement.
For example, the contract may state that the terminating party must send written notice within a certain time period (which may vary depending on the length of the contract). Our template provides information to help you decide what period is appropriate for your situation.
If any work was accomplished before the cancellation, the consultant is typically entitled to pro-rata payment (i.e., dividing the agreed-upon payment in proportion to the amount of work that was completed). LawDepot’s Consulting Agreement template includes a term for early-termination payments when applicable.