When you’re looking for a consultant, you probably have a lot of expectations. Ensuring the person you hire is aware of the requirements and the payment structure is essential.
A good consulting agreement should cover all of these issues. This way, you can prevent any miscommunication or misunderstandings down the line.
Table of Contents
Scope of Work
A well-drafted consulting agreement or contract will outline the scope of work for the consultant and client. It will help avoid any potential conflicts or misunderstandings later on.
It will also ensure that all parties are on the same page and can focus on results rather than means.
The scope of work includes what the client expects from the consultant and how they can deliver on these expectations. The document also covers governance and escalation mechanisms in case of any issues that may arise during the project.
The scope of work will also include payment and invoicing rates. It will ensure that the client pays you for all of the services that you provide. To achieve your business goals, companies like Intuitive Edge contracts consulting provide a tailored strategy and tested playbook for managing your contracts.
Intellectual Property Ownership
A large part of what employees and independent consultants do is create or make intellectual property, such as inventions, discoveries, content, logos, and software. Who owns this intellectual property depends on the work performed and the agreement between your company and the employee or independent consultant.
When entering into a new consulting relationship or freelance contract, parties will often include language on intellectual property ownership in the documentation. However, this language can be problematic and needs to be carefully drafted to protect the rights of knowledge workers and creative professionals.
Expenses
A consulting agreement or contract should clearly define the services provided and how the consultant will be compensated. Furthermore, it ought to include payment details for taxes.
Some consultants will request that their clients cover some of the expenses they incur while working for them, such as copying services, messenger service, phone calls, hotel stays, and meals. These items may not be acceptable to a client, so discussing them carefully before entering into a contract is essential.
Unless the agreement states otherwise, the consultant will pay all income and self-employment (Social Security) taxes. This provision allocates risk and liability between the parties, allowing the client to pay a lower rate for services than if the client had to pay taxes separately.
Payment Schedule
The payment schedule in a consulting agreement or contract outlines the timing and method of payments. It may specify a monthly retainer, an upfront deposit with the remainder due on completion of deliverables, or a fixed fee for each project.
The type of payment schedule you choose depends on the nature of your consulting services. It can also depend on the scope of work, the time it will take, and the project’s complexity.
Confidentiality
Often, clients will require consultants to sign a contract or confidentiality agreement to protect proprietary information. It should ensure that all confidential information remains private and cannot be disclosed without prior consent from those involved in creating it or agreeing to its use.
Generally, a confidentiality agreement defines confidential information, who will know it, and why the recipient must realize it. It may also include exclusions or limits on personal information.
A choice of law clause is typically included in a confidentiality agreement, designating the law that will apply to the disclosing party’s disclosure of confidential information. It can be challenging to negotiate and affect the disclosing party’s willingness to disclose the information to the receiving party.
Termination
A termination clause is a critical part of a consulting agreement or contract. It establishes how the parties end their business relationship and their responsibilities when the relationship ends.
Aside from defining the terms of ending a consulting agreement, it also helps prevent miscommunication between parties. For example, it may require that a party keep confidential information it exchanged with the other for a certain period after the contract expires.
Termination clauses are often included in employment agreements, as well. They define what behavior may lead to the termination of an employee, such as being late for work or delivering substandard work.
