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The basic elements of a consulting contract spell out the terms for the exchange of the services of the consultant for consideration (payment) by the client. A consulting contract can be as complex as a multipage legal document or as simple as a typewritten letter. The key is to include all the essential elements of the consulting agreement so that the expectations are clear for both the consultant and the client. While many consulting contracts are drafted by attorneys, it is possible for a consultant to write her own contract.
Spelling Out Terms
Spell out the terms of the contract verbally with the client. This should ideally occur during a face-to-face meeting, but can also be done by telephone or even through an email exchange. Go over each of the relevant aspects of the contract and make sure you and the client are in agreement. If the consultation takes place in person or by telephone, take thorough notes of the entire conversation.
Begin the consulting contract by including the full legal names of the consultant(s) and the client(s). A statement as simple as "This contract constitutes an agreement between Consultant X and Client Y to contract the services of Consultant X in executing Project Z" is fine for an opening statement.
State each task to be completed separately or in a bullet point or item in a numbered list. Include the expected date of completion and the type of deliverable, or final product, to be presented to the client. If the consultant is expected to attend specific meetings on behalf of the client, include the meeting dates and locations.
List the procedure for approval of each step and payment after each stage of the contract (if applicable). Also, list the procedure if revisions or changes are required for approval. If partial payment will be made even with revisions, state this as well.
Spell out the procedure for client-initiated changes that are not the result of required revisions. If additional payment will be required, spell out the amount of additional payments and the procedure for making the payments.
State the total payment amount, the date(s) of payment and the method of payment. If an invoice from the consultant is required to initiate payment, include a description of the required format of the invoice.
Spell out any provisions for termination of the contract before or at the end of its term, including the disposition of any work product. Also, state whether there will be an option for renewal of the contract at the end of the term, and how a renewal will be negotiated.
State the grievance and/or mediation procedures of the contract in case of disagreement about the performance of the consultant and/or payment by the client. Spell out whether legal recourse will be available to either party in the case of a complete breakdown in communication.
Include the terms of confidentiality concerning the project, if applicable. State whether the terms of confidentiality will extend beyond the term of the contract. Also, state any consequences, legal or otherwise, for violations of confidentiality.
State any noncompete clause or provisions to the contract if applicable. A noncompete clause limits the options of the consultant to contract for similar projects or with competing clients for a specified period of time.
Make two copies of the contract for both the consultant and the client to sign. Give one copy of the signed contract to the client and keep one signed copy for your files. Having the signatures notarized provides extra assurance, but is not legally necessary.
Some clients have standard contracts that they use for all consultants. If so, read the contract carefully before signing it. If there are any elements of the contract that are unclear or present a potential problem, bring it up with the client.
If significant changes are made in the contract, it may make sense to rewrite the entire agreement. Otherwise, any changes should be presented in an addendum to the original contract and signed or initialed by both the consultant and client.
Oral contracts are often legally valid, except for contracts that fall under the Statute of Frauds (see Resources). The Statute of Frauds spells out the terms for which contracts must be written in order to be valid. Even when oral contracts are legally valid, they are often not enforceable.
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