What is a Consulting Contract?A consulting contract, also known as a consulting agreement, defines the terms of service between the consultant and the client, protects the interests of both, and ensures that the client properly pays the consultant at the end of the project.
This Consulting Contract (this “Agreement” or this “Consulting Contract”), effective as of [Effective Date] (“Effective Date”), is made by and between [Client.Company] , a company organized and existing in [Client.Location] with offices located at [Client.Address] (“Company”), and [Consultant.Company] , a company organized and existing in [Consultant.Location] with offices located at [Consultant.Address] (“Consultant”).
A consultant provides expertise in a particular field. Because their services cover multiple industries, it’s important to create an agreement that is comprehensive enough to cover most contingencies between the parties, with a method of updating the contract as circumstances change. This consulting contract template can be customized for each consulting arrangement and still maintain the standard sections on statements of work, compensation, termination, intellectual property rights, and confidentiality.
WHEREAS, the Company wishes to retain the Consultant to [Description of services] as more specifically set forth in Attachment 1; and
WHEREAS, the Consultant agrees to perform the services set forth in this Agreement and Attachment 1;
Attachment 1 is an important addition to this contract. The description of services set out below is a summary, but the details of services are spelled out in the attachment. It serves as a method to modify details of service should circumstances change, and all parties must sign off on the modifications.
NOW, THEREFORE, in consideration of the foregoing recitals and the terms, conditions, and covenants contained herein, it is hereby agreed as follows:
The Company hereby engages the Consultant to render independent consulting services (“Services”) as set forth in the Statement of Work in Attachment 1 and other statements of work that may be added by way of modification to this Agreement (“Statement of Work”), all of which are incorporated in and form a part of this Agreement. Services shall be ordered when the Company issues purchase orders and/or statements of work that include this Agreement by reference or are otherwise added by modifications to this Agreement as defined herein. The Consultant shall provide the Services as requested and by the scheduled completion dates set forth in the Statement of Work or the terms of any purchase order. Time is of the essence for this Agreement and any purchase orders and/or statements of work issued hereunder.
The term of this Agreement shall commence on the Effective Date and continue until [Effective Date] unless otherwise modified by mutual, written agreement of the parties or terminated as set forth herein.
Compensation and payment can be adjusted according to how much time the project will take, the resources involved, and the overall complexity. You may decide to handle payment in a number of ways. You can choose a monthly retainer for services, an upfront deposit with the remainder due on completion of deliverables, a fixed fee for each specific project, or an hourly rate.
In consideration for Services rendered and upon the submission and approval of monthly invoices, the Company shall pay the Consultant at the rates or in accordance with the milestone payment schedule set forth on purchase order(s) issued by the Company or in the Statement of Work. In no event, however, shall the Consultant perform or receive compensation for: (a) additional services not set forth in the Statement of Work without a formal, bilateral modification to the Statement of Work encompassing such additional services; (b) services involving contingency payments prohibited by any applicable law, regulation, or the Company’s contract; or (c) services rendered that result in billings to the Company that are in excess of [Dollar amount] which is the total ceiling value or not-to-exceed (NTE) value for this Agreement.
If expressly provided for in the Statement of Work, the Company shall reimburse the Consultant for out-of-pocket travel and other miscellaneous expenses are incurred in the execution of and in relation to this Agreement. Such travel expenses include but are not limited to air/rail travel, taxis, auto rentals, meals, and lodging, provided that such reimbursement is not already included elsewhere in this Agreement, will not be in excess of that allowed in the paragraph above, and will not include reimbursement for the Consultant’s commuting to facilities within a fifty-mile radius of the Consultant’s home or place of business.
Consultants are often required to travel as part of their work, and you can include a section in your contract covering reimbursement for project-related travel, meals, transportation, and accommodation.
All reimbursable expenses must be pre-authorized by the Company in writing. Reimbursement for reasonable and actual expenses shall be made in accordance with the following rates:
All invoices shall include a breakout and description of the Services rendered, along with the actual hours and expenses incurred (for T&M type services), milestone descriptions (for FFP type services), and receipts (if required), and shall be submitted in a format prescribed by the Company and indicating the applicable purchase order number issued by the Company or Statement of Work for which the invoice relates.
The Company shall submit payment within forty-five (45) days after receipt of an invoice that complies with the requirements of this Agreement. The Company may withhold any amounts in an invoice that are in dispute, are contrary to the requirements of this Section 3, or are not substantiated by proper receipts.
Payments made to the Consultant shall not constitute or be construed as acceptance of any of the Services performed by the Consultant under this Agreement.
It is important to differentiate between the services of an employee versus those of an independent contractor like a consultant. These differences can affect intellectual property rights, tax withholding, health insurance coverage, and workers’ compensation.
The Consultant is an independent contractor, and nothing herein shall be construed to create or imply that there exists between the parties a partnership, joint venture, or other combined business organization. The Consultant shall hold no authority, express or implied, to commit, obligate, or make representations on behalf of the Company and shall make no representation to others to the contrary. Nothing herein is intended or shall be construed for creating the relation of employer and employee or agent and principal between the parties. Except as otherwise specified herein, the Consultant retains the right to direct, control, or supervise the details and means by which the consulting services are provided. The Consultant’s employees shall not be eligible for or participate in any insurance, pension, workers’ compensation insurance, profit-sharing, or other plans established for the benefit of the Company's employees.
The Consultant shall be responsible for payment of all foreign and domestic taxes arising out of the Consultant’s activities in connection with this Agreement, including without limitation, sales, goods and services, excise, value-added, or similar taxes, whether of federal or other jurisdictional level, social security taxes, unemployment insurance taxes, and any other taxes or business license fees as required. The Company shall not be responsible for withholding any income or employment taxes whatsoever on behalf of the Consultant, and the Consultant further agrees to indemnify, defend, and hold the Company harmless from and against any claims or action arising out of or relating to the Consultant’s failure to withhold such taxes on behalf of the Consultant or the Consultant’s employees.
The Consultant shall retain all books, records, documents, and other evidence pertaining to its Services rendered and billings made under this Agreement (“the Records”). The Records shall be subject to inspection and audit by the Company and the Government at all reasonable times and upon reasonable notice for a period of three (3) years after final payment under this Agreement. If any audit of the Consultant’s invoiced charges demonstrates that these charges exceed the correct charges, the Consultant shall immediately pay or refund such excess charges to the Company’s account, and if such excess charges exceed the correct charges by more than five percent (5%), the Consultant shall also pay or reimburse the Company for all reasonable costs of such audit, to include any attorney fees and costs incurred by the Company in collecting such charges from the Consultant.
Consultants often have access to confidential information related to a client’s business. The consultant’s work product may contain sensitive client data that requires a confidentiality clause, as well as one for non-solicitation and the protection of intellectual property rights. Including such clauses helps hold all parties accountable for potential fraud or disclosure breaches.
Each party shall receive in confidence (“receiving party”) from the other party (“disclosing party”) and treat as confidential all technical information, business/financial information, management information, and documentation that (i) is stamped or otherwise marked as being confidential or proprietary, whether in written or electronic form; (ii) pertains in any way to such party’s (or its affiliates’) business plans or methods; or (iii) otherwise is not generally known by others and, under the circumstances of the disclosure, the disclosing party had a reasonable expectation that the receiving party would know the information is confidential or proprietary (collectively, “Proprietary Information”). Information that is disclosed orally or visually to a receiving party shall also be deemed Proprietary Information if the disclosing party identifies such information as proprietary at the time of disclosure and, within thirty (30) days after such disclosure, reduces the subject matter of the disclosure to writing and submits it to the receiving party.
A receiving party shall hold Proprietary Information received from the disclosing party in confidence, shall use such information only for the purpose of and in accordance with this Agreement, and shall not further disclose such information to any third party without the prior written approval of the original disclosing party. The obligation to protect the confidentiality of Proprietary Information shall extend for a period of five (5) years following a party’s receipt of Proprietary Information.
The restrictions of this Section shall not apply to any information (i) lawfully received from another source free of restriction and without breach of this Agreement; (ii) that is published or becomes generally available to the public without breach of this Agreement; (iii) known by the receiving party prior to the time of disclosure; (iv) independently developed by the receiving party without resort or access to the Proprietary Information; or (v) that the disclosing party has approved for further release by the receiving party.
Proprietary Information shall remain the property of the disclosing party and shall be returned to that party or destroyed by the receiving party upon written request or termination or expiration of this Agreement. The receiving party may retain one copy of all written Proprietary Information in the files of its legal counsel and for archival purposes only.
You may have developed some of your own intellectual property that you will use when providing your consulting services. These might include your methods, research, data, or processes. It is not uncommon for both parties to retain the rights to pre-existing intellectual property.
If the Consultant wants to retain any rights to use Inventions for a portfolio or other marketing purposes, the wording in this section can be changed to reflect that.
Typically, if you are an employee, any intellectual property in the form of tools or content will be the property of the employer. If the consultant is an independent contractor, those tools and content will remain their property. Note that these rights can be reassigned, as is the case with this contract.
The Consultant hereby agrees:
Adding an insurance clause is a sign of professionalism and may increase a potential client’s willingness to contract for your services.
The Consultant agrees to procure and maintain during the term of this Agreement, at their own cost and expense, liability and property damage insurance, including automobile and contractual liability, with the following minimum liability limits:
1. $1,000,000 for injuries or death to any one person;
2. $1,000,000 for injuries or death(s) from any one accident; and
3. $1,000,000 for damage to property.
The Consultant agrees to provide appropriate certificates or other evidence of such insurance coverage as may be requested by the Company. The Consultant agrees that the procurement and maintenance of the above insurance coverage shall not limit or affect any liability that the Consultant may incur under this Agreement or otherwise.
The Consultant agrees to comply with all [State and/or Country] occupational health and safety laws, regulations and standards, and all of the Company’s safety rules of which the Consultant has been notified in the performance of Services under this Agreement. The Consultant agrees to communicate the Company’s safety rules to the Consultant’s contractors and employees. The Consultant is responsible for maintaining a safe workplace by following commercially accepted safety and health rules and practices. The Consultant is responsible for immediately reporting accidents, injuries, and unsafe equipment, practices, and conditions related to the Consultant’s performance of work for the Company to the Authorized Representative of the Company identified herein. The Company is committed to keeping its workplaces free from hazards.
The Consultant authorizes the Company to provide minor first aid to those individuals performing Services on behalf of the Consultant hereunder, with the consent of the injured person and for injuries sustained on the Company’s property. If the Company believes immediate emergency care is necessary for an illness or injury to the Consultant’s employees, the Consultant authorizes the Company to call for ambulance service.
The Consultant shall defend, indemnify, and hold the Company and its officers, directors, and employees harmless from and against all expenses, costs, damages, liabilities, and losses incurred by the Company in connection with any claim, investigation, demand, action, suit, or proceeding arising out of or resulting from the provision of any medical care, transportation, or treatment to those individuals performing Services on behalf of the Consultant hereunder.
Except as required by law, the Consultant shall not issue any press release or make any other public statement relating to this Agreement, any Services performed under this Agreement, or any of the transactions contemplated by this Agreement without obtaining the prior written approval of the Company.
If the Company is not reasonably satisfied with any Service, it will notify the Consultant with a written explanation of the deficiency. The Consultant will, at their own expense, re-perform the Service within fifteen (15) days of receipt of the Company’s notice of deficiency. The foregoing procedure will be repeated until the Company accepts or finally rejects the Service.
This Agreement may be terminated by either party in the event the other party fails to perform its obligations hereunder on time, fails to assure timely performance, or otherwise fails to perform its material obligations; provided, however, that prior to such termination the terminating party notifies the defaulting party in writing at least ten (10) days in advance, states the reasons why the Agreement should be terminated and affords the defaulting party an opportunity to cure any alleged default during such ten (10) day notice period.
Either party may terminate this Agreement, upon notice and without liability, in the event that the other party: (a) files a petition in bankruptcy; (b) has filed against it an involuntary petition in bankruptcy not dismissed within sixty (60) days; (c) consents to the appointment of a receiver, custodian, trustee, or liquidator; or (d) dissolves, liquidates, or makes a general assignment for the benefit of creditors.
The Company may terminate this Agreement, or any Services to be performed hereunder, in whole or in part, without cause and for its own convenience, by providing the Consultant with written notice of termination at least seven (7) days in advance, specifying the extent to which the Agreement is so terminated and the date upon which such termination becomes effective. The Company shall have no liability for such termination except for liability for Services rendered or expenses incurred by the Consultant in accordance with this Agreement prior to the effective date of such termination and for which payment has not been made.
Upon termination of this Agreement, the Consultant shall return to the Company all copies of any Company data, records, or materials of whatever nature and regardless of media format. The Consultant shall also furnish the Company with all work in progress or portions thereof. Within thirty (30) days following the termination or expiration of this Agreement, the Consultant shall submit to the Company a termination proposal detailing the work completed and accepted by the Company and the proposed value of such work.
The amount due to the Consultant as a result of any termination hereunder will be as follows:
Upon payment of the agreed to termination settlement amount, the Company shall thereafter have no liability or obligation to the Consultant for any further compensation, fees, expenses, or other payments related to this Agreement.
Neither the Company nor its officers, directors, employees, affiliates, or parent companies shall be liable for any injury to the person or property of the Consultant or its employees or contractors, except to the extent that such injury was directly caused by the fault or negligence of the Company or its employees acting within the scope of their employment.
In addition to any other indemnification obligation herein, the Consultant shall indemnify, defend, and hold the Company and its officers, directors, and employees, harmless from and against all expenses, costs, damages, liabilities, and losses (including without limitation, reasonable attorneys fees) incurred by the Company in connection with any claim, investigation, demand, action, suit, or proceeding (whether civil, criminal, administrative, or investigative) arising out of or resulting from the Consultant’s performance of the Services, including but not limited to, the following:
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER PARTY OR ANY THIRD PARTY, WHETHER IN CONTRACT, TORT, OR BASED UPON A WARRANTY, EVEN IF THE OTHER PARTY OR ANY THIRD PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE COMPANY’S MAXIMUM LIABILITY UNDER THIS AGREEMENT SHALL BE THE SUM OF THE STATEMENT OF WORK AND/OR PURCHASE ORDER TOTAL VALUES, LESS ANY PAYMENT MADE TO THE CONSULTANT HEREUNDER.
This Agreement is duly executed by the authorized representatives of the parties as set forth below: