What to include in a consulting agreement or contract

If you’re a consultant in Australia, having a contract or agreement in place with a client can provide some protection for all parties as you provide your services. Here are five things to include in your consulting agreement.

1. Payment terms

Under the terms of your consulting service contract, it’s important to have clear direction regarding payment. Keep your clients informed on how much you are charging and when payment is due.

There are a variety of ways you may wish to handle payment. You may choose to charge:

• a fixed-fee for each project;
• an hourly rate; or
• an upfront deposit, with the remainder due on completion of a series of deliverables.

You and your client may also agree on a set timeframe for the client’s payment. It’s also a good idea to include a clause that relieves you of your obligation to continue providing your services if you do not receive the correct fees.

Additionally, inform your client about whether you will charge for any additional expenses incurred. For example, you may choose to pass on the cost of travel, printing expenses, or government fees to your client.

2. Intellectual property

As a consultant, you will likely develop some of your own intellectual property (IP) that you will use to provide your consulting services.

To help protect your IP from misuse, you can underline in your consulting agreement what you want to happen to any pre-existing IP you hold or new IP you create. Similarly, your client can do the same for their pre-existing IP.

3. Dispute resolution

Despite your intention to minimise the risk of disputes by having a clear consulting agreement, disagreements can still arise. Consider having a dispute resolution clause in your consulting agreement. This clause sets out the steps you and your client may take before initiating legal action.

3. Termination

Both you and your client may enter into a consulting agreement with the intention of meeting each other’s obligations. However, circumstances might arise where one party wishes to end the relationship. Therefore, consider including a termination clause that governs this process.

Your termination clause may outline:

• how much notice is required to terminate;
• what each party is required to do upon termination (for example, you can request each party return the other’s intellectual property); and
• payment required by the client for services completed and expenses incurred up until the point of termination.

5. Liability

Your clients rely on the information and advice you provide, but mistakes can happen. When this happens, you may be called to take on a degree of responsibility.

One way to reduce this exposure is by excluding liability for events outside of your control, such as:

• your client’s actions;
• the actions of third parties; or
• “consequential loss”, such as loss of profits or business opportunities.

Consultants can further reduce their risk with business insurance. For instance, Professional Indemnity can safeguard your consultancy practice against claims of errors, negligence or breach of duty. And with BizCover, you can get fast, simple, and cost-effective business insurance in under 10 minutes!