This consulting services agreement is between
The Consultant has performed the same or similar activities for others.
The parties therefore agree as follows:
1. ENGAGEMENT; SERVICES.
- (a)Engagement. The Company retains the Consultant to provide, and the Consultant shall provide, the services described in Exhibit A (the "Services").
- (b)Services. Without limiting the scope of Services described in Exhibit A, the Consultant shall:
- (i) perform the Services set forth in Exhibit A. However, if a conflict exists between this agreement and any term in Exhibit A, the terms in this agreement will control;
- (ii) devote as much productive time, energy, and ability to the performance of its duties under this agreement as may be necessary to provide the required Services in a timely and productive manner;
- (iii) perform the Services in a safe, good, and workmanlike manner
by fully trained, skilled, competent, and experienced personnel using at all times adequate equipment in good working order; - (iv) communicate with the Company about progress the Consultant has made in performing the Services;
- (v) supply all tools, equipment, and supplies required to perform the Services, except if the Consultant's work must be performed on or with the Company's equipment;
(vi) ensure that all materials and equipment furnished to its personnel is of good and merchantable quality, unless otherwise agreed by the Company; (vii) (vi) provide services (including the Services) and end products that are satisfactory and acceptable to the Company and free of defects; and(viii) (vii) remove, replace, or correct all or any portion of the work or end products found defective or unsuitable, without additional cost or risk to the Company.
- (c)Legal Compliance. The Consultant shall perform the Services in accordance with standards prevailing in the Company's industry, and in accordance with applicable laws, rules, or regulations. The Consultant shall obtain all permits or permissions required to comply with those standards, laws, rules, or regulations.
- (d)Company's Obligations. The Company shall make timely payments of amounts earned by the Consultant under this agreement and notify the Consultant of any changes to its procedures affecting the Consultant's obligations under this agreement at least 30 days before implementing those changes.
- (a)Term. This agreement will become effective as described in section 21. Unless it is terminated earlier in accordance with subsection 2(b), this agreement will continue until the Services have been satisfactorily completed and the Consultant has been paid in full for those Services (the "Term").
However, this agreement may not remain effective for more than years. - (b)Termination. This agreement may be terminated:
- (i) by either party on provision of
days' written notice to the other party, with or without cause; - (ii) by either party for a material breach of any provision of this agreement by the other party, if the other party's material breach is not cured within
days of receipt of written notice of the breach; or - (iii) by the Company at any time and without prior notice, if the Consultant
is convicted of any crime or offense, fails or refuses to comply with the written policies or reasonable directives of the Company, or is guilty of serious misconduct in connection with performance under this agreement. ; or (iv) automatically, on the death of the Consultant.
- (i) by either party on provision of
- (c)Effect of Termination. After the termination of this agreement for any reason, the Company shall promptly pay the Consultant for Services rendered before the effective date of the termination. No other compensation, of any nature or type, will be payable after the termination of this agreement.
3. COMPENSATION.
- (a) Terms and Conditions. The Company shall pay the Consultant in accordance with Exhibit A.
- (b)No Payments in Certain Circumstances. No payment will be payable to the Consultant under any of the following circumstances:
- (i) if prohibited under applicable government law, regulation, or policy;
- (ii) if the Consultant did not directly perform or complete the Services described in Exhibit A;
- (iii) if the Consultant did not perform the Services to the reasonable satisfaction of the Company; or
- (iv) if the Services performed occurred after the expiration or termination of the Term, unless otherwise agreed in writing.
- (c)No Other Compensation. The compensation set out above and in Exhibit A will be the Consultant's sole compensation under this agreement.
- (d)Expenses. Any ordinary and necessary expenses incurred by the Consultant or its staff in the performance of this agreement will be the Consultant's sole responsibility.
- (e)Taxes. The Consultant is solely responsible for the payment of all income, social security, employment-related, or other taxes incurred as a result of the performance of the Services by the Consultant under this agreement, and for all obligations, reports, and timely notifications relating to those taxes. The Company has no obligation to pay or withhold any sums for those taxes.
- (f)Other Benefits. The Consultant has no claim against the Company under this agreement or otherwise for vacation pay, sick leave, retirement benefits, social security, worker's compensation, health or disability benefits, unemployment insurance benefits, or employee benefits of any kind.
4. NATURE OF RELATIONSHIP; INVENTIONS.
- (a)Independent Contractor Status.
- (i) The relationship of the parties under this agreement is one of independent contractors, and no joint venture, partnership, agency, employer-employee, or similar relationship is created in or by this agreement. Neither party may assume or create obligations on the other party's behalf, and neither party may take any action that creates the appearance of such authority;
- (ii) The Consultant has the sole right to control and direct the means, details, manner, and method by which the Services will be performed, and the right to perform the Services at any time, place, or location. The Consultant or the Consultant's staff shall perform the Services, and the Company is not required to hire, supervise, or pay any assistants to help the Consultant perform those Services. The Consultant shall provide insurance coverage for itself and its staff.
- (b)Inventions Retained and Licensed. Attached as Exhibit B to this agreement is a list of all intellectual property that the Consultant made before its agreement with the Company (the "Prior Inventions") that belong to the Consultant, that relate to the Company's proposed business, products, or research and development, and that are not assigned to the Company under this agreement. If no list is attached, the Consultant represents that there are no Prior Inventions. If disclosure of a Prior Invention would cause the Consultant to violate an existing confidentiality agreement, the Consultant may not list the Prior Invention in Exhibit B but shall instead provide the name of the invention, a list of the party or parties to which it belongs, and an explanation of why full disclosure was not given. A space is provided in Exhibit B for this purpose. If in the course of providing services to the Company, the Consultant incorporates into a Company product, process, or machine a Prior Invention owned by the Consultant or in which the Consultant has an interest, the Company will be granted and have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use, and sell that Prior Invention as part of or in connection with that product, process, or machine.
- (c)Company Inventions. The Consultant has no right or interest in any work or product resulting from the Services the Consultant performs for the Company, or any of the documents, reports, or other materials the Consultant creates in connection with those Services (collectively, the "Company Inventions"), and has no right to or interest in any copyright to the Company Inventions. The Company Inventions have been specially commissioned or ordered by the Company as "works made-for-hire," as that term is defined in the United States Copyright Act, and the Company is therefore the author and the owner of all copyrights in the Company Inventions.
- (d)Disclosure of Company Inventions. The Consultant shall promptly disclose in writing to the Company all Company Inventions that the Consultant has authored, made, conceived, or first actually reduced to practice, alone or jointly with others.
- (e)Assignment of Company Inventions. If the Company Inventions or any parts of those are deemed not to have been works made-for-hire, the Consultant hereby assigns to the Company all interest the Consultant may have in the Company Inventions, including all copyrights, publishing rights, rights to use, reproduce, and otherwise exploit the Company Inventions in all formats or media and all channels, whether now known or created in the future.
- (f)Patent and Copyright Registrations. The Consultant shall assist the Company or its designee, at the Company's expense, to secure the Company's rights in the Company Inventions and any copyrights, patents, mask work rights, or other intellectual property rights relating to the Company Inventions in all countries, including by disclosing to the Company all pertinent information and data with respect to those, by signing all applications, specifications, oaths, assignments, and other instruments that the Company deems necessary to apply for and obtain those rights and to assign and convey to the Company, its successors, assigns, and nominees the exclusive interest in the Company Inventions, and any copyrights, patents, mask work rights, or other intellectual property rights relating to those. When it is in the Consultant's power to do so, the Consultant shall sign or cause to be signed these instruments or papers after the termination or expiration of this agreement. If the Consultant provides assistance after the termination or expiration of this agreement at the Company's request, the Company shall pay the Consultant a reasonable rate for any time spent. If
because of the Consultant's mental or physical incapacity or for anyother reason the Company cannot secure a signature to apply for or pursue any application of any United States or foreign patents or copyright registrations covering Company Inventions or original works of authorship assigned to the Company, the Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Consultant's agents and attorneys in fact, to act for and on behalf of the Consultant to sign and file those applications and to do all other lawfully permitted acts to further the prosecution and issuance of patent or copyright registrations with the same legal force and effect as if they had been signed by the Consultant.
5. USE OF TRADEMARKS.
The Consultant may use, reproduce, and distribute the Company's service marks, trademarks, and trade names (if any) (collectively, the "Company Marks") in connection with the performance of the Services. Any goodwill received from this use will accrue to the Company, which will remain the sole owner of the Company Marks. The Consultant may not engage in activities or commit acts, directly or indirectly, that may contest, dispute, or otherwise impair the Company's interest in the Company Marks. The Consultant may not cause diminishment of value of the Company Marks through any act or representation. The Consultant may not apply for, acquire, or claim any interest in any Company Marks, or others that may be confusingly similar to any of them, through advertising or otherwise. At the expiration or earlier termination of this agreement, the Consultant will have no further right to use the Company Marks, unless the Company provides written approval for each such use.
6. CONFIDENTIAL INFORMATION.
- (a)Confidentiality. During the Term, the Consultant may have access to or receive certain information of or about the Company that the Company designates as confidential or that, under the circumstances surrounding disclosure, ought to be treated as confidential by the Consultant ("Confidential Information"). Confidential Information includes information relating to the Company or its current or proposed business, financial statements, budgets and projections, customer identifying information, potential and intended customers, employers, products, computer programs, specifications, manuals, software, analyses, strategies, marketing plans, business plans, and other confidential information, provided orally, in writing, by drawings, or by any other media. The Consultant will treat the Confidential Information as confidential and will not disclose it to any third party or use it for any purpose but to fulfill its obligations in this agreement. In addition, the Consultant shall use due care and diligence to prevent the unauthorized use or disclosure of such information.
- (b)Exceptions. The obligations and restrictions in subsection (a) do not apply to that part of the Confidential Information:
- (i) was or becomes publically available other than as a result of a disclosure by the Consultant in violation of this agreement;
- (ii) was or becomes available to the Consultant on a nonconfidential basis before its disclosure to the Consultant by the Company, but only if:
- A. the source of such information is not bound by a confidentiality agreement with the Company
- or is not otherwise prohibited from transmitting the information to the Consultant by a contractual,
- legal, fiduciary, or other obligation; and
- B. the Consultant provides the Company with written notice of its prior possession either (I) before
- the effective date of this agreement or (II) if the Consultant later becomes aware (through disclosure
- to the Consultant) of any aspect of the Confidential Information as to which the Consultant had prior
- possession, promptly on the Consultant so becoming aware;
- (iii) is requested or legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar processes), or is required by a regulatory body, to be disclosed. However, the Consultant shall:
- A. provide the Company with prompt notice of these requests or requirements before making a
- disclosure so that the Company may seek an appropriate protective order or other appropriate
- remedy; and
- B. provide reasonable assistance to the Company in obtaining any protective order. If a protective
- order or other remedy is not obtained or the Company grants a waiver under this agreement, the
- Consultant may furnish that portion (and only that portion) of the Confidential Information that, in
- the written opinion of counsel reasonably acceptable to the Company, the Consultant is legally
- compelled or otherwise required to disclose. However, the Consultant shall make reasonable efforts
- to obtain reliable assurance that confidential treatment will be accorded any part of the Confidential
- Information disclosed in this way; or
- (iv) was developed by the Consultant independently without breach of this agreement.
- (c)Obligation to Maintain Confidentiality.
- (i) Confidentiality. At all times during its work with the Company, the Consultant shall hold in strictest confidence, and not use, except for the benefit of the Company, or to disclose to any person, firm, or corporation without the prior written authorization of the Company, any of the Company's Confidential Information.
(ii) Term. The Consultant shall maintain the confidentiality and security of the Confidential Information until the earlier of: (A) such time as all Confidential Information disclosed under this agreement becomes publicly known and is made generally available through no action or inaction of the Consultant or (B) the anniversary of the termination of the Consultant's work with the Company. However, to the extent that the Company has disclosed information to the Consultant that constitutes a trade secret under law, the Consultant shall protect that trade secret for as long as the information qualifies as a trade secret.
- (d)Remedy. Money damages may not be a sufficient remedy for any breach of this section by the Consultant and, in addition to all other remedies, the Company may seek (and may be entitled to) as a result of such breach, specific performance and injunctive or other equitable relief as a remedy.
7. REPORTING.
8. OTHER ACTIVITIES.
During the Term, the Consultant is free to engage in other independent contracting activities, except that the Consultant may not accept work, enter into contracts, or accept obligations inconsistent or incompatible with the Consultant's obligations or the scope of Services to be rendered for the Company under this agreement.
Within
10. INDEMNIFICATION.
- (a)Of Company by Consultant. At all times after the effective date of this agreement, the Consultant shall indemnify the Company from all damages, liabilities, expenses, claims, or judgments (including interest, penalties, reasonable attorneys' fees, accounting fees, and expert witness fees) (collectively, the "Claims") that the Company may incur and that arise from:
- (i) the Consultant's negligence or willful misconduct arising from the Consultant's carrying out of its obligations under this agreement;
- (ii) the Consultant's breach of any of its obligations or representations under this agreement; or
- (iii) the Consultant's breach of its express representation that it is an independent contractor and in compliance with all applicable laws related to work as an independent contractor. If a regulatory body or court of competent jurisdiction finds that the Consultant is not an independent contractor or is not in compliance with applicable laws related to work as an independent contractor, based on the Consultant's own actions, the Consultant will assume full responsibility and liability for all taxes, assessments, and penalties imposed against the Consultant or the Company resulting from that contrary interpretation, including taxes, assessments, and penalties that would have been deducted from the Consultant's earnings if the Consultant had been on the Company's payroll and employed as a Company employee.
- (b)Of Consultant by Company. At all times after the effective date of this agreement, the Company shall indemnify the Consultant from all Claims that the Consultant may incur arising from:
- (i) the Company's operation of its business;
- (ii) the Company's breach or alleged breach of, or its failure or alleged failure to perform under, any agreement to which it is a party; or
- (iii) the Company's breach of any of its obligations or representations under this agreement. However, the Company is not obligated to indemnify the Consultant if any of these Claims result from the Consultant's own actions or inactions.
11. FORCE MAJEURE.
A party will not be considered in breach or in default because of, and will not be liable to the other party for, any delay or failure to perform its obligations under this agreement by reason of fire, earthquake, flood, explosion, strike, riot, war, terrorism, or similar event beyond that party's reasonable control (each a "Force Majeure Event"). However, if a Force Majeure Event occurs, the affected party shall, as soon as practicable:
- (a) notify the other party of the Force Majeure Event and its impact on performance under this agreement; and
- (b) use reasonable efforts to resolve any issues resulting from the Force Majeure Event and perform its obligations under this agreement.
- (a)Choice of Law. The laws of the state of
govern this agreement (without giving effect to its conflicts of law principles). - (b)Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in
County, .
13. AMENDMENTS.
No amendment to this agreement will be effective unless it is in writing and signed by a party or its authorized representative.
14. ASSIGNMENT AND DELEGATION.
- (a)No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
- (b)No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
- (c)Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.
15. COUNTERPARTS; ELECTRONIC SIGNATURES.
- (a)Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b)Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
16. SEVERABILITY.
If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.
17. NOTICES.
- (a)Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
- (b)Addresses. A party shall address notices under this section to a party at the following addresses:
- If to the Company:
, - If to the Consultant:
, - (c)Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
18. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
19. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
20. HEADINGS.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
21. EFFECTIVENESS.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
22. NECESSARY ACTS; FURTHER ASSURANCES.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
| Date:__________________________________ | By:____________________________________________________________ Name: |
| Date:__________________________________ | By:____________________________________________________________ Name: |
[PAGE BREAK HERE]
| EXHIBIT A |
| DUTIES, SPECIFICATIONS, AND COMPENSATION |
1. DUTIES.
The Consultant shall perform the following services:
2. SPECIFICATIONS.
3. COMPENSATION.
As full compensation for the Services rendered under this agreement, the Company shall pay the Consultant
(A) The first installment of is due when is completed. (A) The first installment of is due on . (B) The second installment of is due when is completed. (B) The second installment of is due on . (C) The third installment of is due when is completed. (C) The third installment of is due on . (D) The fourth installment of is due when is completed. (D) The fourth installment of is due on . (E) The fifth installment of is due when is completed. (E) The fifth installment of is due on .
[SIGNATURE PAGE FOLLOWS]
Each party is signing this Exhibit A on the date stated opposite that party's signature.
| Date:______________________________ | By:____________________________________________________________ Name: |
| By:____________________________________________________________ Name: |
[PAGE BREAK HERE]
| EXHIBIT B |
| LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP |
1. Except as listed in section 2 below, the following is a complete list of all Prior Inventions that were made, conceived, or first reduced to practice by the Consultant, alone or jointly with others, before its agreement with the Company:
| add border | ||
|---|---|---|
| Title | Date | Identifying Number or Brief Description |
| The Consultant has no inventions or improvements to list | _____________ (Initials) |
| I have attached _____ additional sheets to this Exhibit B. | _____________ (Initials) |
2. Because of an existing confidentiality agreement and the duties of confidentiality that the Consultant owes to the parties listed below, the Consultant cannot complete the disclosure in section 1 above with respect to the inventions or improvements listed generally below:
| add border | ||
|---|---|---|
| Invention or Improvement | Party Names | Relationship |
| I have attached _____ additional sheets to this Exhibit B. | _____________ (Initials) |
| Date: __________________________________ | |
| By:____________________________________________________________ Name: |
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Consulting services agreement: How-to guide
From an accounting perspective, hiring consultants is cheaper than employing an individual full-time.
In addition to the obvious expenses of salaries, bonuses, and other compensation, employees can cost a company in more subtle ways, requiring further investments in benefits, payroll taxes, insurance premiums, office space, and equipment. Such additional costs aren’t required for consultants. Companies can use these individuals for specific tasks according to business needs and can avoid the legal minefields of hiring and firing staff according to the ebb and flow of the market.
Organizations can choose experts to perform necessary work when needed and can avoid the cost and hassle of providing additional education or training to current employees.
There are risks for businesses using consultants, the most dangerous of which is that those individuals will be reclassified as employees. If this happens, the company using those consultants will be required to reimburse the IRS or state tax authority for delinquent employment taxes, interest, and penalties. Although a business can't insulate itself absolutely from reclassifications or contract audits, written consulting services agreements can offer a certain amount of protection from such charges.
This article covers the essential details of drafting a consulting agreement. However, you and your consultant must continue to discuss the terms of your agreement, settling questions about work parameters, payment, and responsibilities. Once you have agreed on contract terms and signed the agreement, each party can focus on its area of expertise: the company on developing its business and the consultant on the services to be performed.
What are the key aspects to consider in a consulting services agreement?
A consulting agreement protects the parties’ rights during the contract term. Before finalizing the terms, however, it is important to discuss what services the consultant agrees to perform and the rates applicable to it.
1. Consultant’s services and payment terms
As the hiring party, first, you must decide your goals. It can contain any agreed-on terms but should, at a minimum, include:
- A description of the consultant’s tasks
- The amount to be paid, the terms of payment
- Deadlines for completion
- The specific end products expected (if any)
Clarify the terms and conditions of your agreement before memorializing them in writing.
2. Review and revisions required
Allow each party to spend time reviewing the agreement once it is drafted. This will reduce the likelihood, or at least the efficacy, of a claim that a party didn't understand any terms or how those might affect the agreement as a whole.
3. Basic guidelines to be followed
A written agreement is only the first step in establishing an individual’s independent contractor status. Once signed, both parties must follow its terms exactly to make sure that status is maintained.
While creating your consulting agreement, it is important that you review your state’s laws governing independent contractors. In recent years, many states have made it difficult for individuals to qualify, imposing absolute requirements about the freedom a consultant must have from company control.
4. Getting signatures and renewals
Once the agreement is drafted, the involved parties need to sign two copies of the agreement. The hiring party keeps one, and the other is given to the consultant.
Keep a copy of the signed agreement for your records. You and the consultant can revisit its provisions at the end of its term and consider whether to renew.
Depending on the nature of its terms, you may decide to have your agreement witnessed or notarized. This will limit later challenges to the validity of a party’s signature.
To create a consulting agreement, you can use a sample agreement template to start. And with our straightforward template, you can get this done faster and easier. But, if your agreement is complicated, you can always seek an attorney's help to draft a document that meets your needs.
Understanding the clauses of the entire agreement
The following provision-by-provision instructions will help you understand the terms of your consulting services agreement.
1. Introduction
In this initial section, mention the relevant details of the involved parties and, if applicable, what type of organization(s) they are. The party who hires the consultant shall be addressed as the “company,” and the consultant is called the “consultant.” You also have to provide a brief description of the company’s business in the intro part.
Additionally, you need to provide the date on which the agreement will become effective (often the date on which it is signed).
2. Responsibilities
This segment lists each party’s responsibilities under the agreement. It means that the consultant agrees to perform services with adequate attention and care, and the company agrees to assist in this by providing necessary information and guidance.
You can even mention any additional obligations here. For instance, having a system where the company can provide regular feedback about the consultant’s services. Mention the person responsible for this task on the company’s behalf and include any other duties that should be taken care of by the consultant.
3. Nature of relationship
This part explains the relationship of the consultant with the company. It states that the consultant isn't an employee or partner of the company and will provide services only in the capacity of an independent contractor. This is an important distinction for legal reasons, including requirements for health insurance coverage, liability, and taxes.
The agreement seeks to emphasize this divide, but both parties should take care not to blur the line between an independent contractor and an employee in the performance of their duties. Review your state’s laws governing independent contractors to make sure that the agreement follows all the local restrictions.
4. Confidential information
Defines confidential information for purposes of the agreement and explains how the consultant will treat such information.
5. Representations and warranties
Details the parties’ promises under the agreement, which means that the involved parties agree to enter into the agreement based on the conditions listed in this section.
6. Compensation
This section explains the payment terms as agreed by the parties in detail.
- Indicates the amount of time the company has to make payments to the consultant. For many businesses, this will be about 60 days. Depending on the company’s procedures for accounts receivable, you may want to increase or decrease this time.
- The circumstances under which no payments will be made.
- Emphasizes that the payments outlined are the consultant’s only compensation for its services under the agreement.
- Notes that the consultant will pay for its own expenses. This is another reflection of the fact that the company and the consultant function as separate entities (i.e., not in the capacity of an employer-employee relationship). For example, all the travel expenses incurred by the consultant will be borne by the consultant only, and the company need not pay the consultant for it or any such expenses.
- Indicates that the consultant is responsible for paying its own taxes on the money it receives (i.e., it isn’t receiving a “salary” as an employee of the company, and the company won’t withhold those amounts on its behalf).
7. Reporting
This part requires the consultant to provide periodic reports on its progress. You can designate a contact person at the company to receive these reports, indicate how frequently they should be provided, and specify the type of information to be supplied.
8. Work for hire
Grants ownership of all work performed by the consultant under the agreement to the company, including completed products and materials produced during creation. Moreover, if any work is owned by the consultant, the consultant promises to assign its interest in any such work to the company.
9. No conflict of interest
Here the consultant gives prior written consent that they aren't currently working with any other company or product that competes with your company or business.
10. Term
Indicates that the agreement will last until termination or until the listed services are completed. This section allows the parties to set a deadline by which all services must be finished.
11. Termination
Explains that certain actions or events, including written notice or material breach, will cause the agreement to end out of time (i.e. before the services are completed or the end of the term, if any). Write in the notice period a party must give for an earlier termination or to notify the other party of a breach.
12. Return of property
This is an extremely important provision, and although it may seem obvious to you that the company’s products should be returned after the end of the agreement, this section makes that clear. Enter the time period within which the consultant must return the company’s property after the agreement is terminated.
You can also include information relating to any exclusive property the consultant might use during the agreement term. For this, you can pay the consultant. If you don’t want to bear such expenses, state in this section that the consultant is solely responsible for taking care of their property, and the company won't be held responsible for any claims arising for its damage. Also, this property won't need to be returned to the company at the termination of the agreement.
13. Indemnification
This provision allocates responsibilities between the parties if problems arise in the future and protects each party from the consequences of the other’s negligence or intentional conduct.
14. Use of trademarks
States the consultant won't use the company’s trademarks and intellectual property inappropriately or acquire a trademark of its own that is similar to the company’s. For example, an independent contractor for XYZ can't apply for a trademark on Sam’s XYZ Products. This section also states that the consultant may not continue using the company’s trademarks after the agreement terminates.
15. Modification
Indicates that any changes to the agreement are ineffective unless they're made in writing and signed by both parties.
16. Assignment
Explains that each party must obtain the other’s written permission before assigning its obligations and interests.
17. Successors and assigns
States that the parties’ rights and obligations will be passed on to heirs or, in the case of companies, successor organizations, or organizations to which rights and obligations have been permissibly assigned.
18. Force majeure
Releases a party from its obligations if its performance is made impossible by an event beyond its control (e.g., flood, earthquake, etc.). This release is effective only if circumstances continue to prevent that party’s completion of its tasks.
19. No implied waiver
This explains that if either party allows the other to ignore or break an obligation under the agreement, it doesn't mean that the party waives any future rights to require the other to fulfill those (or any other) obligations.
20. Notice
Lists the addresses to which all official or legal correspondence should be delivered. Write a mailing address for both the company and the consultant.
21. Governing law
Allows the parties to choose the state laws that'll be used to interpret the consulting agreement.
22. Counterparts; electronic signatures
The title of this provision sounds complicated, but it is simple to explain: it says that even if the parties sign the agreement in different locations, or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement. In a modern world where signing parties aren’t often in the same city—much less the same room—this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole.
With LegalZoom eSignature services, you can easily get signatures from all the parties involved and make your consulting agreement valid within the effective date mentioned in the document.
23. Severability
Protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it won't undo the entire document. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the agreement enforceable.
24. Entire agreement
The parties’ agreement that the document they’re signing is “the agreement” about the issues involved. Unfortunately, the inclusion of this provision won't prevent a party from arguing that other enforceable promises exist, but it'll provide you some protection from these claims.
25. Headings
This section explains that the headings at the beginning of each section are meant to organize the document and shouldn't be considered operational parts of the consulting agreement.
Frequently asked questions
What's a consulting services agreement?
A consulting services agreement allows you to benefit from the knowledge of an expert consultant for a stated period by helping you clarify the terms of their involvement in your business, such as efficiency analysis or expansion estimates. As an outsider or independent contractor, the consultant can maintain the necessary objectivity and bring a different point of view.
What key details should you know while creating a consulting services agreement?
To create a consulting agreement, some of the key details you need to know are:
- Information about the company or business that is hiring the consultant
- Details about the consultant, such as their name and contact information
- Specifics of the services provided by the consultant and the company's expense to hire them
- Timeline set to finish the task or project for which the consultant is hired
Free Consulting Services Agreement Template
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