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How to Write a Consulting Contract

Consultants perform a number of services for people or organizations that hire them. Before a consultant is hired, they often create and execute a consulting contract, which lays out the duties of all the parties involved. In order to create an effective consulting contract, you will have to understand your state's contract law, contemplate the contract, write the contract, then execute the contract. Follow the steps in this article and adapt where necessary in order to create the best consulting contract possible.

Determine whether you have the need for a consulting contract. A contract is a legally enforceable agreement. You will write a consulting contract if you are looking to hire a consultant or if you are a consultant looking to be hired. A consultant is someone who provides professional or expert advice.

Determine whether you have the ability to enter into a consulting contract. You will need to decide if you have the legal capacity to enter into a valid contract, which involves knowing what you are getting yourself into by entering into the agreement. Also, you will want to know what is needed to create a legally binding contract. Those requirements include:

An offer
Valid consideration
Mutual assent and
A legal purpose

Ensure the terms and provisions you want to put in your contract comply with your state's laws. Contract law is always going to be state law, so you will need to make sure you meet your state's requirements. For example, some states have strict laws regarding liquidated damage provisions while other states allow them more freely.

Writing the Consulting Contract

Start with the basic information. This will include the title of your contract and the parties making the agreement. When writing this section, be sure to include detailed descriptions of the parties. For example, if the parties are people, you will include first and last names. If a party is a company, you will want to provide the company's name, address, and tax identification number if possible.

Be sure to clearly indicate how each party to your contract will be referred to in the rest of your contract as well (e.g., "hereinafter referred to as consultant"). Commonly, a consultant will be an individual entering into a contract with a company looking for the consultant's services. For instance, a law firm may hire an individual consultant who has expertise in hiring and firing practices.

Detail the consideration each party is providing. In short, clear, readable paragraphs, explain what each party is providing under your contract. At this point, there is no need to get incredibly detailed. Most of the time you only have to state that one party is providing consulting services and the other party is providing compensation.

For example, an acceptable provision may state: "The customer is of the opinion that the consultant has the necessary qualifications, experiences and abilities to provide services to the customer. The consultant is agreeable to providing such services to the customer on the terms and conditions set out in this agreement. In consideration of the matters described above..." This type of language is used to ensure that the requirement for valid consideration is met.

Define the consulting services to be performed. Specify exactly what the consultant will be required to do under your contract. Be detailed in your specifications and include as much information as possible.

This section may start with something like this: "The customer hereby agrees to engage the consultant to provide the customer with services consisting of (x, y, and z). The services will also include any other tasks the parties may agree on. The consultant hereby agrees to provide such services to the customer."

Common services include litigation support, asset management, process improvement, and second opinions.

Include a compensation provision. You must decide how the consultant will get paid. Some contracts may require periodic payments while others may require one lump sum payment at the end of the consulting. Whatever you choose, make sure it is detailed clearly in your contract.

If paying periodically, think about including something like this: "For the services rendered by the consultant as required by this agreement, the customer will provide compensation to the consultant of $XX.XX per hour." If paying in one lump sum, try something like this: "The compensation will be payable upon completion of the services."

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