Consultancy contracts

Consultancy can take many forms: from individual contracts to produce a particular piece of work or to advise upon a particular process, to long-term consulting projects involving large teams, complex issues and a varied and variable services scope.

These consultancy agreement templates are designed to be adaptable to a wide range of different circumstances, and to be clear, easy to use, and flexible. They may be suitable for use whether you are a consultant offering your services to customers, or a customer considering the recruitment of a consultant.

Consultancy agreement selection

We supply 6 general consultancy agreements.

The "standard" versions of the consultancy agreements / T&Cs are designed for ease-of-use, whereas the "premium" versions contain a wide range of additional and optional clauses.

In addition to the clauses in the "standard" versions of the consulting agreements, the "premium" versions include:

• provisions on interpretation,
• a simple acceptance procedure,
• hourly-rate charging,
• variation of charges,
• more sophisticated IPR provisions allowing for third party rights,
• customer materials,
• a moral rights waiver,
• more comprehensive limitations of liability,
• indemnities,
• mutual (rather than unilateral) confidentiality provisions,
• data protection provisions,
• non-solicitation clauses,
• notices clauses, and
• more detailed boilerplate clauses.

The equivalent "terms and conditions" and "agreement" templates are very similar in substance. The difference between the template types is largely presentational.

The "consulting agreement" templates are designed to be used to create traditional agreement documents, with the parties' names stated at the top and the parties signing at the bottom. This style of consultancy agreement is typically used where the parties negotiate the terms of the document (i.e. the terms are not being imposed by one party on the other).

The "consulting terms and conditions" templates are designed to be used to create terms and conditions type documents. Usually, the specifics will be detailed in a separate document (a proposal, quotation, etc). This style of document is typically used where one party is imposing its standard terms of trading on the other party, and where the terms are not up for negotiation.

Analysis of key contract terms

This summary of the terms of the consulting agreements is not intended to be exhaustive, but it gives a good idea of the content of the documents, and also of the kinds of decisions that need to be taken in amending the documents.

Defined terms

The first substantive section, the definitions and interpretation clause, includes a number of key definitions. Four of the defined terms are considered here: "Confidential Information", "Intellectual Property Rights", "Deliverables" and "Services".

Confidential information

Most consultancy arrangements will involve the disclosure of some confidential information to the consultant, and the term "Confidential Information" is used in the standard consultancy agreement to define the limits of confidentiality. Information may be confidential by virtue of falling into a general confidentiality category (for instance, information marked "secret") or because it is specifically identified as confidential in the definition.

In the premium consultancy agreement precedents, there are two definitions of confidential information: one for information disclosed by the customer to the consultant, and one for information disclosed by the consultant to the customer.

Intellectual property rights

All of the consultancy agreement documents include a definition of intellectual property rights. The basic definition is very broad, covering not just the standard rights, such as copyright and patents, but also more obscure forms of intellectual property, such as unfair competition rights, utility models and semi-conductor topography rights. The definition should be trimmed as appropriate.

Deliverables

In the standard agreements, the "Deliverables means the deliverables specified in the Schedule". The premium agreements incorporate a more flexible definition of "Deliverables". As well as the specific deliverables defined in the schedule, the definition may be include "any other materials or works in any form or format - created by the Consultant in the course of the Project". The more capacious version of this definition may be useful, for example, where the customer is to take an assignment of the rights in the entirety of the consultant's work product. Typically, this will be the case where the work of the consultant is wholly or largely built upon materials and rights owned by the customer.

Services

A catch-all definition of "Services" is used: "the services provided or to be provided by the Consultant to the Customer under the Agreement". The specifics of the services therefore need to be set out in the body of the consultancy agreement and in the schedule. The advantage of this kind of catch-all definition is that it makes it easy to refer to every service the consultant should or does in fact provide to the customer.

Agreement duration

The last thing a consultant or customer wants is to be uncertain about whether a consultancy contract is in force or not. The start date and end date (and where appropriate start time and end time) of a contract should therefore be certain and easily established.

The standard consultancy agreement and the standard T&Cs document specify that they will come into force upon execution (i.e. the date when the second party to sign or otherwise agree the document does so). They continue until terminated.

The premium templates contemplate two additional, alternative possibilities. First, that the contract will continue in force until either the deliverables are accepted by the customer or the contract is terminated. Second, that the contract will endure until a given period of time elapses or a specified event occurs, subject again to earlier termination.

The consultant's duties: general considerations

The Sale and Supply of Goods and Services Act 1982 implies, into a contract for the supply of a service, an obligation that the service provider will use reasonable care and skill in the performance of the service. This base level obligation can be enhanced by contract, for example to the "good professional standard" suggested in the templates.

It is helpful if a consultancy agreement specifies whether a failure to meet a deadline or timetable laid down in the contract constitutes a material breach, potentially giving rise not only to damages but also to a right of termination. In other words, is the deadline or timetable "of the essence" of the contract? All the templates include an optional provision covering this point.

In addition to the provisions concerning the consultant's duties in the standard consultancy agreement / T&Cs templates, the premium documents contain clauses concerned with keeping the customer informed, complying with the requests and instructions of the customer, delivering the deliverables, and (this may be relevant where the project relates to a specific customer of the customer) refraining from contacting the customer's customer directly.

Acceptance

Optional deliverable acceptance provisions are included in the premium consulting contracts but not the standard ones.

If you have decided to include an acceptance procedure in your contract, the first question is this: what criteria will you use to determine whether deliverables are in fact acceptable? What are the acceptance criteria? Criteria should be objective, but not necessarily black and white. For example, the premium consultant contract templates include a suggestion that one of the acceptance criteria is that the deliverables are "of a good professional standard" or "of a reasonable standard". This kind of provision has obvious utility, notwithstanding the expanse of grey it may create.

The acceptance procedures in the consultancy agreement templates are straightforward. Within a fixed period following delivery, the customer must assess the deliverables and notify the consultant whether they meet the acceptance criteria. If the deliverables don't meet the criteria, then the consultant has a further fixed period to remedy the defects. And if the deliverables fail a second set of acceptance tests then the consultant may be considered in breach of the consultancy agreement.

This procedure may need to be adapted to suit a particular type and complexity of deliverables.

Charges

For all but perhaps a lucky few consultants, the charges are the raison d'être of the consultancy contract.

The standard precedent consulting agreements include all of the standard charges provisions you would expect to find in this type of document: an obligation on the customer to pay the charges; a procedure for the issuing of invoices; a clause identifying the time for payment.

Intellectual property rights

Many types of consultancy service will entail the creation, by the consultant, of materials that are or may be protected by intellectual property rights. For example, written reports and software will be protected by copyright; designs may be protected by design right; and patents may be available to protect inventions.

Typically, the customer will want some rights to use materials created by the consultant (a licence), and may want to own all the rights (an assignment). The standard consultancy agreement templates allow a choice between these options.

The intellectual property provisions of the premium templates are more sophisticated. First, they allow for a mixed approach, with some rights being assignment to the customer while others are retained by the consultant and licensed to the customer. Second, there is express provision of the treatment of third party rights that subsist in the work product of the consultant. Third, there is a further assurance clause enabling the customer to request that the consultant acts to ensure assigned rights are properly vested in the customer. Fourth, there is a waiver of moral rights. And fifth, there is an express cross-license, by means of which the customer licenses the consultant to use materials the rights in which are controlled by the customer. All of these extra provisions are optional.

Warranties and indemnities

All of the agreement precedents contain a warranty from each party that it is legally entitled to enter into the agreement and perform its obligations under the agreement. In addition, the consultant may warrant to the customer that the deliverables will meet any specification and defined quality requirements, and will not infringe any person's rights or breach any laws.

The premium agreement precedents include an additional warranty from the consultant to the customer concerning the consultant's ability to carry out the project. They also include a warranty relating to materials supplied by the customer to the consultant mirroring that provided by the consultant in relation to the deliverables.

Finally, the premium documents include an optional indemnity from the consultant.

Other provisions

Both the standard and premium versions of our consultancy agreement and consultancy terms and conditions include a wide range of other provisions that have not been covered here: limitations and exclusions of liability, termination provisions and confidentiality provisions (to name a few) as well as the usual boilerplate clauses. If you have any questions about the contents of the documents, please ask.