What to Include in a Consultancy Agreement Template

A consultancy agreement template in Australia is a way of buying or selling consultancy services using the same set of legal terms and conditions. A template consulting contract can save time negotiating contracts. What’s more, they can protect your consulting practice by capturing your insurance requirements and risk profile.

In this article, Farrah Motley, Director at Prosper Law and a consultant agreement lawyer, shares her insights. She explains how a template consultancy agreement template can benefit your consulting practice.

Editable commercial contract terms (including fee and scope)

A template consultancy agreement should be easy to use. This means ensuring there is a section in the contract to add the project or client-specific details.

We recommend placing the commercial terms section within the first few pages of the contract. This is because it sends a better message to see the scope and fee first when opening a contract, rather than a set of legal terms and conditions.

A limitation of liability clause in a template consulting agreement

Limit of liability

Every consulting contract should include a limitation of liability clause. This is because if there is a large enough claim then the solvency of the business may be put at risk.

The preferred limit of liability is the relevant Fee for that engagement. However, clients will often push back on such a small limit. If this happens, the limit of liability clause may exclude insurance proceeds that are (or should have been) recovered.

The limit needs to apply to every cause of action and survive termination (as well as novation or expiry). Further, it may exclude things that are within the consultant’s power to avoid. For example, infringement of intellectual property, breach of confidentiality and fraud.

Consequential loss exclusion in a consultancy agreement template

A consequential loss exclusion clause works hand-in-hand with a limitation of liability clause.

A clause in a consultancy agreement template that excludes consequential loss exclusion should specifically refer to the categories of consequential loss that are being excluded. For instance, loss of profit, loss of revenue, loss of contract, loss of production, loss of opportunity or damage to goodwill.

Include a liability discharge period in the consulting contract template

A liability discharge clause allows a consulting business to limit its liability to a defined period of time. For example, the liability discharge period could be defined as one year. This means that after one year, the client cannot pursue the consultant for any loss or damage.

Any clauses that aim to limit or exclude liability need to be properly drafted. This becomes even more important with consultancy agreement templates because they are used repeatedly for different engagements. This is one reason why you should hire a commercial contract lawyer to prepare your consultancy agreement template.

A right to rely on information provided by third parties

When other consultants or clients provide information that another consultant is relying on, that consultant should be able to assume the information is accurate. This doesn’t mean that the template contract should absolve the consultant of responsibility if there is an obvious error.

Instead, the information should be completed and accurate and the consulting firm should be entitled to rely on that information. And the template consultancy agreement should acknowledge that the consultant will review for obvious errors.

An obligation on the client to provide timely information and instructions

It becomes especially important for clients to provide timely information and instructions when a consultant has been given strict deadlines or a vague brief by the client.

Naturally, if a consultant doesn’t have the information to progress their deliverables the deadline will be pushed out.

A consultancy agreement template that addresses this risk is key.

Even better, it will be easier for both parties to understand what is needed if you can specify what information you need from the client and when.

All of this can be included in the editable commercial terms section of the contract.

And if you get push back from the client? Well, that’s a red flag that’s better dealt with during the negotiations.

The consultancy agreement template should be easily modifiable

A contract template should be plug-and-play. This means that whoever is filling out the consultancy agreement template doesn’t need to make lots of changes to the contract terms before being able to use it.

The trick is to make the default terms and conditions generic where it is appropriate to do so. Further, a commercial contract lawyer can write the terms so that they get enlivened only if they’re relevant to what you’re engaged for. As an example, if you’re providing peer review services but you are not creating new deliverables, a different risk profile should apply. All of these things can be captured in a well-written consultancy agreement template.

How Prosper Law Can Help?

Prosper Law is Australia’s online law firm. We provide legal advice to businesses and individuals across Australia. Our areas of legal practice include contracts, eCommerce, publishing, entertainment, legal counsel and employment law.

If you need to talk to a commercial contract lawyer, get in touch today.

Contact the legal team of Prosper Law today to discuss how we can provide you with advice for a fixed fee or at affordable hourly rates.

Farrah Motley | Director

PROSPER LAW – Australia’s Online Law Firm

M: 1300 003 077

E: enquiry@prosperlaw.com.au