Byline Technical Services Consulting Agreement Template Made Easy

Sign technical services consulting agreement template

hi in this session we deal with the consulting contract this is the agreement between client company and consulting firm or custom and consultant in the consulting contract a certain agreement is made primarily on what the services so products will be that will be delivered by the consultant and what payments will be made by the client company now this agreement is very important because it's project based now project based agreements are very different to process based agreements a project based agreement always has the time cost and quality factor they in other words it's going to cost us a lot of money if it's going to be in a short period of time or if it's high quality and short path you know there is always these these three elements there therefore it's it's a contract which is tightly managed because it also expires after a certain time you know if you finish with your consulting service then you know doesn't continue like the employment relationship which is more process based so the best in this type of agreement is to put it into writing I'm going to tell you what a contract is began to look at the nature of contracts and the nature of agreements and what should be inside the consulting contract yes a contract can be verbal it can be by means of a letter but we recommend that it's always a written contract especially due to the nature of the disagreements that can arise let's have a look at the different consulting contracts and but it starts at a place where we where we investigate what what is a contract was the definition of a contract how do we define this a contract is an agreement entered into by two or more people with the intent of creating a legal obligation the crux here is on legal obligation when two or more people agree on something there's a contract this does not have to be written it could be verbal it could just be agreement for instance if I go to a hawker who's selling an apple for $1 then there is an agreement and that's legal in other words there's obligation on both sides the hawk has to give me an apple and I've gotta give the Hawker one dollar that's the agreement now the agreement has to be legal I can't agreed to kill somebody it's not legal now say a consultant agrees to do a specific work at the given time at a given cost and at a specific quality if the client agrees to pay this for such service of the pay a specific agreed upon amount for said service there's an agreement this agreement doesn't have to be in writing it could be an email it could be a letter it could just be verbal the fact that both parties agreed to apply to each other very specific delivery and the fact that both parties have done in - you know they they are of age they're not under age because then it would be illegal then it's a binding contract the first requirement for a contract to be valid is consensus this implies that both parties must agreed you cannot force somebody to sign a document and then claim that it's that it fits a contract the contract must be they must be conscious consensus so if you trick anybody into doing something or if you make somebody to sign a document and they didn't know what they are signing that contract will not be valid in terms of minds it means that people must be compos mentis they must know what they doing they must be of age it must be in material terms in other words you must be able to measure it and both parties must be aware of what the delivery on each side is then only can they be a contract a consensus is very important do not think that people can trick you into something or you know ask you for a signature then afterwards claim that this was a legal contract no there has to be consensus and both parties have to be consenting in terms of mind and material terms the second requirement is capacity of parties what this means is that the parties who consent to the contract must have the capacity to do so now in most countries around the world the legal age for somebody to be able to make a contract is 18 years if a person is younger than 18 years in sign a contract that contract would be regarded as not in a court of law the second way of being having capacity is the mental ability many people have a mental illness or mentally disabled will never be able to undergo a valid contract because they do not have the mental ability in other words they will never be of age a good example of this is the many court cases where men would have sexual intercourse with a female but at a very young age a minor now the first rule here is that the minor cannot consent to such act in other words they cannot be agreement and most of the cases such an act is called rape so both parties must have the ability you cannot conclude a contract with somebody that does not have the ability to do so that person must be of age that man's person must be have mental capacity in legal terms we call it the person must be compos mentis must be of a mind which in a state in which a contract can be concluded another example would be a person with the mental capacity but said sir person might be unconscious or not conscious or under the influence of alcohol or under the influence of drugs such a person may not conclude a contract in if it's proven that you were under the influence of liquor or under the influence of seduced seducing material like drugs then such contract would not be valid the third requirement is formalities now the basic formalities that both parties must agree must have consent and said must have the capacity now we are put in brackets here that it usually is in writing inside this is not a formal requirement for contracts you can have a contract if you just agree a gentlemen agreements is a contract the problem however is that it is very difficult to prove therefore we suggest that when you enter into a consulting agreement such contract is signed and is in writing this just cuts out the bigger t this sorts out any disputes in other words at the later stage when somebody says there was no contract you can produce a document and say well here the person signed therefore there was a contract so it is good to have a contract in writing in legal terms and signed it's good to have witnesses they now remember the witnesses do not sign that they know what's in the contract they're just saying that they witnessing that you are signing whatever is there so the witness doesn't really have much to do with the content they're just telling that this person of science is a person you know is you so in writing is recommended the fourth requirement is legality in other words the contract must be legal if there's a specific statute to law or common law by law that regulates a specific thing then the contract which you conclude must be within these laws a very good example would be if you bet somebody that a football team would win on Sunday and in that place where you make such a bit betting or gambling is illegal well then that contract will not be enforceable in other words if the person loses the bet you will not be able to take that person to court and say that such a person aspire because League betting is illegal because it's gambling in that specific place if you are making such a bit in a place where gambling is legal but you do not have a license to gamble then it could still not be enforceable so it has to be legal you can't as I said earlier agree to kill somebody or hurt somebody because these things are legal are illegal under common law another good example would be where you want to make an adjustment to your house you contract a boulder and you set a contract with a boulder that that you you must well that whole contract it might be illegal because they certain bylaws regulating how houses should be bought so they should probably be plans that must be approved first etc etc so legality is a formal requirement if you're a consultant and you going into a contract with the party then it must be a legal contract in other words the laws within the country or area or province where you execute your consulting project what you have agreed upon must be a legal agreement the fifth requirement for valid contract is possibility especially at the time of execution in other words it must be possible to execute the contract one of the things I put in brackets there is force majeure II close the forceful jury Clause implies that vast majority stands for force of nature in other words if you contract me to build a wall at your house and there's a hailstorm at the day when I should build the wall then it's simply not possible for me to do that there was no ways in which I could execute that contract and the reason I couldn't do it is because of forces of nature I cannot control the weather therefore I can't hold your Hall you can't you do not have a claim against me you can't say that I fell to deliver on the contract because it was not possible for me to deliver in the consulting work world a good example is a consultant that has to facilitate a workshop on the way to the workshop the consultant is in a car accident and has to go to hospital there was no ways in which such consultant could facilitate that session therefore the company would not ever get a claim if it was the contract was made for the consulting firm and that consultant could have been replaced by another consultant well then they do have a claim because all the firm air to do is just find out about the accident and then send somebody else but if a court of law determines that it was not possible for you to render that service I I myself consult internationally and I remember one time when there was a delay in flights I just you know there was no airplane to get on to therefore I was late at the specific engagement and there was nothing the people could do because it was not this it was impossible for me to be on time or it's a possibility it must be possible at the time of execution to actually do this and the impossibility must be outside your area of influence in other words that which makes it impossible for you to commit to do the execute your task or deliver on the contract must be something which you had no control over a sick child for instance well that would not be an excuse a Halestorm way you have to ball the wall outside well that would be the last formality for a valid contract is certainty agreement must have a definite and determinable content and obligations must be clear for enforcement the first certainty must be that these consensus that the parties who consented have capacity that all the necessary formalities have been met and that it's legal and of course that it's possible to actually execute this contract therefore the delivery in any contract must be in clear quantifiable terms it wouldn't be a certain contract if a client said that they would pay you there is no certainty you know how much they would pay you therefore that's not valid the contract must say well the client will pay you $9.99 that's clear they certainty in exactly how much you must get on the obligation of the consultant it must be clear what exactly the consultant must deliver in other words the kind won't you say well I'll pay you $9.99 if you you know facilitate the strategy there should be clarity on specifically when should you facilitate this strategy how should this facility we strategy be facilitated where should this be done how long is it going to take etcetera etcetera so on both sides they must be certainty on what exactly is going to be delivered here the first key element to the consulting contract should be the aim of the consulting project in other words quite at the beginning of this document whether it's a letter of agreement or whether it's a standard contract should be the clear statement on what this consultancy aim to achieve I myself often consult in the field of strategy development so I would begin war very early in the contract after the definitions I would state that on completion of this consulting contract or this consulting contract or this this this the service aims to facilitate the strategic session for the department of so-and-so and so they would know if you read the contract this is about facilitating a strategic session we can get more specific on the that should be exactly ringing that but likely in the contract now that we've stated the aim of the project we can get specific what specifically do you have to deliver to the client what is the client expecting from you yeah you could broadly be specific on what you have to achieve in other words firstly you say we want to facilitate the strategy session and then the specifics would be that we're going to consult or have interviews with all the relevant role players after this we would construct a design plan for the session and give it for management to approve and after approval will run the session for so long and then we'll issue a report something in that line so you're specific I must be honest what I like is an attachment to any consulting contract which is the project plan the project plan is specific as you can get to the services that they're to be rendered especially in terms of time resources needed and you know dependency flow so a project plan is always good some some clients require a project brief in other words a short executive summary of the project that should be attached to the contract next is defining delivery from the client in other words what are your expectations the consultants expectations just as the consultant has to specify what they have to deliver what we have to deliver the client has to specify what they have to deliver mostly this is a type of payment - a payment arrangement though it could also be that certain resources are are done very often I facilitate sessions at the premises of the clients and this must be clear in the contract that they would be supplying the premises they would be supplying the catering they would make the logistical arrangements so what precisely do they have to deliver in terms of this contract makes these the names of the project team with their roles and responsibilities it's important that it's contractually decided who the project team would be what their qualifications are and experiences so that if one of these people fall out of the team they could be obligation on the consulting firm to provide people with the exact same type of experience and background now it's time to work with the duration of the contract or rather win with this contract start and win with it finished so the project could be defined in terms of dates or expiry of specific number of consultancy days whatever the case may be in rare occasions there's even the achievement of certain deliverables whatever the case may be this must be clear when with this contract start and when when it finished the most qualifying characteristic of a project is that it starts and it stops and the more clear we are about the exact quantification of the start and finishing point the more manageable such a project becomes within any formal agreement there needs to be a termination clause it's very rare but there are times that a contract is terminated before the actual finishing time they should be there for mechanism and notice required for such a cancellation this could be to a variety of reasons I've even seen reasons where the company simply goes bankrupt you know and then the contract is automatically terminated or you know for some legal reason they not happy with the work or the consultant he's not happy that this there's been a delivery on the client spot but they are very rare times that that contracts can determine for the time the termination clause should exactly spell out how this is done and what the requirements and what the details are for terminating a contract let's look at the payment arrangements these must be very precise it's unlikely in a consulting project that you would be paid all the money afterwards or all the money before except if it's a very small project such as facilitating a two-day session but usually consulting projects lost for six months to even five years therefore they certain to of payment and certain intervals of payment now these could very very often these are the milestones of the project plan so wherever there's a milestone there's a payment some payments are measured in weight in other words if the milestone weighs 30 percent of the project in the consultant gets 30 percent of the payment at the completion of that milestone many times consulting firms do not have the startup capital anybody who's been in this industry would know that the start of the project is the most expensive part for the consulting firm and it's usually the last payment where the consulting firm makes their profits in the beginning that simply ease expenses you need to print materials outsource to people get equipment so it's expensive exercise and therefore the usual rule of thumb is that the consultant would require about 40 percent upfront get 30 percent in the midterm and 30 percent on completion it's often the other way around it could be 30 percent upfront 30 percent in the midterm and 40 percent on completion this is all a negotiation process there's no set rules for these things my advice to any consulting firm get as much as possible before the project because that's where your expenses are your cash flow is in danger at the beginning of a project at the end of the project most of the work has been done and it's only about writing reports therefore your profits lies in the last payment then we have to define the cost breakdown and the payment arrangements in terms of daily rate hourly rate retainer fee etcetera the cost breakdown has to be explained how did we get to this cost how do we break these costs down you know is the weighting system is it based on a milestone what are the reasons for this so the cost breakdown is clearly explained in the contract then we need to explain the expenses what are the rules and the limits here how are we charged in terms of estimated budget we need to be clear this you know what are the limits in terms of how much can we pay for accommodation and and what the client will not give the consulting firm and open checkbook for expenses so what are the rules do we fly business class do we fire economic laws being specific on what exactly the rules relating to the expenses are yeah let's have a look at intellectual property and copyright this is a very important plaus since you want to protect your intellectual property and property right copyright and the client wants to protect days let's look at intellectual property and copyright this is a very important clause since you want to protect your property intellectual property and copyright and the client would like to protect this therefore they need to be a specific clause that says whatever the consultant brings into this organization will be protected it stays your copyright your models and and and and your your methodologies whereas the client keeps copyright over they methodologies and and things which you will have access to that has intellectual property these could be creative work copyrighted document fundraising materials logos slogans there is a various array of things that could be included in the intellectual property and copyright clause then there is the confidentiality clause it's important that things of confidential nature stay that way and it's also important that this confidential nature is clearly defined in the contract there could be things that the client would keep obviously the consultant by nature of their work would have access to very confidential information like strategies and certain policy documentation other documentation in regarding employees salary scales there's many confidential information to which the consultant would have access but this also confidential nature which would give access to which the client organization would access to that belongs to the consulting firm so the clause goes both ways it's important that it's clearly defined that information both from the consulting firm and from the client firm be treated as confidential and that none of this information would be made available to any third party the contract is concluded with the signed agreement this this agreement is usually kept by both parties and it's signed in duplicate so that each party could could keep a signed copy it's usually each signature each person who represents the party signs in a block and there's two witnesses that testifies that that's indeed that person who has signed a and then it's made these two copies of this one goes to the client and want to the consulting firm it's important that the people who sign they has the authority to represent the institution's if somebody signs for the consulting firm such a person must be allowed to sign documents of this nature for the consulting firm and if somebody signs on behalf of the client then such a person must have the authority to do so make sure of this it could lead to a lot of problems at the later stage when anything in the contract is being disputed they are various types of contracts now the first one I would like to discuss here and I have done so earlier in this session is the verbal agreement the verbal agreement means that nothing has been signed this there is just a verbal agreement that they needs to be delivered on both sides I have I know that this is not the right way but I have successfully engaged in verbal agreement contracts with people with phoned me and said there could you come tomorrow morning and facilitate something for us and then I Beach up and they pay me you know there needs to be a very good relationship and a trust relationship for this to happen I strongly recommend against this verbal agreements are valid but they are very difficult to prove so if you have a verbal agreement then this thing goes to the court it's going to be very difficult for you to prove who was responsible for what so the the choice is not to have a verbal agreement the next contractual form is a letter of agreement now very often the letter of agreement follows a verbal agreement the letter of agreement is simply usually client initiated later that states clearly that the consultant have been given this contract and that it's required of the consultant to perform the following the consultant would then return with the letter of acceptance saying that he or she accepts this project and this could also be a client company writing to a consulting firm in the consulting firm accepting so together these two letters make a contract and where there's any dispute it would be these letters of agreement that basically define what needs to be delivered on both sides I strongly recommend that after a little of agreement the contract or the consulting assignment is concluded with the proper contract and not just the letter of agreement but nevertheless if there's only a little would still be a valid agreement now we look at the written contract now much of this has been discussed earlier in the session all those key elements to what should be in a contract should be in a written contract this is a signed document then it clearly states that it's a contract they forwarded bites to the rules of the contract and it's usually drawn up by attorneys in law who knows what clauses to put in such a contract usually these things follow a sequence first there's a verbal agreement yes you have the job then there's a little agreement that formally appoints you to this position and then there's a written contract sometimes it's other way around you would have a verbal agreement a written contract and then a letter of in statement the written contract I'm not going to go through all the points again it's the best form especially in a consulting project that would have quite a long duration so that if there are any disputes we could fall back on this contract and look at what was promised in terms of delivery and in terms of payment so the Stratton contract is strongly recommended and I do not believe that any consulting project should be engaged in without the proper of the agreement lastly we look at the psychological contract now this is very different to the previous ones because the previous ones all gave legal obligations to perform this psychologically contract is more something between two people or parties where there's trust and integrity involved the psychological contract is not codified in any document and cannot easily be described it's a psychological contract under which the consultant and the client cooperate in an atmosphere of trust and respect believing that the approach taken by the other party is the best one to bring the assignment to a successful completion this contract cannot be replaced even in the finest legal document if I have heard good things about a consultant and I've taken time to establish a relationship for this consultant then I expect good things from this consultant now although the psychological contract cannot be legally enforced I tell you that it's the one that can cause the most damage if people stopped trusting you stop believing in your integrity and stop believing that the brand which you represent is a good one which will deliver results well then future work will be bleak and few now so far in this session we have discussed requirements for the contract we've set what should be in this contract what a contract is and what input would not be a contract let's India with looking at the steps in generating a contract well obviously the first step would be to create a title we want to know what this is about it's amazing to see many contracts that does not have this but if it lies on a table your table my table we would like to see what this is about we would like to file it appropriate so it doesn't matter of good office management any contract should have a good title next is the name of the parties now this seems quite straightforward who is concluding the contract with whom but often these are long names you would for instance have the International Shell Petroleum Company enters in contract with Derrick Hendricks consulting so it's very difficult because these names have to appear in the contract quite a bit therefore we shorten it we say you're off to refer to as the client then wherever you want to talk about the company in future in the in the document you just say client and that would refer to this name and the consulting firm derek annex consulting it could either be consulting firm or very often just the HC in other words the initials for the full name and if this is in the beginning of the contract then we know that the rest of the contract would refer to these people in short so the names of the parties can be shortened throughout the contract now we need to record the day on which the contract is concluded this is usually in the beginning of the contract there is a date when the contract was thrown up and at the end of the contract there is a date where it says contract signed on this day which is usually in the number of the day in other words 21st or 22nd of the month February 2014 it's very important to if you cannot have a contract without a date because whenever there is a dispute this would be the first thing to determine when was this contract contract concluded so date very important that must be clear in the contract when this contract has been has been concluded and win/win/win that these two parties agree on the outcomes that must be delivered here now we define the work that must be done much has been said about this in the session I believe that one should not be too specific here but give three or four broad objectives you've defined the contract you said that we have to facilitate the strategic session now you could broadly say we have to do a pre session analysis we have to get the session approved we have to run the session and we have to submit the report by the end of the recession my preference in terms of this is to give three or four objectives and then to attach a project plan to the contract the project plan can be detailed you see it's much easier to change a project plan which is an annex sure than it is to change the actual contract so if you have broad objectives on what must be achieved never more than four never less than two so three or four objectives are the perfect amount write them down in the contract this is what must be achieved and then you attach the project plan and and annex it to the contract and the project plan can always be amended and it's very specific in terms of what must be done then of course the con the compensation a breakdown must be specified how much is going to be paid to the consulting firm and in which type of breakdown sessions will these be paid I have discussed this earlier in the session so if we've talked a lot about this but this needs to also be very clearly stated in the contract you can see each of these sessions that I'm talking about your each of these steps are literally paragraphs in the contract that must be there step six is to define the work relationship now this is mostly important for tax liabilities and also other liabilities if the consultant is seen as a employee then all of a sudden such consultant gets various benefits that the company owes him or her so usually contracts have a clause that reads as follows consultants relationship with client will be that of an independent contractor and nothing in this agreement is intended to or should be construed to create a partnership agency joint venture or employment relationship no part of consultants compensation will be subject to withholding by the client or for the payment of any social security federal state or any other employee payroll taxes so it's very clear in this clause that there is no employment relationship that this is a contract based project based work that will begin and that will end and that when it ends there is no continuation of this relationship in other words the consulting firm are just that consultants now let's look at specific intellectual property and copy offer copyrights the parties also something that I've discussed in length this refers to any research memorandums graphics software produced in the course of independent consultants work where the client is generally Turner which is generally turned over to the client if if you're going to give something to the then it must be very specific and it must be defined as as a work product so it must be clear in the contract what stays your intellectual property and what you actually hand over if they're paying you to develop something for them specifically then you're also transferring intellectual property or copyright of something maybe I'm writing a document for these people then they would keep the copyright this must be clear in the contract so this the so that there's no further ambiguity about this it has happened in the past that client companies have sued consulting firms because they have used the same models which they've developed for the client company in other companies and then the dispute would be about is that intellectual property transferred or is it not the clause would typically read as follows consultant agrees that all work product development by him or her alone in or in conjunction with others in connection with the performance of services pursuant to this agreement is and shall be the sole property of the client and consultant shall retain no ownership interest or rights then work product includes but is not limited to the reports graphics memorandum slogans tag lines etc so we are stating exactly what is transferred and what is not transferred very important clause a lot of disputes in consulting contracts are about the specific clause then each contract should define a confidentiality agreement usually the consultant as I've discussed early in the session would have privy to confident and secret information you need this to do your work you might be have access to formulas or strategies which the client company does not want other people to see that in the contract it would usually prohibit you to disclose any confidential information to other parties and they would usually be an exception where it says that you may disclose such information if you ordered so by court but I haven't seen any consulting contract drawn up or advised by a client company where they are not quite serious about the confidentiality clause in fact I would say that the intellectual property clause is often more important to the consulting firm and the confidentiality clause is more important to the client from the contracting firm in other words standard clauses are clauses which are often included in the contract one of these the first one would be the choice of law especially in today's times where consulting firm and client company is not necessarily in the same country all the client company could be in a variety of countries where the consultant has to perform work so there it must be clear which countries law is my dear this is usually the the client companies country where the contract has been drawn up in other words if I'm from South Africa and the client company is from Malaysia then it produced either B the Malaysian law that governs the rules of this contract the second standard clause is severability severe ability are common in all types of contracts and simply say that in any clause of the contract is found to be unenforceable other clauses shall remain unchanged in other words the fact that there is one clause in the contract that cannot be enforced does not mean that the other clauses are also not valid then a very important standard clause is relief for breach of contract this is basically a closed where the client may force performance by the consultant if this if there's any breach it would read typically read as follows consultant agrees that her obligations under this agreement are of unique character that gives them particular value consultants breach of any such obligations will result in irreparable and continuing damage to the client for which there will be no adequate remedy at law and that in the event of such a breach the client will be entitled to injunctive relief and for a degree of specific performance and such other and further relief as may be proper including monetary damages if appropriate so the client protects himself against consultant non-performance and of course they protect their own content mutti of business the contract is ended with a signature block this is a block with space or usually a table we both parties can sign and witnesses that they have signed are they it is common practice for each party to have their own witnesses I have discussed this quite thoroughly earlier in the session the only thing left is to format the contract make sure that it's numbered clearly do not have unnumbered clauses or even paragraphs make sure that it's numbered because when you refer to a contract you would refer to page 7 paragraph 4.3 you could have your paragraphs under 1 2 3 4 and then each paragraph the Clause could take on that number of the paragraph itself in other words paragraph 4 would have clauses 4.1 4.2 4.3 in that way we can refer to what we dispute and we can refer to specific obligations in the contract without being vague secondly leave spacings in equal ways in other words if you space 2 spaces between a paragraph then it should go through right through make your paragraphs a different font or bold or underline it so there should be a general easy understandable format remember nobody takes a contract lies on their bed and reads it through on a Sunday afternoon that's not what we do with contracts nobody reads them this is about getting to information quite quickly so it's about referencing it's about referring to specific clauses on specific pages I've seen contracts with that page numbers that's just ridiculous so make sure it's got a nice feel and that it's got a nice format to it lastly remember that your contract should be flexible the purpose of a contract is to protect the interest of all parties involved and two things change and you need some bit of creativity in contract so flexibility is very important don't have a contract that's too tight this would definitely set you up for failure