When considering how to draft a consultancy agreement, it’s vital to ensure the agreement is appropriate for your situation and protects your business sufficiently. You’ll need to consider who should be entering into the consultancy agreement, what services will be provided, how you’ll calculate the fee payable, and consider issues of liability, confidentiality and more.
This blog provides links to consultancy agreement templates, which you can use depending on whether you’re working as a consultant or are engaging a consultant, and explains how to enter into the template agreements. For more in-depth guidance on what terms are usually included in a consultancy agreement, see this blog.
How to draft a consultancy agreement
The appropriate template to use to draft your consultancy agreement will depend on whether you are the consultant (also known as a freelancer or contractor) or you are the client engaging a consultant.
Your consultancy agreement should clarify the basic terms of your consultancy relationship as well as include terms to protect your business, for example by limiting your liability (if you’re providing services as a consultant) and being clear about the grounds on which the contract can be terminated.
If you’re a consultant, you can find template consultancy agreements at:
- Individual consultancy agreement (pro consultant) (if you provide services in your own name); or
- Company consultancy agreement (pro consultant) (if you provide your services through a company).
If you’re engaging a consultant, you can use:
- Individual consultancy agreement (pro client) if your consultant is acting as an individual; or
- Company consultancy agreement (pro client) if your consultant runs their business through a company.
Using the consultancy agreement template
- Choose the appropriate template for your business above and follow the link;
- Click ‘Get started’ and read the background information under ‘What you need to know’;
- Complete the questionnaire with details of your business and the consultancy arrangement (see below for examples of information you’ll need to consider and provide);
- Download the finished document and read through it carefully to ensure it covers your situation appropriately. If you are unsure what any of the clauses mean, or the other party wishes to negotiate the terms, seek legal advice. You can access a specialist lawyer in a few simple steps using our Ask a Lawyer service;
- Print the contract and arrange for each party to sign it. Keep the originals in a safe place.
Information required to complete the template agreement
Depending upon which template you use to draft your consultancy agreement, you’ll be required to insert details relevant to your situation, such as the following:
- Parties to the agreement
Make sure you insert the correct party names (eg full registered company name) and addresses, to reflect who is entering into the contract. This avoids any dispute later about who is liable to perform obligations under the contract. - Confidentiality
All of our templates contain general confidentiality provisions to protect the parties’ confidential information. If you’re engaging a consultant and there is any particular business information of yours that you want to protect, the template questionnaire allows you to specify this information to ensure it’s protected. - Services to be provided
You’ll need to give an accurate description of the services being provided (you may want to attach a separate page containing a full specification). Follow the instructions provided in the questionnaire if you wish to do this. - Work schedule and equipment
You may be asked to provide information about the consultant’s work schedule, location of work, start and end dates for the services, and who will provide and store equipment. Bear in mind that if you’re engaging a consultant, you need to be careful that they are not considered your workers or employees (which becomes more likely the more closely you control how the consultant provides services). See Freelancers (self-employed staff) for further guidance on how to avoid this. - Substitutes
If you’re engaging a consultant, you may need to decide whether you will allow them to appoint suitably qualified substitutes to carry out the work. If you don’t allow this, it is a strong factor suggesting that the contractor is a worker or employee, which could have adverse employment law and tax consequences. As mentioned above, see Freelancers (self-employed staff) for further guidance on how to avoid this. - Rectifying a breach
If you’re engaging a consultant, the template questionnaire requires you to advise how long you will give them to rectify a breach of the agreement before you can claim damages. - Calculating the fee
Calculation of the fee must be clear (eg whether it is calculated using an hourly rate or a fixed fee). The template questionnaire may require you to provide information about whether VAT is included in the fee, how invoicing will work, who pays for the consultant’s out of pocket expenses, and whether interest will be charged on late payments. - Termination
The template questionnaire may require information about how many days’ notice of termination of the contract should be given, and whether and how a client’s failure to pay can result in termination of the agreement. - Intellectual property
If you’re engaging a consultant, you may wish to assign the intellectual property in their work to yourself (otherwise it will usually belong to them). Whether the consultant agrees to this may be a matter for negotiation. The template questionnaire asks you whether you will take steps to assign the IP yourself, or whether the consultant will be responsible for this. You’ll need to consider what will be most practical in your situation.
Note that you must comply with your data protection obligations if you are sharing any personal data throughout the consultancy arrangement. See Key obligations when sharing personal data for further guidance.
You must also read through all of the provisions of the template consultancy agreement you choose and ensure you understand them. If you are unsure, seek legal advice. You can access a specialist lawyer in a few simple steps using our Ask a Lawyer service.
The content in this article is up to date at the date of publishing. The information provided is intended only for information purposes, and is not for the purpose of providing legal advice. Sparqa Legal’s Terms of Use apply.
Marion joined Sparqa Legal as a Senior Legal Editor in 2018. She previously worked as a corporate/commercial lawyer for five years at one of New Zealand’s leading law firms, Kensington Swan (now Dentons Kensington Swan), and as an in-house legal consultant for a UK tech company. Marion regularly writes for Sparqa’s blog, contributing across its commercial, IP and health and safety law content.