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Are you looking to provide consulting services to a client? If so, it is essential that you know how to draft a consulting contract properly so that you can enforce its terms if a dispute arises between you and your client. When a contract is enforceable, both contracting parties must abide by its terms. Otherwise, they could be liable for legal action. This article will explain how you should create a consulting agreement in New Zealand. 

What is a Consulting Agreement?

A consultant is someone who provides advisory services to another business or an individual. When running a consultancy business, you should have a consulting agreement containing key terms about what services you will provide. A consulting agreement will be legally enforceable as long as it contains all the elements of a binding contract

Type of Contract

Scope of Work and Deliverables Agreement

A scope of work and deliverables contract is a type of consulting agreement. It should clearly state what service you are providing as the consultant. Likewise, any changes to this work must be specified in the agreement. It follows that the service will have a fixed price. This is particularly beneficial for clients, as they will know what to expect before signing the agreement. 

Open-End Agreement

An open-end agreement is the opposite of a scope of work and deliverables agreement. An open-end agreement is where the scope of the work is not defined and will change depending on what the client requests. It will have limits to what services a consultant will provide, though there are generally no specifics included. An open-ended agreement will have a variable cost depending on what type of service the consultant provides. 

Consulting Retainer Agreement

A consulting retainer agreement is common where a business needs a consultant at all times. The business will pay the consultant a frequent fee under this agreement and the consultant will be on call to complete any task the business needs. If the consultant has completed a large project, there may be an extra fee on top of the retainer.

Key Terms to Include in a Consulting Agreement

Payment Terms

It is important that a consultant agreement contains how a business will pay the consultant. This will depend on the type of contract you enter with a client. Notably, the payment terms should contain how much the business must pay and how often this should be. There should also be a reference to the scope of the agreement in the payment terms.

Scope of the Agreement

The scope of the agreement will determine what services a consultant will provide under the consulting agreement. It is crucial that your consulting agreement defines the scope of your services. There should also be a limit to the type of service that you provide. Including this limit offers protection, so you have no legal obligation to provide a service outside of your knowledge.

Termination Clause

Another critical clause to include in your consulting agreement is a termination clause. A termination clause allows either party to cancel the agreement, provided parties meet the conditions specified in the agreement. Generally, parties will negotiate these conditions. 

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Key Takeaways

It is vital to create a consulting agreement to clarify your services as a consultant. The consulting agreement will determine what and how the service is provided. It will also be vital if there is a dispute between the parties.

If you need help drafting or negotiating a consulting agreement in New Zealand, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

Can my contracting party cancel the consulting agreement?

A client can only cancel the agreement if they use the termination clause or if you breach the agreement.

Can I change the structure of my consulting agreement?

You can only change the structure of your consulting agreement with the consent of all other parties to the arrangement. 

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