Key Terms of a NZ Consulting Agreement

As a consultant, you must have a clear consultancy agreement with your client before starting on a project. However, it may be confusing as to what terms you should include in such an agreement. This article will outline the key terms that you should have in your New Zealand consulting agreement. 

1. The Services

You should clearly articulate the services you will provide as a consultant and an independent contractor in any consulting agreement. This description should be specific to both the client and the project at hand. 

In detailing your consultancy services, you should address:

• any deliverables you will provide your client. For example, you should outline whether you will be providing weekly or fortnightly resorts or summaries of your progress; 
• the anticipated time frame of your consultancy services;
• the obligation to conduct your work with due care and skill; and
• any issues or areas that you do not include as part of your service.  

2. Payment Terms and Expenses

In exchange for your consultancy services, your clients must pay you. 

A consulting agreement should outline:

• your fees for your services; 
• when your fees are due, such as on a weekly or monthly basis; 
• that you are relieved from your consulting obligations should the client fail to provide this payment; and 
• any other additional expenses that the client is obligated to pay. For example, your client may be responsible for paying for the cost of your travel. 

3. Intellectual Property

Throughout your time as a consultant, you would have likely developed your own intellectual property. This intellectual property may be:

• data;
• a particular process or method; or
• a specific line of research. 

You must protect this intellectual property when dealing with your clients. Consequently, it is useful to include an intellectual property clause. This provision would recognise the intellectual property and acknowledge the maintenance of your ownership. This term should also address what is to occur should any intellectual property be developed in your time as a consultant for a particular client. The intellectual property clause should acknowledge whether this is:

• your property; 
• the property of your client; or
• jointly owned by both you and your client.

4. Confidentiality

As a consultant, you are likely going to handle confidential and proprietary information, such as trade secrets.

A confidentiality provision should disclose that this information will remain confidential and affirm that you will return any confidential material at the end of the consultancy period. It is also best practice to address that you will exclude certain information from this confidentiality agreement. As a consultant, you may be legally obliged to release certain pieces of personal data that your client would otherwise wish to remain confidential.

5. Insurance

You should disclose whether you have taken out insurance for your consultancy services’ duration in your consulting agreement. For example, you may provide public liability or professional indemnity insurance. These types of insurance protect you from legal claims taken against you for the services you have provided. 

6. Liability 

As you are advising people and businesses on certain decisions or issues, you will have to take on a degree of responsibility in the performance of your services. 

However, it is best if you outline the extent of this liability. This outline may include:

• a limitation on your liability for breaches of the consulting agreement. This limitation would restrict the amount that your client can claim in legal proceedings; 
• the termination of your liability; and 
• an acknowledgement that this liability does not extend to issues outside of your control. For example, problems that arise due to your client’s actions or a third party.

7. Dispute Resolution

Throughout your time as a consultant for a client, it is not uncommon for issues to arise. Therefore, your consultant contract should outline how you will resolve these disputes before resorting to legal action.

A dispute resolution clause should include:

• a definition of a ‘dispute’;
• how you or your client can initiate this dispute resolution process, such as by written notice; and
• the method of dispute resolution that will be employed, such as mediation or arbitration. 

8. Termination 

A consulting agreement should also articulate when, or if, you or your client can terminate the contract, before its expiration. 

A termination clause should outline:

• the grounds for early termination, such as a breach of the terms of the agreement; 
• How you or your client can initiate contract termination. This is usually by the cancelling party providing the other with written notice of termination; and 
• what you require upon termination. For example, the contract may require both you and your client to return certain materials to one another. 

Key Takeaways

Before engaging in a consultancy project, you must have a clear and well written consulting agreement in place with your client. This contract will ensure that the project can run as smoothly as possible. A consulting agreement should include terms addressing:

• the consulting services you will provide;
• the payment for these services;
• the protection of any existing or new intellectual property;
• confidential information; 
• your insurance; 
• the extent of your liability; 
• how you will resolve disputes; and
• when you and your client can terminate the agreement.

If you wish to draft a consulting agreement, contact LegalVision’s contract lawyers on 0800 005 570 or complete the form on this page.

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