Contracting external resources or a consulting company

Many companies use consulting companies’ services. Like any other business agreement, both the consultant and the client sign a contract that defines the details of the agreement. While there are several elements to a contract, a few key elements of a consulting contract are essential to ensure both the client and the consultant benefit from the business relationship.

 

• Scope of work: The description generally answers several questions, such as what work the consultant will perform, what the company wants and what problem needs to be solved. This section also details the method used by the consultant to attend to the company’s needs.

 

• Schedule: The schedule element of a consulting contract details the project deadline and any timelines agreed upon for completing deliverables or key tasks. This element also deals with the repercussions for any late work on the consultant’s part and details when the project will be recognized as completed and the acceptance criteria of the completion.

 

• Right to use: The ownership element details what party will own the rights to the final work: the client or the consultant. Generally, in this section of contracts dealing with various types of property, such as creative work, intellectual property or copyrights, the contract states that any work performed is “work for hire,” and is solely owned by the client.

 

• Warranty: It details any warranties given by a consulting company to the client regarding the consultant’s work, such as the client has a certain amount of days to notify the consultant of any errors or problems with the work. This section also details any costs associated with the warranty.

 

• Payment: The consultant’s fee details all relevant information about the payment, such as the amount and payment terms. This element also details the basis for charging, whether it be a flat-rate consultant fee, hourly fee, day rate or a fee based on completion of the task.

 

• Confidentiality: The confidentiality clause details to what terms of confidentiality the consultant and the consulting company must commit. This clause is essential, as consultants may be informed on confidential information during his mission. The confidentiality clause typically defines the legal penalties the consulting firm will face if any confidential information is disclosed.

 

• Termination: The cancellation terms detail what actions are necessary for either party to cancel the contract as well as the penalties applicable if either party cancels the contract. This information includes notice requirements, fees for canceling and the mechanism for canceling.
  

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