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What key components should every consulting contract have?

Nowadays, it's common for companies to rely on the insight of outside parties, such as subject experts. These consultants are often hired to help bridge the gap between a company leadership's core competencies and the ones they believe would help elevate their business to the next level.

Companies hiring on consultants do so in an effort to gain a competitive advantage on others in their share of the market. These companies often offer their consultants contracts, promising to provide fair compensation for the value they'll likely add to their business.

Consultant contracts often contain a description of the task the contractor is being asked to complete at the beginning of it. Some companies may elect to go into detail about the problem they're facing that necessitates the hiring of a consultant or address common questions in this section as well. Some even choose to highlight certain research techniques they want their contractor to use within this section.

It's likely that somewhere within this agreement, it will spell out who'll retain ownership rights to the work, including intellectual property rights. In most cases, the contract will reflect that the consultant is conducting "work for hire" and, thus, that the company paying the contractor will retain the sole rights to everything done.

A consultant agreement is likely to also include a confidentiality clause that prohibits the contractor from sharing any proprietary information, including trade secrets, with others. It's likely to include a warranty that allows the company a certain period of time to go back to the contractor and have them make corrections to better meet their standards.

Most contracts will also outline certain milestones for getting certain aspects of the project finished as well as the deadline for getting the entire job completed. Along with the rubric of what constitutes a fully completed project, the monetary penalties associated with not getting it done on time will likely be described in this section.

The requirements both parties must follow to break the contract and any penalties associated with doing so will likely come near the end of the contract. The payment terms, such as whether the consultant will be paid on an hourly or flat fee basis, should also be contained within this agreement.

If you're considering hiring a consultant for your business, then you may benefit from having a Cincinnati business contracts attorney read it over first.

Source: Houston Chronicle, "Key elements of a consulting contract," Calia Roberts, accessed Dec. 28, 2017

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