Drafting an hourly rate consultant contract: Essential parts and best practices
In the early stages of working with a new client, you as a consultant typically engage in a thorough conversation during which you discuss key aspects of the project, such as the scope of work, timelines, deliverables, and payment terms. Once these details are verbally agreed upon, it’s important to formalise them in the written form of a consulting agreement. This document serves as the official record of the settled terms, ensuring both parties are aligned on expectations.
Nowadays, the preparation of a consulting agreement doesn’t require extensive legal knowledge or complicated procedures. By using an online contract template and the drafting practices we’ll share with you in this article, you can prepare a legally binding document in just a few minutes.
Key components of a consultant contract
To be comprehensive and fully enforceable, an hourly rate consultant contract must include eleven essential points:
- Information about the parties involved;
- Description of tasks that you as a consultant will perform;
- Reporting schedule;
- Start and termination details;
- Hourly rate and payment terms;
- Description of costs;
- Clarification of intellectual property ownership;
- Non-disclosure and non-compete clauses;
- Information about the liability;
- Dispute resolution;
- Miscellaneous.
Before you come to the preparation of your document, it’s advisable to thoroughly discuss each of these aspects with your client, clarifying any areas that might cause confusion or misinterpretation later.
How to structure a consultant contract at an hourly rate
Once you use an hourly rate consultant contract from AdminTech, there is no need to worry about the structure or legal complexities. The contract body has been prepared by Swiss lawyers, ensuring all essential clauses and provisions are included. Consequently, you simply need to complete the document by filling in the specific details of your cooperation. The overall process can be completed in just five steps.
Step 1: Include basic information about yourself and your client
The agreement starts with information that clearly distinguishes the involved parties. Here you need to specify:
- Title or legal form of both parties;
- Business names;
- Business registration numbers;
- Full address;
- Country.
Step 2: Add the description of your responsibilities
After identifying the parties, it’s important to include detailed information regarding the tasks that you as a consultant are expected to perform. Clearly outline the exact services you will provide, eliminating ambiguity and ensuring there are no conflicts or confusion about what’s expected.
Additionally, based on what has been discussed and agreed upon with your client, you can include information about the delegation of specific tasks.
Step 3: Outline schedule details
To maintain clarity during the cooperation, you should regularly report on your work progress and key accomplishments. So, it is essential to establish a clear reporting schedule within the agreement, specifying whether updates should be provided daily, weekly, or monthly.
Step 4: Define the effective date and termination
The consulting contract can be open-ended or fixed-term. If you’re entering into an agreement that has a definite timeframe, then you should include the date on which it comes into force as well as the termination date. However, once you have an ongoing advisory role or a long-term business relationship that doesn’t have a specific end date, you can simply specify the start date and leave the agreement open-ended.
Step 5: Set hourly rate remuneration and payment terms
While filling in the information regarding compensation, you should clearly state the amount that is charged per hour, VAT, payment frequency, and payment deadline.
If you’re working at a consultancy firm in which an hourly rate is calculated based on staff seniority, it’s important to cover the different rates that apply depending on job roles or experience levels within the firm.
Step 6: Clarify intellectual property ownership
Once the consultancy work leads to the creation of new materials, designs, or reports, you should take time to discuss with your client and then clearly define who will retain ownership rights.
Please note that intellectual property should belong exclusively to one party. However, the other party may still have usage rights provided it is clearly stated in the agreement.
Step 7: Add non-disclosure and non-compete details
The consulting contract template includes the confidentiality clause that obliges you to protect the secrecy of all confidential information of the client. However, if during the discussion of the cooperation details, your client has specified additional confidentiality or non-compete details, you should add them to the agreement to avoid any misunderstandings.
Step 8: Define liability obligations
As a consultant, you might be required to address any defects discovered in your work and correct them within an agreed timeframe. Consequently, in your contract, it’s important to state the period within which the client should thoroughly review the deliverables and notify you of any issues.
Best practices for drafting a consultant contract
While preparing your document, we encourage you to follow practical drafting tips that reduce the risk of misunderstandings:
- Be as specific as possible while defining your responsibilities, stating precisely what tasks you will perform.
- If the cooperation involves signing legal documents or acting on behalf of the client in formal matters, then while filling in the Responsibilities section, it’s important to add proper information regarding representation.
- Specify the costs that might be charged in addition to the agreed fee.
- Clarify ownership rights as well as the restrictions that apply to the usage, sharing, or further development of the created intellectual property.
- Discuss and then define a reasonable period during which the client should review the deliverables and inform you of any imperfections.
Prepare your hourly rate consultant contract with AdminTech
You can easily create your hourly rate consulting document with the help of our online contract template. An intuitive builder guides you through each step, so you don’t need to worry about the complexities of legal language or structure.
The created document doesn’t require additional reviews or legal checks. You can download it and proceed with signing.
Additionally, if you have multiple clients, you can benefit from a convenient profile. There you can save your documents, continue working on your drafts, and edit the created contracts without the need to start from scratch.
