When hiring a consultant, there’s a good chance you’ll sign a consulting agreement. Also called a consulting contract, that agreement is a legally binding document that defines the terms of a service between the consultant and your business. Here, we’ll discuss why you need one and what to look for in a consulting agreement. 

Why Is a Consulting Agreement a Good Idea?

There are many reasons why you should have a consulting agreement in place when entering a relationship with a consultant:  

  • It formally establishes the relationship between you and the consultant. 
  • It clearly outlines the specific service(s) the consultant will provide, which can avoid confusion and save valuable time.
  • It provides recourse should one party not uphold their end of the agreement, protecting you and the consultant legally and financially.

What to Include In a Consulting Agreement

Every contract between a business and a consultant might look a little different, but they typically share some elements. Here’s what to look for in a consulting agreement: 

Names, Contact Details, and Other Background Information

The very first thing any consulting agreement should include is the names of the parties entering the agreement, business names, and contact information. 

Scope of Services

The scope of services addresses what you expect the consultant to provide in exchange for compensation. It holds the consultant accountable for their performance. Ideally, it should be as detailed as possible. 

One thing to note here is that projects can change. If you determine you need the consultant to perform additional tasks, it’s a good idea to modify the original agreement and re-sign it to avoid issues for both parties. 

Timeline and Deadlines

Putting anticipated timelines and deadlines in a contract provides clarity and direction for all parties. It helps to keep the work on track and ensures that everyone has the same dates for when each part is due. 

Compensation Details

There should be a section of the agreement that outlines payment details. It should include how much the consultant will receive for their work and how your business will pay them. Comprehensive compensation information can help to avoid payment disputes. 


A consultant will learn a lot about your business, including sensitive details like financial data, how you’re performing, and other behind-the-scenes information that you don’t want your competitors to know. You can ensure that information stays safe with a confidentiality clause. 

Termination Clauses

A termination clause is essentially an exit strategy. It’s there in case there’s an issue with the project or the relationship between you and the consultant. For instance, the consultant can terminate the agreement if you don’t pay them on time. On the other hand, you can end it if you’re dissatisfied with the service you receive. 

Dispute Resolution

There should always be a section in an agreement that outlines how the parties will handle disputes. These measures will protect all of you and help avoid legal action should a dispute arise. 

Ensure Your Relationship Starts — And Stays — Well-defined

A consulting agreement may seem like a hassle, but it’s essential for ensuring a good relationship between you and your consultant. It outlines clear expectations, ensures that you get the services the consultant promised, and avoids several potential issues along the way. 

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