Chapter 1: Contracts that Define Client Relationships
Part 1: Examples of Client Contracts
A: Consulting Agreement / Consulting Contract
IT consultants: this contract will be your mainstay. This document usually has the following elements:
- Terms of Agreement. Effective dates and conditions when the agreement can be renewed or adjusted. For short-term projects with defined scopes, include start and end dates.
- Duties. Services you will provide to the client. For example, if you're a software consultant, specify that you will provide software planning, design, and development services.
- Time Requirements. When you will be available to the client.
- Compensation and Terms. Hourly or project rate plus travel time.
- Expenses. Who is responsible for what (e.g., you may specify that your client is responsible for paying for licensing fees and hardware).
- Confidentiality. This lets you sidestep having a separate non-disclosure agreement. Basically, it states you can't discuss the work you do for your clients unless they make that information public.
- Rights and Licenses. If you develop software specifically for your clients, you may need to iron out who has the copyrights to the work, you or the client. Your client may want you to sign a work for hire agreement, which would give them the ownership of the work you produce. Jump to page xx for details.
- Relationship. An important inclusion for independent contractors. It can provide proof to the IRS that you are not your client's employee.
- Waiver, Modification, or Cancellation. Include this to clear up miscommunication problems. If the provisions of the agreement change, those changes must be in writing and signed by both parties.
- Assignment. This specifies that the parties entering into the agreements are the ones responsible for seeing it through. No bait-and-switching.
- Liability. This is your indemnification clause. It states that you can't be held liable for certain losses associated with your services. However, it may not be enough to keep your business out of court, and each judge will decide whether the clause has legal standing. That's why, as a failsafe, you should always carry adequate Professional Liability Insurance, which pays for legal expenses when you're sued over the financial losses your work allegedly caused.
- Governing Law. This specifies which state's laws you and your client are following (which is important if you ever get dragged to court).
If you want to get your boilerplate contract underway, check out Tech Republic's IT consulting contract template.
Next: Part 1B: Examples of Client Contracts: Web Design Contract