Issues to Address in Consulting and Service Agreements

Since I’m on issue number 12 of BizB4Law, and I haven’t yet written a “Things to Know About X” kind of article, I thought it was probably time.  And, since I drafted a consulting agreement this week, that seemed like a timely topic.  Please understand that this article, like all of my blog posts, is written by me and not by some service – therefore, it reflects my thinking at the time of writing and based on recent experiences.  I urge readers to understand that this is not an exclusive or all-inclusive list of the issues that arise in consulting agreements.  With that caveat, here is a list of topics that should be addressed in almost all consulting agreements or service contracts: 

  • Scope – what is the consultant being asked to do?
  • Deliverables – what work product or deliverables will be provided?
  • Timeline – when will they be provided?
  • Satisfaction/Acceptance – how will it be determined whether the work product or deliverables are acceptable?
  • Standard of Care – what level of skill or care will be required (e.g., good faith, commercially reasonable, best efforts, best in the industry, measured by an external standard – e.g., GAAP)?
  • Term of Engagement – how long will the relationship last?
  • Payment – when and how will the consultant be paid?
  • Confidentiality – is there a need that information provided to or generated by the consultant will be held in confidence?
  • Insurance – is it important that the consultant maintain, e.g., errors and omissions or other insurance?  Will the client be an additional insured?
  • Indemnification – will the consultant indemnify the client for anything – e.g., mistakes, misrepresentations, gross negligence, willful misconduct, violations of law, breaches of the agreement?  Will the client indemnify the consultant for liability suffered because the consultant worked for the client?
  • Warranties and Representations – will the consultant warrant the work product or other matters (e.g., non-infringement, legal compliance)?
  • Intellectual Property – who will own and have the right to use the work product?  Any limits?
  • Authority – will the consultant have authority to speak on behalf of or bind the client?
  • Dispute Resolution; Choice of Law; Venue – how will disputes be resolved and where (e.g., mediation, arbitration, litigation); what law will govern?  These issues are particularly important for international agreements (do you want to be in a courtroom in, e.g., Afghanistan with Afghan law being argued to an Afghan jury in the Afghan language?).

 As noted above, these are not all of the issues to consider in a consulting agreement – but if you start with these, you’re well on your way.

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