What to Include in Your Consulting Agreement

Consultants provide specialized expert advice that helps clients significantly improve their businesses. See what a standard consulting contract contains to decide whether you feel comfortable drafting one yourself.

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Ronna L. DeLoe, Esq.
by

Ronna L. DeLoe, Esq.

Updated on: March 5, 2026
Read time: 6 min

In today's fast-paced business world, many companies hire consultants for projects that last anywhere from a few hours to a few months or longer. Consultants are often freelancers, meaning they aren't the client's employees, so the client doesn't have to add them to the payroll or provide employee benefits such as health insurance. As experts in their field, consultants possess knowledge about a particular subject the client needs to improve their business.

Different types of consultants

Consultants represent all types of industries. Good consultants follow industry trends and learn as much about the topic, product, or service they're advising on.

While consultants are found in just about every industry, some of the more common business fields are:

  • Investing
  • Marketing and advertising
  • Sales
  • Real estate
  • Tax
  • Computers and technology
  • Diversity training

Common clauses in a consulting service agreement

Before the consultant commences work for the client, the two parties should sign a consulting agreement to protect both sides in case of nonpayment, failure to deliver services, or problems that arise between the consultant and the client. The agreement also defines the duration of the consulting arrangement and the consultant's compensation.

Consulting agreements can be simple or complex. However, a standard consulting agreement usually contains some of the following clauses and language:

  1. The date the parties enter into the agreement, listed at the top of the contract.
  2. The names of both companies and their business addresses.
  3. The type of consulting being offered, with as much detail as possible, and that the client desires to hire the consultant to perform such consulting services pursuant to the terms of the contract.
  4. The duration of the agreement, with start and end dates noted. Alternatively, the agreement can state that the relationship ends when the consultant has completed the project in question, although it's preferable to pick a specific end date, as both sides may not agree when the consulting service has ended.
  5. Terms of termination of the consulting agreement, which usually includes one party giving sufficient written notice to the other party and how many days' notice the party must give. Termination can also result from any breach of the contract.
  6. Compensation for the consultant, including how much, payment schedule, and how, if necessary, the consultant must provide invoices.
  7. A statement that the consultant is to keep the client's product and company information confidential, such as industry secrets, designs, ideas, how the company is performing, and anything that a competitor could use to its advantage against the client.
  8. A noncompete clause, requiring the consultant not to compete with the client's business at a similar type of company during the service contract and for a specified period of time after the consultant completes the work. The clause can also state that the consultant agrees not to work for the client's competitors or customers and not to solicit the client's employees.
  9. A statement that the relationship between the parties is that the consultant is an independent contractor and not the client's employee or partner.
  10. A statement describing who owns the property or intellectual property, such as copyrights, to any product created by the consultant.
  11. The state where the agreement is governed, which is usually picked by the party preparing the contract.
  12. A statement that the agreement is the entire agreement between the parties and no oral promises are part of the contract unless specifically included herein.
  13. A statement that each party is not liable to the other and is not in default for any delay due to acts of God (such as earthquakes, floods, hurricanes) or other unforeseen catastrophes.
  14. Signatures and titles of an officer from each party.

Whether you're a consultant or a client looking to hire one, you can draft a simple agreement based on the above information. Consulting contracts, however, usually contain legal terminology about warranties, liabilities, and indemnification, so that each company isn't liable to the other under certain conditions. 

Consulting agreement FAQs

What is a consulting agreement and why do I need one?

A consulting agreement is a written contract that sets up the rules between you and someone you hire for expert advice or services. You need this agreement even for simple projects because it protects both you and the consultant. Without a written contract, you might face problems like payment disputes, unclear work expectations, or fights over who owns the work that gets created.

How do I make sure the work scope is clear in my consulting agreement?

You need to be very specific about what work the consultant will actually do for you. Don’t list vague explanations like "marketing help." Instead,  list exact tasks, like "create 20 social media posts per month." Include details about what the final work will look like, when you'll get it, and how you'll measure if it's good enough. You should also mention what tools, information, or workspace access the consultant will need from you. Being super detailed here prevents most disagreements later. 

What are the different ways to pay a consultant?

There are three main ways to pay consultants. You can pay a fixed amount for the whole project, pay by the hour, or use a combination approach with a monthly retainer plus bonuses for good results. Your agreement should explain exactly when payments are due, how the consultant will send you bills, and what happens if you pay late. You should also decide upfront who pays for extra costs like travel or special software.

How do confidentiality clauses work in consulting agreements?

A confidentiality clause means the consultant promises not to share your private business information with anyone else. This includes things like your customer lists, secret recipes, financial information, or any special processes your company uses. The clause should clearly explain what counts as "secret information.” This protection works both ways too. If the consultant shares their own special methods or tools with you, they might also want you to promise not to share those secrets with their competitors.

What happens if I need to end the consulting agreement early?

Your agreement should explain exactly how either you or the consultant can end the contract before the work is finished. Most agreements require giving notice (like 30 days warning) before ending the relationship, unless someone breaks the contract rules. The contract should list specific reasons that allow immediate termination, like not paying on time, sharing confidential information, or missing important deadlines. It should also explain what happens to any work that's already been done and who pays for what when the contract ends early. 

Who owns the work created during a consulting project?

The ownership of work created during consulting (called intellectual property) doesn’t automatically belong to either party— it depends on what your agreement says. It should  clearly explain who will own things like reports, designs, software code, or marketing materials that get created. This is especially important for things like software code or unique business processes. Your agreement should make these ownership rules crystal clear from the start.

How do I make sure my consultant is classified correctly and not treated as an employee?

Your agreement must clearly state that the consultant is an independent contractor, not your employee. This means they control how and when they do their work, use their own equipment, and handle their own taxes and insurance. You won't control their work schedule; they can work for other clients, and they're responsible for their own business expenses. You also shouldn't provide them with company benefits like health insurance or paid vacation time, since those are for employees only. Getting this wrong can be expensive because the government might make you pay back taxes, penalties, and employee benefits. 

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This article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.