Legal

10 Steps in Preparing a Contract - Part 3

Steps 7-10 in preparing a contract

7. Provisions necessary for the protection of the client:

A time schedule for the completion of services by the consultant, or a formula for determining such.
A requirement for adequate insurance coverage. The client should be adequately protected either by insurance or by a hold-harmless agreement, or both.
A provision preventing the consultant (and the client) from assigning the contract or subcontracting a part of it without the written consent of the other.
Although the agreement will normally terminate by provision or implication when the consultant's services are fully performed, the client may be given the right to terminate the agreement if the consultant's performance is unsatisfactory or if the client has no further need of the service provided, or, in some cases, any time at the option of the client. A reasonable arrangement for payment of fees in the event of such termination should be provided for.
By implication and by specific contract provision, where called for, a requirement may be stated that only competent personnel may perform or continue to perform work for the client. It is not unknown for the client to request the assignment of a specific person or persons to perform the services, with identification of same in the contract. The consultant should note that such a contractual clause will limit the consultant's flexibility. Avoidance of such a clause may be in the consultant's interest.
Other provisions include requirements that the consultant obtain any approvals required by government agencies, that the consultant maintain adequate records, that the consultant make periodic reports to the client, and that any fee paid for a preliminary report to the client may be applied to the total fee involved for a completed project.

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10 Steps in Preparing a Contract - Part 2

Steps 4-6, in preparing a contract

4. The basic commitment or agreement of the consultant should be set forth.

a. The services to be provided by the consultant should be set forth in sufficient detail to make clear the consultant's undertaking. The services to be performed by the consultant should be spelled out in as much detail as possible. Since care is being taken to develop the contract document, it makes little sense to be terse. The best advice is to leave nothing open to question. Enumerate all of the consultant's tasks and major sub-tasks.

b. Where the services relate to a particular project or line of work, it should be fully described by means of size and location and/or the type of work or project involved.

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10 Steps in Preparing a Contract - Part 1

1. Select the contract forum

A formal written contract executed by both parties.
A letter of agreement or a purchase order type of agreement prepared by one party and accepted by the other party, setting forth the essential elements of the contract.
A verbal agreement for the services to be rendered with most of the promises and conditions implied.

NOTE: Government agencies in situations involving major engagements commonly require formal written contracts. Letter agreements and purchase order types of contracts can often be safely used where the amounts involved are smaller or the practice of the client is to use such. Many consultants, like lawyers, verbally agree to provide a particular service for compensation commonly based on the per-hour or per-day rate charged by the consultant. An estimate is often made as to the total cost of providing the service involved, but this is subject to change depending upon the length of time necessary to perform the promised services.

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Consulting Contract Strategies - Part 2

Assurance of Work

The most dangerous and frequent trap for any consultant is the situation in which he gives away his expertise free of charge. This trap awaits him at three different junctures in his dealings with the client: in the exploratory interview, in the written proposal, and in the contract. Notice that in the aforementioned specification of activities, the consultant wisely stated what he would do, not how he would do it. Since no contract is signed on the day that it is presented, the client could very easily refuse to sign, adopt the methodology of the consultant foolish enough to spell it out, and have his staff accomplish the project without incurring the expense of a consulting fee.

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Consulting Contract Strategies - Part 1

The successful consultant will always employ basic strategies when negotiating a contract with the client in order to achieve six major goals: avoidance of misunderstanding, maintenance of working independence and freedom, assurance of work, assurance of payment, avoidance of liability, and prevention of litigation. It is unfortunate that our society has placed a pejorative coloration on the word "strategy". The purpose and meaning of strategy here is neither to mislead the client nor to be devious with him. Rather, it is to assure both parties that these six goals, which are in your mutual interest, will be reached.

Let's take a good look at each of these goals, because they are important.

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