Extra Eagle

Consulting Agreements are probably the contract type that most freelancers and consultants are most familiar with. I don’t think I have ever been given one at less than 5 pages. It really needs a Refactoring as us computer nerds like to put it.

Of course the people who give it to you normally understand as little about what it says as most other non lawyers as they tend to be written in dense legalese with lots of fluffy words, that look impressive such as:

Waiver by one party hereto of breach of any provision of this Agreement by the other shall not operate or be construed as a continuing waiver.

But what does this mean? I don’t know. Many agreements nowadays come with a human readable addendum that actually specifies the real terms of the agreement, such as rate, parties, duties, payment terms etc. Shouldn’t there be a better way?

Agree2 has a few different consulting agreement templates that our users have submitted. In particular this Software Development Agreement by Andre Lewis took a great step towards conciseness and readability.

I’ve decided to start working on a new that could be used either as is or used as a starting point for other more special purpose consulting agreements for industries such as Software Development, Graphics Design.

General purpose concise Consulting Agreement template

So the requirements for this is to be readable/skimmable. No legalese allowed. No repetition.

No Legacy code

Also reduce the amount of clauses protecting against highly unlikely situations. Many of the standard clauses found in these boilerplates are there, because once 35 years ago someone somewhere did something that someone wanted to protect themselves against in the future.

Programmers like me know this as legacy code. In many companies people are scared to change or remove this code, because no one remembers what it does or the last person who understood the code left the company years ago.

So any clause that doesn’t make any sense and is there because, you know it’s always been there is out. These can always be added back again with in plain English, if someone knows why its important.

Introducing the text.

You can always go in and view and contribute to the General Purpose Concise Consulting Agreement template on Agree2. This is going to be a wiki like template, any registered user can edit it and comment on it. Feel free to use it of course for your own contracts.

I’ll go over each clause here to explain my reasoning behind it.

Words surrounded by square brackets such as [client name] are what we in Agree2 call Smart Fields. These automatically become text input fields in the template and can later be used to build reports as well. Anything within that followed by a ‘=’ such as [rate=$100] is a default value.

Overview

[client company] would like to hire [consultant name] as an hourly paid consultant to perform [task] on the [project] project.

Explain the contract in a single sentence. The twitterable version of the contract so to speak. Who are the parties and what is it about.

Task would be say “rails development”, “graphic design”, “translation services” etc. Project would be the project within the company. Eg. GMail would be a project within Google.

Client

[client company] is represented in this agreement by [client name] with email address of [client email].

This just explains clearly in one line who the client is and who is the actual person within performing the contract.

Consultant

[consultant name] with email address of [consultant email] works through [consultant company].

The same for the consultant. Most consultants work (at least they should) through their own company, LLC or even through an agency. Many contracts I have seen leave this out, causing some ambiguity about who the contract is with.

Description of Task

[description of task]

A blank space to describe in as much or as little detail as you want about what the task is. For large gigs this may be fairly vague, but for small short contracts you should probably be more specific. eg. “Improve performance of the so and so feature.” or “Create a logo for the site”.

The description of the task is where many real world disagreements stem from. So don’t skip it.

Start and Length of Agreement

This agreement is valid from [valid_from=today] until [valid to=1 year from now].

This should be obvious. Agree2 actually allows you to put english terms like today and 1 month from now in certain date like smart fields and it will translate it to a real date.

Hourly Rate

In return [client company] will pay [consultant name] the hourly rate of [rate]. [consultant name] should limit the weekly hours invoiced to [max hours=50] hours.

Again this should be fairly straight forward. It specifies as concisely as possible as the rate.

Where the “Description of Task” above outlines the consultants part of the agreement, this is the clients part. Remember for it to be a legal contract, all parties have to do something.

Reporting of hours worked

[consultant name] will keep [client company] informed on the progress and send them an email at the end of each week to [client email] containing the amount of hours worked as well a brief description on what was done. Instead of an email an on-line time tracking service may also be used.

This is also often something that unnecessarily causes contention in contracts. Sometimes clients change on the whim how they want this. It’s better for all parties to just spell it out from the outset. No need to get more complicated than this.

Invoicing and Payment

[consultant name] will send an invoice to [client company] every [payment frequency=two weeks] for the work done in the prior [payment frequency=two weeks] as well as any expenses approved by [client company]. [client company] will pay [consultant name] within [payment terms=15 days].

This should also be straightforward. I added the part about expenses as there sometimes can be expenses on a gig, but not very often (in 13 years of consulting I’ve only had to expense something once). I have seen contracts with 4 or 5 paragraphs outlining convoluted expense procedures, I don’t think more than this is necessary. Maybe it should be left completely out? Tell me what you think.

Confidentiality

[client company] may share secrets with [consultant name]. In return, [consultant name] agrees to use any secrets shared only as directed by [client company].

[client company]’s secrets are anything owned by (or in the possession of) [client company] that:
* are not generally known or discoverable through legal methods;
* provide a competitive advantage, have economic value or relate to individual privacy; and
* are kept secret by [client company].

This clause was stolen pretty much verbatim from Zak Greant’s fantastically short Simple Non Disclosure Agreement

These clauses sometimes fill multiple pages. I recently received one where the confidentiality clauses consisted of 11 pages!!! They even wanted me to sign an additional NDA on top of it. Zak did a fantastic job condensing this down to two paragraphs.

Liability

In no event shall [consultant name] be liable to [client company] for [client company]’s lost profits or other damages.

I am not a big fan of Liability statements like this. From what I understand they are more there to scare the parties than actually serve a real function should something reach a court as Tort Law and/or Criminal law would override anything in the contract anyway.

Now, I am not a lawyer, but if you think I am wrong please do comment. But in any event I left a very short Liability clause in just to keep us all on our toes.

Independent Contractor

[consultant name] is not an employee of [client company], but rather an independent contractor. This means that [consultant name] may perform work for other clients, can generally decide how and where [consultant sex=he] works. [consultant name] is responsible for paying whatever taxes are due on payments from this agreement.

As far as I understand this clause needs to be there in the US or the IRS could consider it an employment contract. Your country may have similar rules. While I find it extremely annoying and pointless, for these kind of hourly projects I believe it is necessary, and it certainly wouldn’t harm anything even if you’re not in the US.

Disagreements

Disagreements happen. If it does happen and [consultant name] and [client company] is in disagreement of about this agreement, we both will attempt as much as posible to come to agreement. If we can’t resolve a dispute between us all disputes arising out of or in connection with the present contract should be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with their Rules.

This could probably be left out. Most agreements of this sort never hit the courts anyway. But just in case Arbitration is normally a cheaper and fairer option for all parties. Should I leave it out?

Help contribute

If you are a consultant/freelancer or whatever else you might call yourself, you probably have an opinion about contracts. Please add your comments, rewrite sections, add clauses etc. Also if you do use this for your own contracts, please let us know of any problems you experienced with it.

Also if you think I am going about it completely wrong, please start your own hopefully even more radical consulting agreement template.