Consultant is a provider of consulting services to a person or organization based on a cooperation agreement. Prior to starting work, both parties will prepare and sign a consultation contract containing an agreement in terms of their respective duties, rights, and obligations. To draw up an effective consulting contract, you must understand the legal provisions that will form the basis of the cooperation agreement, prepare a draft contract, sign the contract, and carry out the things agreed in the contract. If you want to create a consulting contract, use the guidelines described in this article and make the necessary adjustments.
Step
Part 1 of 3: Getting Ready
Step 1. Consider whether you need to make a consultation agreement
A contract is a document that proves the existence of a legally binding agreement. You need to sign a consulting contract if you want to use the services of a consultant or you are a consultant who wants to offer consulting services. A consultant is a person who provides professional advice or works as an expert.
Step 2. Determine if you are ready to collaborate by drawing up a consulting contract
Make sure you are qualified to enter into a legally valid contract, for example by understanding that you will be bound by legal terms once you sign the contract. In addition, you need to know what points must be included in the agreement so that a contract is said to be legally binding, for example:
- Offer
- Acceptance
- Valid considerations
- Mutual agreement
- Legal purposes.
Step 3. Use the terms and conditions that you include in the contract in accordance with the laws in force in your country
Make sure you make a contract that meets the provisions of the country's law because the law on which the contract is based is the law that applies in your country and the country of the prospective client (if the client comes from abroad).
For example: some countries apply strict legal rules regarding the obligation to pay penalties in case of default, but there are also those that provide freedom to apply this rule
Part 2 of 3: Preparing the Draft Consulting Contract
Step 1. Start preparing a draft contract
Include the title of the contract and the identity of the parties who will cooperate. At the beginning of the contract, write down detailed information explaining who you will be working with.
- Try to find out the full name of the person who will be signing the contract, either as a person or on behalf of the company. If you are going to work with a company, include the company name, address, company TIN, and other required identification. State the terms that will be used throughout the contract to denote the parties (eg: First Party hereinafter referred to as “consultant”; Second Party hereinafter referred to as “client”).
- Consultants usually work individually and provide consulting services to companies by making cooperation contracts. For example: a law firm that requires consulting services regarding the recruitment and firing of employees will cooperate with consultants who have expertise in these fields.
Step 2. Write down the considerations of each party that underlies the cooperation agreement
Write a short paragraph to describe what each party will do. For now, you don't need to give a detailed explanation. In essence, you must state that the consultant will provide consulting services and the client will compensate.
For example: to prepare a draft contract outlining the considerations of the parties, you might write: “The client has considered and decided that the consultant has the qualifications, experience, and competencies needed to provide services to the client. The consultant has agreed to provide services to the client in accordance with the terms agreed in this agreement. Based on the things described above…” This sentence can be used to ensure that the agreement is made based on valid considerations
Step 3. Describe the consulting services to be provided
Describe exactly the work to be done by the consultant as agreed. Write complete and detailed information about your job.
- Begin this section by writing: “The client agrees to work with the consultant as a consulting service provider in terms of x, y, and z. Consulting services include other tasks that will be determined further based on the agreement of both parties. In this case, the consultant has agreed to provide consulting services to the client.”
- In general, consultants provide consulting services in the litigation process, asset management, process improvement, and submit comparative opinions.
Step 4. Write an agreement on compensation
Explain the payment method to the consultant. Payments from clients can be made on a regular basis or lump sum at the end of the contract period. Make sure you include the agreed payment method clause in the draft contract.
- If you will receive periodic payments, write the following clause in the draft contract: “For the services rendered by the consultant under this agreement, the client will compensate the consultant Rp…/hour on the date of … every month until the end of this agreement.”
- If you will receive lump sum payments, write in the draft contract: “The obligation to pay compensation arises when the consultant completes the work providing consulting services and must be paid by the client no later than the contract expiration date.” or “within … business days after the contract expires.”
Step 5. Decide whether you want to be an employee or independent consultant
Know that the difference is a very important aspect that you should explain in the contract. Many consultants prefer to be independent consultants. If you want to become an independent consultant, explain your desired status and why you chose to become an independent consultant. Also state in the draft contract that you are not entitled to take leave, do not get medical benefits and other facilities as received by permanent employees.
As an independent consultant, the company or person who uses the services of a consultant is obliged to make a minimum payment to the consultant. This is very helpful so that it is easier for you to get started and make deals, for example: because you are not obliged to pay taxes. For example: as a payee for services with an amount below the PTKP, you have no obligation to pay income tax. In this case, the service user is obliged to withhold tax and report
Step 6. Determine the validity period of the contract
You must mention the period of cooperation in the draft contract, the start date of the cooperation, and when it will end.
The clause used usually reads: “This agreement comes into effect from the date of signing the cooperation by both parties and will remain in effect until the consulting services are completed by the consultant, unless there is an early termination of the cooperation which will be further regulated in this agreement. The validity period of the agreement can be extended upon the agreement of both parties
Step 7. Write a contract termination clause
You will need to include how to terminate the cooperation before the work is completed, when you must submit the notification letter, and what impact it will have on the compensation you will receive.
For example, the termination clause in a draft contract usually reads: “This agreement can be terminated unilaterally, with or without any reason, no later than 30 (thirty) days after either party submits a notification letter to the other party. In the event that the consultant terminates the agreement, based on the terms and conditions in this agreement, the consultant is obliged to complete the task properly until the end of the cooperation on the date stated in the notification letter. Upon termination of the agreement by the client for certain reasons, the consultant is entitled to receive compensation and reimbursement, if any, which is due under the terms of this agreement, but has not been paid when the consultant stops working. In addition, the consultant is entitled to receive irrevocable compensation and penalties for cancellation as provided for in this agreement. If the consultant terminates the agreement without giving a reason, the costs that the consultant has to incur to complete the work will be considered nil and the client will not be reimbursed because there has been a cancellation.”
Step 8. Include other information and standard clauses
At the end of the draft contract, you should include the standard clauses that are usually included in the contract. You can copy the draft clause from the contract format on the internet, but read it carefully first and make sure this clause is exactly what you want. Some standard clauses that must be included in the contract, for example:
- Severability Clause
- Change Clause
- Indemnity Clause
- Choice of Law Clause
- Entire Agreement Clause
Step 9. Prepare some spaces for the signature
At the end of the contract, leave some space for both parties to sign the contract. Make sure you leave enough space for the signature and date.
Part 3 of 3: Submitting Draft Consulting Contracts to Prospective Clients
Step 1. Submit the draft contract you prepared to the prospective client
After you submit a draft contract, a potential client will usually respond with several options:
- The draft contract is approved so the contract is ready to be signed and you can get to work.
- Rejected. This means you will have to make revisions to get potential clients to approve draft contracts or find new clients.
- Prospective clients will negotiate several clauses in the contract. In this case, you need to negotiate with potential clients until an agreement is reached.
Step 2. Negotiate the terms of the contract
When negotiating, the points that need to be discussed are usually overpayments for services and/or the form of consultation you should provide. This discussion tends to cause tension because it will discuss some of the main points in the contract.
Step 3. Sign the contract and get to work
If both parties have found an agreement to start cooperation, you and the client must sign a contract and start working according to the terms that have been mutually agreed upon.
Tips
Look for a draft contract with the right format and adjust it as needed. You can search the internet for draft contracts so you don't have to type from scratch and set the format to save time
Warning
- We recommend that you consult a legal expert before signing any contract as the rights and obligations that arise can have legal consequences.
- Remember that every agreement must be made according to the laws of the country. Therefore, make sure the contract you prepare does not conflict with applicable law, especially if you want to work with clients from abroad.
