How Does a Consultancy Agreement Work? (2022 Update)

May 24, 2019
Reading Time: 3 minutes
Written by Lachlan Ward

Are you looking to hire someone to help management some aspect of your business? Is there an area of your business that you wish to improve, such as human resources? For valuable advice, an independent consultant can be the solution. Or, maybe you’re a consult wishes to take on new clients. Not matter what side of the table you’re sitting at, it is important to cover all you bases and ensure you are legally protected. A great way to do this, is to implement a consultancy agreement.

What is a Consultancy Agreement?

A consultancy agreement also known as a consulting contract, or consulting services agreement establishes the rights and obligations between you and the consultant. It will outline the obligations and expectations of both parties, so both parties are well informed regarding what they must do under the agreement. Basically, the consultancy agreement stipulates the responsibilities and duties the consultant will undertake, for an express price.

The consultancy agreement acts to minimise the potential and risk of disputes in the future. So, no matter whether you are a business wishes to employ a consultant, or a consultant looking to formalise your duties with a business, this type of agreement is a great way to protect both parties.

What Can a Consultant Help You With?

A consultant helps to evaluate the strengths and weaknesses in your business and works with the goal of improving your processes and brand. They have specialised experience in a particular area, for example, human resources, value creation, customer relationships, marketing, planning, risk minimisation, informational technology and business strategy.

What Does a Consultancy Agreement Usually Cover?

To ensure that there is a smooth relationship from start to end between both parties, the following terms should be incorporated into any consultancy contract:

1. The Parties Involved

Chiefly, contracts require clearly defined parties to operate. The legal names of the involved parties should be first on the list for what to include in a consultancy agreement.

2. Clear Rights and Obligations of Both Parties

Crucially both parties should share a common understanding of each other’s expectations for the relationship. You should ask yourself and the other party the following questions. What is the purpose of the task? What is the end goal? Fundamentally, the scope and nature of the business should be captured in the agreement. Furthermore, the tasks that will be performed should also be outlined in the agreement.

3. Confidentiality and non-disclosure agreements

You should include a confidentiality clause if sensitive information or exclusive intellectual property will be utilised in the relationship. These clauses can protect your confidential information from disclosure. Furthermore, a non-disclosure agreement can provide you with additional peace of mind.

4. Duration of the contract

You also have to include the consultant’s commencement and termination times.

5. Payment

It is important that your pay arrangements are documented, like any other employment contract. This is crucial regardless of whether payment is to be in a lump sum or made in instalments.

Benefits of Hiring a Consultant

There are a few main reasons why you would hire a consultant for assistance:

  • Outside perspective and analysis – In situations where you wish to improve an aspect of your business, an independent opinion can be constructively critical. Moreover, a consultant can guide you towards success;
  • Specialised knowledge – A consultant can provide more in-depth insights into a specific problematic area;
  • Cost savings – As an employer, you have an obligation to pay for added employment benefits, such as superannuation to an employee.
  • Flexibility – The term of work designated to a consultant is usually for a fixed period only and there are no long-term obligations after your contract expires.


If you think engaging the services of a consultant sounds right for your business, make sure your contract with them is drafted properly. Furthermore, you should make sure your agreement is reviewed by a business lawyer to ensure it is effective.

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

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