Consultancy agreement template

A consultancy agreement is a contract between a client and a consultant. It sets out the terms on which consultancy services are provided.

The consultant may be:

• an individual providing services personally
• a company through which the services of an individual are supplied to the client

The consultant works as an independent contractor and runs their own business. This is different from an employee or worker, who provides services as part of the client’s organisation.

A consultancy agreement may be used:

• for a set period or with a notice period
• for a specific project or task

For the client:

• greater flexibility in how consultancy services are delivered and managed
• avoids fixed employment costs and many employee-related legal obligations

For the consultant:

• more flexibility in working patterns and hours
• ability to work for multiple clients at the same time
• potential tax advantages compared with employment income

Yes. A consultancy agreement can be ended, but you must check the contract to see how and when this is allowed.

Most consultancy agreements include a clause that explains how either party can end the agreement. This usually allows for:

• termination with notice – either party may end the agreement by giving notice (for example, one month)
• termination for cause – the agreement may be ended immediately, or on short notice, if one party breaches its terms or becomes insolvent
• project completion – the agreement ends once the agreed project or task is completed

Consultancy agreements often also set out what happens after termination. This may include payment for work already done, the return of confidential information and any post-termination handover or restrictions.

PaperRock’s consultancy agreement templates include clear and flexible termination clauses, with guidance to help you tailor them to the nature and length of the work.

The phrase “subject to contract” shows that the parties are still negotiating. It means that no binding agreement exists until the final contract is signed.

If a consultancy agreement, or any draft of it, is marked “subject to contract”:

• the parties do not yet intend to be legally bound
• any terms discussed so far are provisional
• the agreement only takes effect once both parties sign the final version

This wording is commonly used during negotiations. It allows the client and consultant to discuss key terms, such as services, fees, and termination rights, without creating a binding legal relationship too early.

Once the consultancy agreement is signed and no longer marked “subject to contract”, it becomes legally binding and both parties must follow its terms.

A consultancy agreement should clearly explain the rights and responsibilities of both the consultant and the client. It helps both sides understand the work involved, how payment works and where risk sits.

A well-drafted consultancy agreement will usually cover:

• scope of services – what the consultant is engaged to do and any agreed deliverables
• term and termination – how long the agreement lasts and how either party can end it
• fees and payment – rates, invoicing, and payment terms
• independent contractor status – confirming that the consultant is not an employee
• confidentiality – protecting the client’s confidential information
• intellectual property – who owns any work or materials created during the engagement
• liability and insurance – the consultant’s liability, any limits and required insurance
• post-termination restrictions – non-compete or non-solicitation terms, where appropriate
• governing law and jurisdiction – which legal system applies, particularly for cross-border work

The exact clauses needed will depend on whether the consultant is an individual or a company, and whether the work is time-based or project-based.

PaperRock’s consultancy agreement templates cover both types of appointment and include clear guidance to help you tailor the document to your engagement.

Consultancy agreements are not automatically confidential. However, they usually include confidentiality clauses that limit how the consultant can use or disclose the client’s confidential information.

A confidentiality clause will often cover:

• information the consultant learns about the client’s business, systems, customers or strategy
• any data, materials or deliverables created during the engagement
• an ongoing duty not to disclose this information after the agreement ends

These clauses protect the client’s commercial interests. They are particularly important where the consultant has access to sensitive business information or intellectual property.

Some consultancy agreements also place confidentiality obligations on the client. This can apply where the consultant shares proprietary methods or materials.

The agreement itself is usually a private document and is not publicly available.

A consultancy agreement is usually used for a specific piece of work or engagement. A consultant is engaged to provide defined services for a set period or for a particular project. All key legal and commercial terms are set out in one document.

A master services agreement (MSA) works differently. It is a framework agreement that sets the overall terms of the relationship. Individual projects are then agreed separately, often through statements of work.

Key differences include:

• a consultancy agreement is usually a standalone contract for one engagement
• an MSA is designed for ongoing or repeat work
• MSAs can save time and reduce negotiation where services are provided regularly or across different parts of a business
• consultancy agreements are simpler and often better suited to one-off or short-term projects.

Care is needed to ensure that the arrangement is not treated as an employment relationship for employment or tax purposes. This can be complex, and you may need specific legal or tax advice to confirm the correct status.

In some cases, the consultant may provide services through a personal service company. This can offer limited liability for the consultant and may be more tax-efficient. It can also reduce the risk that the client is treated as the consultant’s employer.

However, the underlying working arrangements must still be reviewed. If they meet the deemed employment tests under the IR35 rules, the service company will need to deduct tax and employee National Insurance contributions and pay employer National Insurance contributions.

Consultancy agreements should also deal clearly with intellectual property. If ownership is not addressed, any materials or deliverables created by the consultant may remain theirs rather than passing to the client.

Other standard clauses usually cover the use of confidential information and governing law. These are particularly important where the consultant is based outside the UK.