What to Include in Your Consulting Contracts

In a perfect world, contracts wouldn’t be necessary.

But in the real world, wise independent consultants use contracts to set expectations and boundaries. While an agreement that covers the scope of work and payment terms may seem enough, strange things happen. When issues arise, it can be advantageous to have certain clauses agreed to.

After talking to other consultants and reflecting on our own contracts, I wanted to share with you some often-overlooked but important clauses.

Let’s take a closer look at each one:

  1. Payment Terms. Nobody wants to spend time chasing cash, so keep payment terms simple. Our preference is to be on Net 10 terms, where the invoice is due in 10 days. If the client won’t accept Net 10, then Net 30 is a viable option (but offer a 2% discount on payment received within 10 days as an incentive).


“Payment will be made by ACH. Contractor will submit invoices for services rendered no later than 30 days following the month of completion. Company shall pay Contractor’s invoice within thirty (30) calendar days of receipt following Client approval of deliverables. Contractor shall offer a discount of 2% for payment received within ten (10) calendar days following submission of an invoice to Client."


  1. Termination. Consider what really matters when the contract ends. Early termination isn’t ideal for independent consultants as it takes some time to replace the income stream. To address this, I’ve seen other consultants include early termination fees to recoup all or some of the lost income.

    But in our case, we want to be flexible. Termination on either side can be done within 15 days. This shows that we can come in and out fast, so clients don’t have to worry about a long-term engagement.


“Termination for Convenience. Company may terminate this Agreement at any time, for any reason, without liability or continuing obligation, upon written notice to the Contractor. Such termination shall be effective on the date specified in the notice. Contractor may terminate this Agreement at any time, for any reason, without liability or continuing obligation, upon fifteen (15) calendar days written notice to Company. This Agreement also may be terminated at any time upon the mutual written agreement of the Company and Contractor.”


  1. Non-Competition. Non-compete clauses for independent consultants rarely hold up in court because they’re not employees under IRS standards. But if the client requires it, I strive to list very specific competitors in the contract.

    For example, if my client is Walmart and they require a non-competition clause, then I would try to ensure that it specifically names competitors like Target and Costco – rather than broadly restricting work with all retailers.


“For the duration of this Agreement and 12 months after its duration, Contractor agrees not to directly or indirectly engage with the following competitors of the Company:

  • [Competitor 1]

  • [Competitor 2]

  • [Competitor 3]

This restriction applies solely to Contractor personally and does not extend to other individuals or entities affiliated with Contractor. However, no affiliated entity will engage with the listed competitors without written and prior consent from the Company.”


  1. Non-Solicitation or Recruitment. This clause prevents clients from directly hiring other consultants you bring in to support your work. It typically states that the client cannot hire someone they’re introduced to through you without written permission and a recruitment fee.

    If you decide to add this clause, it’s also helpful to add a separate section about what the specific recruitment fee should be – whether it’s a percentage of the recruit’s salary or a fixed amount.


“Company agrees to not directly or indirectly solicit, hire, or engage any individual or entity introduced by Contractor to assist with the project during the term of this agreement or within 12 months after its termination, without obtaining prior written permission from Contractor.

If Company wishes to hire or engage any such individual or entity, a recruitment fee of 20% of the individual’s first-year salary shall be paid to Contractor as compensation.”


  1. Survival. This one sounds far-fetched but it’s actually quite important. The survival clause states that if you die, your estate should get paid for the work you did.


“In the event Contractor dies during the Term of this Agreement, this Agreement shall terminate, and the Company shall pay to Contractor’s estate the compensation which would otherwise be payable to Contractor for services rendered prior to Contractor’s death.”


  1. Severability. If one part of your contract is invalid, a severability clause protects you from having the entire contract made void. Without this clause, you can be exposed to more liabilities and legal headaches.


“If any term or provision of this Agreement is held to be void or unenforceable, that term or provision will be severed from this Agreement, the balance of the Agreement will survive, and the balance of this Agreement will be reasonably construed to carry out the intent of the Parties as evidenced by the terms of this Agreement.”

But remember that these are my personal opinions and anecdotal examples. You should still consult an attorney for recommendations that are right for your specific situation.

We’ve also created these starter project-based and time-based templates from the examples gathered from other consultants.

Feel free to download and edit them as you need.