A consulting agreement establishes the terms of a relationship between a consultant and client, whether a business or individual. A consulting agreement defines the relationship and establishes rights and duties of the two parties for the services sought. This type of agreement can vary in complexity but it is vital that all consulting agreements establish the scope of work. This means a consulting agreement needs to describe the services the consultant will provide the client or hiring party, and how much the consultant will be compensated. The definition of the scope of employment should be specific and should include whether the consultant will be reimbursed for incurred costs.

A consulting agreement establishes the terms of a relationship between a consultant and a client, and the rights and duties of the parties for the services sought.

A consulting agreement should also include the term of the agreement, that is, the period of time that the agreement will extend to needs to be specified. Further, the circumstances under which the agreement can be terminated should also be specified. Conditions for completion, budgetary matters and a completion deadline are also included in a well drafted consulting agreement.  A breach of contract clause stating the consequences for breach of contract is also important in this type of agreement.

Consulting agreements generally include non-compete agreement clauses and confidentiality agreement clauses. These clauses are imperative if the consultant will be exposed to a trade secret or knowledge that is unique to a business. These type of nondisclosure clauses protect against the disclosure of valuable confidential information.