THE INSTITUTE OF CONSULTING
STANDARD TERMS & CONDITIONS (2011 Edition)
Neither the Institute of consulting nor the draftsman of these Standard Terms and Conditions accept any liability however arising from the use of the Terms which should always be subject to legal advice specific to the Consultant and the assignment.
The Institute of consulting has commissioned Standard Terms and Conditions so as to provide suggested model terms to its members. The work carried out by consultants varies considerably and no one set of terms will be appropriate for every consultant on every occasion. The terms can provide a basis from which consultants can prepare their own terms having obtained any specific legal advice as appropriate. Variations (additions and deletions) to the Standard Terms and Conditions can be made using Schedule 3 (please see Paragraph 3.4 overleaf).
Without limiting that general caveat there are particular types of assignment for which the terms could only be useable with very substantial modifications. These include assignments involving personnel search and selection or computer system and software development.
2 The Structure of the Terms
The Terms of Business are divided into two parts:-
Part 1 - Terms of Engagement
Consists of the identification of the client and the consultant, the contractual incorporation of the rest of the terms and place for signature by the parties. This is followed by three schedules:-
Schedule 1: Requires a detailed description of the assignment and terms of reference.
Schedule 2: Deals with the Consultant's basis of remuneration and other charges.
Schedule 3: Permits the incorporation of particular terms and variations.
Part 2 - The Institute of consulting Standard Terms and Conditions (2007 Edition)
Contains clauses of more general application under a series of paragraph headings.
3 Completing Part 1 - The Terms of Engagement
The sample Terms of Engagement are provided as a separate document. These will need to be completed, or amended and reproduced by the Consultant.
3.1 The Consultant and the Client must be properly described. In particular the names of individuals or corporations should be used rather than trading names. There is space for signature by a guarantor for situations in which a guarantor is included in Schedule 3. A guarantor may be an individual underwriting a limited company's obligations or possibly a holding company of a less creditworthy subsidiary.
3.2 In Schedule 1 a detailed description of the assignment and terms of reference is required. This will often be a separate proposal document to which the Schedule refers.
The proposal should refer to the Institute's Code of Professional Conduct and state that the assignment will be carried out in accordance with the provisions of that Code. The areas, activities, services, functions, departments, systems, etc. to be included and, importantly, excluded should be set out in detail. The methodology to be applied to obtain the objectives of the assignment and details of individual specific phases should be included. The responsibilities and tasks to be performed by the Client, including office and secretarial facilities, and the responsibilities and tasks to be performed by the Consultant should be clearly outlined. If required, progress meetings, their purpose, frequency, participants and progress report contents should be specified. The output or product of the assignment (report, recommendations, etc.) should be described. The anticipated consultant days, elapsed time and provisional work plan should be set out. The proposed starting date and the expected date for completion need to be dealt with. Generally consultants should carefully consider the nature of the obligations which they are entering and the consequences of any inability to perform. The description of the Consultant's obligations may require specific legal advice. In summary, typical terms of reference might include, inter alia:
- project objectives, scope and outputs;
- process and work programme;
- consultant profiles;
- timetable including key milestones;
- project and quality management and communication with the Client.
3.3 Schedule 2 - Charges, Payments and Expenses
The Consultant will need to complete the basis of charge. Special factors relating to taxation (notably VAT) and expenses may need to be dealt with. If applicable the currency and exchange rate may need to be specified. The time for payment should always be specified.
3.4 Schedule 3 - Particular Terms and Variations
Schedule 3 allows for a guarantor of the Client's obligations to be included. The guarantor's details need to be inserted and the guarantor needs to execute the Agreement as indicated. A possible approach to professional indemnity insurance arrangements is also offered at paragraph 3. Professional indemnity insurance is not mandatory but is likely to be required by the Client and the Institute can provide information on approved insurers and rates. Paragraph 4 provides an opportunity to disapply particular clauses of the Standard Terms and Conditions set out in Section Two. Variations are likely to be required and these should be effected by the deletion of particular clauses and the insertion of additional clauses under paragraph 5 of this Schedule 3. Paragraph 5 is also the appropriate place to include specific additional clauses relevant to the Consultant or the assignment. Examples of additional matters which may need to be dealt with include provision for the termination of the assignment on notice, arrangements for any additional or varied work that may be required or limitations on liability for particular circumstances. A specimen arbitration clause has been included as an option.
3.5 Contracts for the supply of services which are made by distant communications rather then face to face may be subject to The Consumer Protection (Distance Selling) Regulations 2000 which give consumers new rights including cancellation. If the Regulations apply their effect should be specifically considered and advice sought.
4 Part 2 – Institute of consulting Standard Terms and Conditions (2007 Edition)
The Institute of consulting Standard Terms and Conditions are printed as a separate document.
These notes are not intended to affect the construction of the contents of the Standard Terms and Conditions and should not be relied on as requiring the need to consider the application of each term from its own detailed wording. The terms are largely self-explanatory but the following notes may be useful:
Clause 1.2 The purpose of this clause is to apply terms to all future services provided by the Consultant to the particular Client. This may or may not be effective depending on the circumstances.
Clause 3.3 The purpose of this clause is to deal with long-running assignments where an increase in rates may be appropriate. It is not generally possible for one party to a contract to unilaterally change its terms including the remuneration payable. Conversely client inertia may make it difficult for a Consultant to obtain express agreement to a reasonable increase in rates. This clause is intended as a practical approach but may in particular circumstances leave uncertainty as to any additional rate payable.
Where possible, express Client agreement to a revised rate is preferable.
Clause 5.2 An obligation to consult the Client does not imply the Client's permission in relation to any change.
Clause 6 There may be retainers where intellectual property issues are very significant and where specific advice is particularly impartial.
Clause 7 Statute limits the extent to which a party can contractually reduce its liability for breach of its obligations. The effectiveness of these clauses will depend upon the specific circumstances.
Clause 10 The law will not enforce the payment of penalties against a party
for breach of its obligations. Whether the payment envisaged in this clause constitutes a penalty rather than a genuine pre-estimate of the likely loss suffered by the Consultant will depend on the circumstances. If this is an issue of concern to a Consultant, it would be appropriate to replace clause 10.2 with a clause specifically addressed to the level of loss that the Consultant and the Client envisage if the Client's obligation is broken.
Clause 14.9 The status of the Consultant for employment law and taxation purposes may not be conclusively determined by this clause. In appropriate cases the working arrangements between the Consultant and the Client may need to be examined.
The Terms have been drafted so as to provide a format for a Consultant's specific terms of engagement and a checklist of issues to be considered by the Consultant subject to taking appropriate and specific legal advice.
© Updated August 2007. Institute of consulting , 3rd Floor, 17/18 Hayward’s Place, London EC1R 0EQ