Your client has sent you a consulting agreement and wants it signed before work starts. Or you have set up as a consultant and need an agreement of your own to send out with your first proposal. Either way, the document in front of you quietly decides several things that are easy to take for granted: the work you actually have to do, when you get paid for it, who owns the work you produce, and what happens if the engagement turns sour.
A consulting agreement is a contract for services between you and your client. It records the commercial deal and sets the rules of the relationship, and it displaces the defaults that would otherwise apply. Without a written agreement there is no agreed scope, no agreed payment terms and no agreed position on who owns the work product. The agreement also shapes how the law characterises you: as an independent contractor or as an employee, with everything that follows for tax, superannuation and workplace entitlements. The clauses below are the ones that do that work, and they are the minimum worth checking whether you are drafting the agreement or reviewing one sent to you.
The core clauses
The clauses that follow appear in almost every consulting agreement that works. Read them as a set rather than individually. A missing payment clause matters less if the scope is clear, but a missing intellectual property clause can cost you your methods no matter how well the rest of the document is drafted.
The work you are actually doing
The scope clause is where the agreement earns its keep. It describes the services you will provide, and its level of detail decides how easily the engagement can be argued about later. A scope written so that a third party could tell whether each service was performed is worth more than any other drafting in the agreement. If a client later questions whether you completed the work you promised, the scope is the evidence both sides point to.
- Deliverables: list every report, document, strategy or other output you will produce, with counts and lengths where it matters, such as the number of workshops and the hours in each.
- Exclusions: say what you are not providing, particularly work the client might otherwise assume the fee covers, such as implementation, ongoing support after handover or attendance at internal meetings.
- Variations: set out how the scope can change and what a change costs. The workable mechanism is a written variation approved by both parties before the extra work starts.
The trap in this clause is vagueness. Phrases like "advisory services as required" or "best efforts to achieve" invite argument about whether a task falls inside or outside the fee, and that argument usually happens after the work is done.
How much you get paid and when
The payment clause sets out how much you charge and when it falls due. The drafting choice that matters most is defining when payment is triggered, because "payment on completion" is only useful if completion is defined.
There is no single correct fee structure. You might charge a fixed fee for the project, an hourly or daily rate, or a deposit with the balance due against milestones. Whatever you choose, the agreement should state the amount, the trigger for each invoice, the due date and what happens if an invoice is not paid.
- Late payment: an interest clause and a right to suspend services until overdue invoices are paid give you a practical remedy without ending the engagement.
- Expenses: decide whether travel, printing and government fees are passed on, and require approval before large items are incurred.
- GST: if your turnover reaches the $75,000 GST registration threshold you must register with the ATO and charge GST at 10% on your invoices. Even below the threshold, state in the agreement whether quoted fees are exclusive of GST so the invoice amount is not a surprise.
Who owns the work you produce
Under the Copyright Act 1968 (Cth), the author of a literary work owns the copyright in it by default. Two exceptions matter here. A work made under a contract of service belongs to the employer, and an assignment of copyright is only effective if it is in writing signed by the assignor. The practical result for a consultant is that you own what you create unless the agreement says otherwise, but agreements usually do say something, and one sentence can undo the default.
The sentence to watch for is "all intellectual property created under this agreement vests in the client". Drafted without care, that sentence can sweep up the templates, methods and prior work you brought to the engagement, not just the final report. The clause should separate the two categories.
- Pre-existing IP: keep ownership of your templates, methods and earlier work, and grant the client a licence to use them for the purpose of the engagement only.
- New IP: decide whether you own the new work and licence it to the client, or assign it to the client. If you assign, make the assignment conditional on full payment and keep your own right to reuse methods that are not client-specific.
- The client's IP: mirror the arrangement for material the client provides. You should have a licence to use it for the engagement and an obligation to return or destroy it on termination.
How much you can be liable for
A liability clause caps the amount the client can claim from you if the engagement goes wrong, and it excludes losses the client would otherwise try to claim. A cap is usually expressed as a multiple of the fees paid, such as the total fees for the engagement, and it is paired with an exclusion of consequential loss such as lost profits or lost business opportunities.
The Australian Consumer Law (the ACL) at Schedule 2 of the Competition and Consumer Act 2010 (Cth) constrains this drafting. Where the consumer guarantees apply to services, a term that excludes liability for failing to comply with a guarantee is void under s 64 of the ACL. For services supplied to a business, however, liability can be limited to re-supplying the services or paying the cost of having them re-supplied, provided the limitation is fair and reasonable in the circumstances: s 64A. In practice this means a total exclusion of liability will not hold up where the ACL applies, but a carefully drafted cap with a re-supply style limitation usually will.
- Cap: set a dollar ceiling on total liability, usually tied to the fees paid under the agreement.
- Consequential loss: exclude claims for lost profits, lost revenue and lost opportunities, which are the claims that dwarf the fee.
- Carve-outs: expect the cap not to cover fraud, wilful misconduct or personal injury or death caused by negligence, and expect the client's statutory rights to survive regardless of what the clause says.
How disputes get resolved
A dispute resolution clause sets out the steps the parties must take before one of them can sue. Courts will enforce a clause that sets out concrete steps. In Aiton v Transfield [1999] NSWSC 996, the New South Wales Supreme Court held that a clause requiring a notice of dispute, a meeting between senior representatives and then mediation was sufficiently certain to be enforceable, and the court stayed the proceedings until those steps were followed. A clause that merely asks the parties to "attempt to resolve the dispute in good faith" may be too uncertain to enforce, so the detail is the point.
- Escalation: require a written notice of dispute, then a meeting between representatives with authority to settle, then mediation before any court proceedings.
- Mediation: say who appoints the mediator, how the mediator is chosen if the parties cannot agree and where the mediation takes place.
- Jurisdiction: nominate the state whose courts will hear a claim and confirm the governing law, so the client's preferred forum does not become the default by silence.
How the engagement ends
A termination clause governs early endings, which happen more often than either party expects. The clause should cover who can terminate, on what notice, and what each side must do when the engagement ends.
- Notice: allow termination for convenience on notice, usually 14 to 30 days, and immediate termination where the other party commits a serious breach.
- Payment on termination: the client should pay for services performed and expenses incurred up to the termination date, otherwise the clause operates as a way to avoid paying for work already done.
- Survival: specify which clauses keep operating after the agreement ends, particularly intellectual property, confidentiality and the liability cap, otherwise those protections lapse with the contract.
Contractor, not employee
The characterisation clause protects the structure of the arrangement itself. Since 26 August 2024, s 15AA of the Fair Work Act 2009 (Cth) directs that whether a person is an employee or an independent contractor is determined by the real substance, practical reality and true nature of the relationship. Before that, the High Court held in 2022 that where the parties have committed their relationship to a comprehensive written contract that is not a sham, the terms of the contract are decisive: Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165. The agreement therefore matters, but it only holds up if it reflects how you actually work.
It is also a breach of the Fair Work Act to make a statement known to be false to persuade an employee to become an independent contractor performing the same work: s 359. If the agreement reads like an employment contract, with day-to-day control, exclusive service and set hours, the relationship can be recharacterised, with consequences for leave entitlements, superannuation and tax obligations. The intellectual property default shifts with it: a recharacterised employee loses the copyright ownership that s 35(6) of the Copyright Act gives to the employer.
- Control: avoid language that gives the client day-to-day direction over how, when and where you work.
- Independence: include your ability to work for other clients and to engage others to assist you.
- Commercial indicia: reflect the reality of invoicing through your own ABN, supplying your own tools and bearing your own costs.
Clauses worth adding when the situation calls for it
Most consulting engagements are covered by the clauses above. These additional clauses earn their place when the specific situation calls for them.
- Confidentiality: include mutual confidentiality obligations when you will see the client's commercial information, or when you share your own pricing, methods and materials.
- Exclusivity: a client may ask you not to take on competing work during the term. If you agree, limit it to the term and to named competitors.
- Restraint: a non-solicitation clause stops either side poaching the other's staff or clients after the engagement. Keep it narrow enough to be enforceable.
- Professional indemnity insurance: clients in some industries require a minimum level of cover. Confirm the amount and provide a certificate on request.
- Privacy and data handling: if the engagement involves personal information, set out which party collects and controls it and how it is protected, having regard to the Privacy Act 1988 (Cth).
When to get a lawyer to look at your consulting agreement
An Artificer Legal practitioner would review a consulting agreement in a particular order, because some clauses are more negotiable than others. The commercial clauses come first: the scope, the fee and the payment terms, because they determine whether the engagement is viable at all. The intellectual property clause comes next, because it decides who keeps the value of the work. Liability and termination follow, and the contractor characterisation is checked throughout, because a clause that describes an employment relationship will not be saved by calling it consulting.
The clauses we would push back on are the ones that shift value without appearing to: a blanket assignment of all intellectual property including pre-existing material, an uncapped liability clause, a right for the client to terminate for convenience without paying for work in progress, and an exclusivity clause that outlasts the engagement. The variants we would insist on are a defined scope, payment milestones, a re-supply style liability limitation consistent with the ACL, and a licence back to you of your own methods and templates. If you are working from a template, the same review applies: a template is a starting point, not a substitute for an agreement that reflects your actual engagement.
The clause consultants most often sign away
Every clause in this article can be negotiated, but the intellectual property clause is the one consultants most often sign away without noticing. The sentence "all intellectual property created under this agreement vests in the client" looks administrative and reads quickly, and it transfers the value of your methods, your templates and the way you work, not just the report you were paid to produce. The Copyright Act protects you only by default: the moment the agreement assigns the work in writing, the default is gone. Before you sign, the question to answer is not only what you are being paid, but who owns what you create, now and after the project ends.
A consulting agreement that covers the scope of work, payment terms, intellectual property, liability, dispute resolution, termination and contractor status will get you paid, keep the value of your work and give both sides a path through a dispute without a courtroom. If a clause in the draft you are holding does not clearly answer one of those questions, that is the clause to fix before you sign.