Consultancy agreement for a project with milestones

A milestone-based project is paid for in stages, and the agreement has to make each stage a defined event: what is delivered, how it is accepted, what is paid and when, and what happens when the stage is late because of the consultant or because of the client. It also has to deal with the IP passing stage by stage, with changes that move milestones, and with a project that ends before the last one. Acting for the client or for the consultant, I draft it for £595 fixed and deliver within five working days. The agreement describes a self-employed engagement; HMRC's Check Employment Status for Tax tool decides status case by case, and no drafting guarantees it.

Who this is for

Businesses in England and Wales commissioning a consultant for a project with defined stages, from a strategy review delivered in phases to a system implementation, and consultants who want their project work paid as it is delivered.

What matters in a milestone-based consultancy agreement

The milestones and what each delivers

The agreement should set out each milestone by name, deliverables, target date and the payment attached, in a schedule, with the deliverables described precisely enough to test and the dependencies between milestones stated; a milestone defined as 'phase two complete' is complete when the consultant says so and incomplete when the client does, and the schedule is what replaces that argument.

Acceptance and the client's part

Each milestone should be accepted against criteria stated in the schedule within a stated period, with deemed acceptance if the client does not respond, correction of material defects and re-submission as the remedy for rejection, and no right to withhold acceptance for matters outside the milestone; the client's obligations (information, access, decisions, reviews by dates) should be listed, because the consultant's dates depend on them.

Payment tied to milestones

The agreement should state the payment for each milestone, due on acceptance or deemed acceptance, with a deposit at signing and a final payment on acceptance of the last milestone, invoicing and payment terms with interest and compensation under the Late Payment of Commercial Debts (Interest) Act 1998, and the consultant's right to suspend work for non-payment; a retention held by the client until final acceptance is a commercial term the agreement can provide for, stated as a percentage and a release date.

Delay, slippage and the penalty rule

Where the consultant misses a milestone date, the agreement can provide a remedy (a stated reduction in the milestone payment for each week of delay, a termination right after a stated period), drafted to protect the client's legitimate interest in the date rather than to punish, because a sum out of all proportion to that interest is a penalty and unenforceable; where the client causes the delay, the milestone dates move and the consultant may charge for idle resources at stated rates. Force majeure should be defined narrowly.

Change control and re-planning

Changes to scope, assumptions or dependencies should go through a change control procedure that prices their effect on fees and milestone dates and requires signature before work starts, and the agreement should allow the parties to re-plan the milestone schedule by agreement without re-signing the whole document; the standard owed is the reasonable care and skill implied by section 13 of the Supply of Goods and Services Act 1982, and the status provisions in the agreement reflect an independent consultancy with the off-payroll working rules in Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 addressed where an individual works through a company for a medium or large client.

Intellectual property passing with payment, and termination part way through

The agreement should assign the intellectual property in each milestone's deliverables to the client on payment for that milestone, in writing under section 90 of the Copyright, Designs and Patents Act 1988, with the consultant's pre-existing materials licensed and IP in unpaid deliverables retained; on termination part way through, the client pays for milestones accepted and for work done towards the next at a stated rate or proportion, receives what it has paid for, and the consultant's liability is capped at the fees for the project with consequential loss excluded, tested under section 11 of the Unfair Contract Terms Act 1977.

What it costs

Consultancy or contractor agreement, £595. Drafted for your business. Five working days.

Template set for repeat use, £895. One master agreement plus a short-form schedule you can reuse for every engagement. Five working days.

Buying online forms the engagement on payment. The scope is what the consultancy and contractor agreements page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A clear, express assignment of intellectual property to your business
• Confidentiality provisions that protect your business information
• Restrictive covenants drafted at a scope a court will uphold
• Clear treatment of status, so the arrangement is not accidentally something else
• Payment, deliverables and termination provisions that match how you work
• A reusable structure, so the next engagement costs you nothing

What is not included

• Employment status determinations and off-payroll working assessments, which need your accountant
• Tax advice
• Disputes with a contractor you have already engaged
• Immigration and right to work compliance

Questions I am often asked

Can we withhold a milestone payment because of problems with an earlier milestone we already accepted?

Not under the agreement, which makes each milestone payable on its own acceptance. Defects in an accepted milestone are dealt with under the warranty and correction provisions, not by withholding the next payment.

The consultant missed the milestone date by a month. Can we charge liquidated damages?

If the agreement provides a reduction that reflects your legitimate interest in the date, yes. A sum that punishes rather than compensates is a penalty and unenforceable, which is why the agreement sets a proportionate figure and a termination right for longer delay.

If we stop the project after milestone three, what do we own?

The deliverables for the milestones you have paid for, with the IP assigned, and work towards milestone four on payment for it at the stated rate. The consultant keeps the IP in anything unpaid.

Related guidance and services

• Consultancy and contractor agreements, £595, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Statement of work for a consultancy engagement
• Terms for a software house doing fixed-price projects

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.