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Retainer in an Agreement

When you`re entering into a business or service agreement, it`s important to understand the various terms and clauses that will be included. One such term that may come up is the “retainer.” In this article, we`ll take a closer look at what a retainer is and how it works in an agreement.

First and foremost, a retainer is a fee paid in advance to secure the services of a professional, such as a lawyer, accountant, or consultant. The purpose of a retainer is to ensure that the professional sets aside time and resources to work on the client`s behalf. Once the retainer is paid, the professional is obligated to provide services up to the agreed-upon amount.

When it comes to agreements, a retainer clause can be included to establish the terms of the retainer. The clause should specify the following:

– The amount of the retainer fee

– How the fee will be calculated (e.g. hourly rate multiplied by estimated hours)

– The scope of services that will be provided under the retainer (e.g. legal advice, financial consulting, etc.)

– How expenses will be handled (e.g. will they be deducted from the retainer or billed separately?)

– The duration of the retainer (e.g. one month, six months, etc.)

– How often the agreement will be reviewed or renewed

It`s important to note that a retainer is not a deposit or a down payment. A deposit is typically paid upfront to secure a product or service, whereas a retainer is paid to secure the ongoing services of a professional. It`s also worth noting that retainer fees are typically non-refundable, as the professional is committing their time and resources to the client.

When considering a retainer clause in an agreement, it`s important to weigh the benefits and drawbacks. On the one hand, a retainer provides a sense of security and guarantees that the professional will be available when needed. On the other hand, the client may end up paying for services they don`t end up using. As such, it`s important to carefully consider the scope of services and expected duration of the retainer before committing.

In conclusion, a retainer clause can be a useful tool in an agreement for securing the services of a professional. However, it`s important to carefully consider the terms and scope of the retainer before agreeing to them. With a clear understanding of what a retainer is and how it works, clients can make informed decisions that benefit both parties.

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