What Does “Retainer” Mean in a Contract?
An advance payment to secure services, which may be applied against future fees or kept regardless of actual work performed.
Detailed Explanation
A retainer is money paid upfront to reserve someone's services. There are two types: "true retainers" (paid to ensure availability, not refundable) and "advance payment retainers" (applied against future bills, with unused portions refundable).
Retainers are common in legal and consulting arrangements. They secure commitment and improve the service provider's cash flow.
Example in a Contract
“Client shall pay a monthly retainer of $5,000, due on the first of each month. This retainer guarantees Consultant's availability for up to 20 hours of services. Hours beyond 20 shall be billed at $300 per hour.”
Why It Matters
Know whether your retainer is refundable and how it applies to actual work. Some retainers are just deposits that offset invoices; others are non-refundable fees for availability regardless of use.
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