“Fixed Fee” and “Flat Fee”

When in a contract you want to specify a fee to be paid, it’s redundant to use the phrase flat fee or fixed fee:

The Bank agrees to pay RP Financial a fixed fee of $37,500 for preparation and delivery of the original appraisal report, plus reimbursable expenses.

During the Term, DigitalGlobe shall pay Consultant a fixed fee of $10,000 per month for up to 15 hours per month of Consultant’s time (“Fee”).

For Services rendered by Consultant under this Agreement, the Company shall pay Consultant a flat fee of $ 4,000 per month.

The Contractor will also be paid a flat fee of $1,500 for his participation and support of our Independent Auditors during their field work in China and for the representation of the Company at the Rodman Renshaw conference in China that will take place in March , 2011.

Those phrases make sense only when you’re referring generically to a kind of payment, rather than a specific fee:

Such fee, at Landlord’s option, shall be either a fixed fee or a fee calculated an hourly basis considering the time expended by Landlord’s agents or representatives in supervising Tenant’s construction.

Wherever possible, the charge will be a flat fee.

I suppose that if circumstances are such that the reader might think that the payment is a recurring one, you could use one-time payment. But I can’t offhand think of any such scenario.

(By the way, the above extracts are fresh from EDGAR—I don’t endorse the drafting in any of them.)

[Updated October 31, 2011: The same could be said about references to payment of “a lump-sum” of $X.]

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

4 thoughts on ““Fixed Fee” and “Flat Fee””

  1. It seems to me that when you’re dealing with an industry where non-flat-fees are the norm and you are paying only a flat fee, it makes sense to spell it that out.  Examples might include a real estate agent’s commission or an attorney’s fee:

    Compare, for example, the following two sentences that might be in an attorney’s engagement letter:  “I will charge you a fixed fee of $200 to handle this matter” v. “I will charge you $200 to handle this matter.”   The second sentence might leave the client wondering “Is that $200 per hour?”

  2. Looking at this commercially rather than legally, I suspect the flat/fixed language is often meant to preclude passthrough of additional charges. Perhaps what the parties truly need is a clear, separate sentence to identify what additional charges, if any, may flow through. 


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