What Should Be In A Service Contract Agreement

Before you begin working with a client, draw up a service agreement to ensure that you share the same expectations almost the work to exist performed, fees, and other details of your working organization.

A service understanding is a written contract between a service provider and a client. It spells out the piece of work to exist performed and the responsibilities of both parties in getting the work done and paid for.

Sometimes chosen a professional services agreement, service contract, or customer services agreement or contract, a service agreement likewise includes time frames for first and completing the piece of work, additional due dates if needed, and other procedures and details involved in the job.

Why Utilise a Written Service Agreement?

Oral understandings are risky. Your customer might meet with several providers and confuse the scope of the work you lot described with someone else'south. You might neglect to mention of import details like situations when additional charges would employ. Written service agreements minimize the gamble for disputes and even lawsuits that might arise due to these types of omissions and misunderstandings.

Who Needs a Service Agreement?

When you buy a car, a calculator, or an apparatus, you lot unremarkably get your purchase on the spot. Even if y'all order it and look for commitment, you know exactly what to expect and what yous are getting. But you can't look at a service beforehand the way you lot would an appliance. Many services are performed over a long period of time, and customers frequently pay the fee, or at least a portion of it, well before they run across what their money bought.

For example, a developer who creates customized software for a company will likely get through several steps—from determining the company'due south needs to designing, installing, and testing the software—before delivering any work.

A written service agreement is a way to manage expectations while the work is underway. It also assures both parties that they will get the work and fees they bargained for in the fourth dimension frame they expect.

Not all services require agreements. For example, when you take your auto to a quickie oil change shop, chances are that you and the owner hold orally about the price, what will be washed, and when. Only when work is performed over time, both parties demand the protection of written standards, goals and pricing.

Some of the businesses and professionals who rely on service agreements include:

management consultants
graphic designers and illustrators
photographers and videographers
website developers and It service providers
real estate brokers
general contractors and construction companies
accountants and lawyers
advertisement and marketing professionals, and
caterers

How to Write a Service Agreement

The title of the agreement should include your company name and "service understanding," "customer agreement," "customer agreement," or another championship that best describes your state of affairs. Real estate brokers utilize the term "list agreement," for example, for contracts to stand for properties for sale. An accountant might apply a "tax preparation agreement," and so on.

Many aspects of a service agreement can be standardized, and you can create what's chosen a template that provides the basics you'll need for your business most of the time. You might take to adjust your template to adjust specific arrangements you make with an individual client. But yous'll unremarkably be able to fill up in the blanks without reinventing the wheel each time y'all get a new client.

Some industries and professions might require additional specialized sections, only in full general, a service understanding should include these sections and topics:

A description of the parties involved in the agreement. The beginning of your agreement should include the names and addresses of the parties involved. If one or both parties is a business, you should include the type of entity, such as a corporation or limited liability visitor. Our full general contractor mentioned in a higher place might start out past proverb, for example, "This is an agreement between Joe'due south Beautiful Homes, a limited liability company located on 100 Primary Street, and Mary Smith, an individual, located on 100 Pine Street."

A description of the services to be performed. Exist as specific as possible, keeping in heed that you lot won't exist able to change your fee if you end up doing additional piece of work. A caterer would want to specify the hours they would spend at the event, the number of servers, and the number of people who would exist fed, also equally the amount and quality of food to be served. Accurately listing the materials and fourth dimension will aid ensure that the caterer bids the job adequately to embrace these costs (serving but organic produce, for instance, will cost more than than conventional produce, and describing the food as organic will prompt the caterer to take its added expense into business relationship).

A description of fees and payment schedules. Include terms like whether the charges are hourly, weekly, or monthly; or whether you lot are charging a flat fee per project. You might also need to specify whether the pricing includes expenses, such every bit travel for a consultant who must visit dissimilar company locations, or if those expenses are to exist billed and reimbursed separately.

You'll also desire to include a payment schedule with dates and amounts due. Some providers, like caterers, will typically have 2 payment dates and amounts, i for the deposit and one for the residue due. But other providers, such as contractors, might take a months-long schedule of payments due for projects that take many months to complete.

The pricing department should also include the types of payments you accept, such as checks or credit cards. Some agreements will include a clause that specifies what will happen if payments are not received according to the schedule. Belatedly fees must approximate, as near as possible, the actual damages that the business or professional suffers when not paid on fourth dimension. (Courts will non enforce late fees that are so high that they are punitive.)

The effective appointment of the contract, when work will begin, and the terms nether which information technology tin can exist terminated. The constructive appointment of a contract is the appointment after which both parties are bound to its terms. Oft, the constructive engagement is the date both parties sign the contract, merely it doesn't have to exist. Next, include a work schedule—work done on a project basis should, at a minimum, include beginning and stop dates. You might list other due dates if your project has several different stages or steps.

Ongoing services, like an It maintenance contract, typically final for a yr or half-dozen months, and they include provisions for renewing the agreement at the terminate of that catamenia.

Your understanding should besides cover situations where you are unable to consummate a project because of something the client does or does non practice. A consultant hired to provide 60 minutes seminars to managers in several office locations, for example, might be unable to complete the consignment because one of the offices does not provide a schedule for the seminars. Your contract should anticipate the most likely operation issues (known as defaults) and provide a means for remedying the situation.

If certain defaults would be so meaning that they would seriously diminish the value of the service, you lot might want to include a provision that allows either party to finish the contract with a specified amount of notice. Conversely, you might want to requite each political party the right to terminate the contract for no reason, with adequate written notice (often 30 to 60 days).

Include a place for signatures. Service agreements should always be signed and dated past both parties involved. It'south a good idea to likewise accept the signatures notarized to forbid whatever political party from claiming later that it did non sign the understanding.

Other Provisions Your Contract Might Need

Service agreements for certain types of jobs and businesses might also demand to include provisions or clauses that bargain with specialized situations. Some of these clauses are:

A agree harmless clause. Agree harmless clauses are typically used when a party wants to shift responsibility for risks associated with the service information technology will provide. For example, a general contractor might include a hold harmless clause that relieves the visitor of responsibility if information technology or a subcontractor damages the client'south belongings while doing the work.

An indemnification clause. An indemnification clause is a promise that y'all volition reimburse the other party if it has to pay money to cover specified damages or losses that it has suffered.

Warranty clauses. Warranties are assurances that work or a production will come across certain standards or exist stock-still or replaced within a specified timeframe. They are typically used in construction.

Confidentiality clauses. Consultants, web developers, and other service providers typically use a confidentiality clause to go on sensitive information from falling into the hands of the competition. A consultant who has developed a special process for streamlining workflow, for example, might use a confidentiality clause to prevent the customer from sharing it with another consultant.

Provisions for intellectual property. Peculiarly in creative fields like graphic design and photography, service agreements specify who will ain the finished product. If the provider owns it and licenses its apply to the customer, the license should describe the situations where the client may utilise it (in specified products or for a limited fourth dimension, for example).

Provisions requiring client cooperation. The agreement should include a provision that defines the client'due south responsibility to provide information and assist and then that the provider tin can meet its obligations.

Boilerplate provisions. Boilerplate provisions are understandings betwixt parties that are so normally used that they announced unchanged in many contracts. Lawyers literally copy and paste them into their contracts. Examples include a "severability" clause (where the parties agree that if a approximate finds that i part of the agreement is not enforceable, the balance of the understanding volition remain in place), a statement that all understandings between the parties are independent in the agreement (this prompts the parties to place all oral understandings in the agreement), and a clause stating that the understanding cannot be changed except by the parties' written consent.