Service Agreement Information
A Service Agreement is also known as a:
- Master service agreement
- Service contract
- General service agreement
What is a Service Agreement?
A written Service Agreement is a contract that defines the terms and conditions of a working arrangement between a contractor and their client. This type of contract outlines a service that a contractor provides to a client in exchange for compensation.
If you are a contractor who provides services, use a Service Agreement to clearly define the service and pricing terms to your client. As a client, if your contractor doesn’t initiate a written agreement, you can create one to prevent future disagreements and ensure accountability.
You can use a Service Agreement for a single project, a job that ends on a specific date, or work that is ongoing.
What is a service-level agreement?
A service-level agreement is a contract that a client and service provider can use to outline the expected standard of service. This type of agreement may outline quality standards, response times, delivery times, and more. This type of agreement is most relevant in commercial agreements.
Instead of using a service-level agreement, you may use LawDepot’s Service Agreement and include the service standards as additional clauses.
Who are the parties to a Service Agreement?
Within a Service Agreement, there’s a contractor and a client. The contractor provides a service for the client, who pays the contractor for their work. Either party can be an individual or an organisation. Also, the client might be two or more people, such as a married couple. Similarly, the contractor could be two or more partners who all sign the agreement.
What is a contractor?
A contractor is a skilled person (or organisation) who provides services for other parties. Often, individual contractors are self-employed and run their own business.
If an organisation hires a contractor, they hire the contractor as an external worker, rather than as an employee, for a set time (or project). For example, a company may hire a freelance accountant rather than employing one in-house.
Outsourcing work (such as IT, design, or delivery services) to contractors is very common and allows clients to access the exact services they need without hiring new staff. Contractors can come from every industry and include labourers, skilled tradespeople, and freelancers.
Typically, contractors:
- Have more than one client
- Send invoices to their clients
- Use their own tools or equipment
- May hire employees or subcontractors to help complete services
- Don’t receive employment benefits from clients
What are the elements of a Service Agreement?
To create an effective Service Agreement, address the following details:
- Service duration: Specify whether the contractor will provide service for a single job, a specific period of time, or indefinitely.
- Service details: Describe the service that the client hires the contractor to provide.
- Contractor and client information: Specify if each party is an individual or company and provide their names and addresses.
- Billing details: Outline how much the contractor will charge and if they’ll charge the client a flat fee, at an hourly rate, or in another way. If the contractor requires a deposit, set a deposit amount. Outline when the client must pay and if they’ll pay in instalments. Set the interest rate for any late payments.
- Notice periods: If both parties agree that they can end the agreement early, outline the number of days that the terminating party must provide written notice to the other party.
- Expenses: Decide if the client will reimburse the contractor for reasonable, work-related expenses and if the contractor needs the client’s approval before incurring expenses.
- Intellectual property ownership: Specify which party owns any intellectual property that the contractor creates. Intellectual property is any work that is a creation of the mind.
- Confidentiality: Decide if the contractor must keep confidential client information private.
- Additional clauses: Include any other relevant clauses, such as the level of service that the client expects.
You can create an effective contract with LawDepot’s Service Agreement template by providing all the necessary information. Be clear and specific when describing the job or project that the client requires and indicate any important dates.
Why is creating a Service Agreement important?
Using a Service Agreement benefits both contractors and clients by clearly outlining the terms of their working arrangement. A written agreement provides transparency and accountability for both parties and helps prevent disputes that could arise without a formal agreement.
How do I enforce a Service Agreement?
If your contractor or client breaches your Service Agreement, you should first contact the offending party and request that they fulfil their part of the agreement, pointing out where they are not meeting the terms.
Communicate with the other party in a civil and non-offensive manner to ensure a better chance of compliance. Also, consider providing them with a notice period to give them time to rectify their actions.
If the offending party doesn’t rectify the situation, you can take legal action for breach of contract. Having a witness sign a Service Agreement can give the document more credibility when it comes to asking the court to uphold it.
