A Brief Introduction About the Administrative Services Agreement?
An administrative services agreement is an agreement that is entered into for the purpose of providing administrative services. Through this agreement, a company hires an independent contractor to perform certain administrative services. The definition of administrative services includes various services such as maintaining an accounting system and maintaining records, complying with reporting requirements, preparing financial statements and tax returns, ensuring compliance with various laws and other services as may be provided for.
Who Take the Administrative Services Agreement – People Involved
The people involved in an administrative services agreement are the company that is need of administrative services (known only as the company) and the contractor who is being hired to provide such administrative services (known as the administrator).
Purpose of the Administrative Services Agreement – Why Do You Need It?
The purpose of an administrative services agreement is to lay down in writing the various administrative services that shall be carried out by the administrator and the manner in which the administrator shall perform them. This agreement provides a complete framework as to how the entire transaction between the two parties shall be carried out and how the administrator shall be compensated for his work. It is very important to enter into this agreement whenever a company hires a contractor to perform administrative services as the agreement will help protect the rights and interests of both parties and will also have a mechanism for dispute resolution in place. The agreement provides a structure within which the parties have the right to function, and both parties have to make sure that they do not exceed any of their powers provided by the clauses of the agreement.
Contents of the Administrative Services Agreement
The key terms of an administrative services agreement are as follows:
- Powers and duties of the administrator: This clause shall define the various powers that the administrator enjoys and the duties that he shall have to perform under the agreement.
- Administrative services: This term should be defined well in the agreement so that there is no room for doubt in the scope of work that is to be performed by the administrator. All the services that fall within the ambit of the definition and all the tasks that the administrator has the duty to perform should be laid down clearly in the agreement.
- Compensation and reimbursement of the administrator: This clause should lay down the fees that will be payable to the administrator and how such payment will be made.
How to Draft the Administrative Services Agreement
The following are the steps to follow while drafting an administrative services agreement:
- The company and the administrator must decide all the important terms and conditions regarding the work that is being assigned to the administrator.
- All the decided terms must be laid down in the agreement itself, and there must be no room for any doubt regarding the intentions of the parties.
- The agreement must be signed by both parties. This will ensure that the agreement is binding in nature.
- The basic negotiation strategy is to ensure that the agreement is fair to both parties and that their interests are protected.
- It must be negotiated such that the agreement is fair and balanced and benefits both parties.
Benefits and Drawbacks of the Administrative Services Agreement
The following are the benefits and drawbacks of having an administrative services agreement:
- Having a written agreement in place helps to exhaustively define the services that are to be performed by the administrator.
- A written agreement helps to prove the various specifics that are agreed to by the company and the administrator.
- A written agreement will also have a dispute redressal mechanism in place in case there is a breach of the clauses of the agreement by either of the parties.
What Happens in Case of Violation?
Generally, administrative services agreements have a clause that talks about the grounds under which the agreement may be terminated. When a breach of the agreement takes place, generally the non-breaching party can serve a notice on the breaching party asking them to remedy the breach within a certain specified time period. If the breaching party ignores the notice and does not remedy the breach, the non-breaching party can choose to take certain steps that will be provided for in the agreement itself. The agreement may also provide that all disputes arising under the clauses of the agreement shall be resolved by arbitration. The arbitration clause states that if a clause of the agreement is breached or if any dispute arises with respect to the terms of the agreement, the matter will be resolved by arbitration.
In conclusion, this administrative services agreement is extremely important whenever administrative services are provided by an administrator to a company, and it imperative that this agreement is created. It helps to provide evidence that such an arrangement is in place and puts into writing the terms and conditions of such an arrangement. It helps to avoid any party exceeding the powers that have been bestowed on them by this agreement and also makes their duties and powers very clear.
Sample Administrative Services Agreement
A sample of the agreement can be downloaded from below.
Download this USA Attorney made Original Agreement for only $9.99
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This agreement is made between the Company and the Service Provider on the effective date of 09th November, 2011.
Company represented by
Ms. Kaisa Harms
Address: 33501 S Dixie Hwy, Florida City, FL 33034
Contact number: (305) 242-4447
Service Provider represented by
Mr. Jason Newstead
Address: 2100 88Th St, North Bergen, NJ 07047
Contact number: (201) 758-2810
Duration of contract: 12 months
Terms and Conditions:
- During the term hereof, the Service Provider agrees to provide administrative services and support (including clerical, accounting, and secretarial assistance) described in the schedule attached hereto and incorporated by reference and any other administrative services as requested by the company and agreed to by the Service Provider.
- Subject to provisions in said section, Service Provider agrees to provide the services in good faith and in a professional manner and in accordance with the instructions of the Company.
- The Service Provider will invoice the Company for services performed hereunder on a weekly, monthly, semi-annually basis on the rate of $AMOUNT per HOUR/DAY/WEEK/MONTH plus such other out of pocket expenditures incurred by the Service Provider as shall be separately stated.
- Any party by delivering a written notice thereof to the other party, terminate any or all of its obligations under the administrative services agreement effective immediately.
This Administrative Services Agreement will only be effective from the date it is signed by the Company as well as the Service Provider.
SIGNED FOR AND ON BEHALF OF COMPANY BY:
SIGNED FOR AND ON BEHALF OF SERVICE PROVIDER BY: