Maintenance Contract

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Maintenance Contract

A Brief Introduction About the Maintenance Contract

Maintenance contract or a management maintenance contract is the known term to be applied over a wide range of documents or agreements –ranging from technical assistance agreements to full-length operation as well as management contracts, and more. As per the definition, a maintenance agreement or contract is defined as a formal agreement between parties that helps in outlining the terms and conditions for the provision of maintenance services to another company or business. It is important to note that this contract is distinct from the service contract.

A management agreement template is known to specify certain clauses, including what maintenance is, the type of maintenance services, and the total duration of the services being provided. It is a legal contract between two parties creating the agreement and specifying that one party will be responsible for maintaining an asset or service owned by another party. These contracts are quite common amongs various industries and can exist for a wide range of commodities or services, including buildings, offices, management services, and more. A maintenance agreement specifies that the document is valid and mandated by the law to be abided duly by both the parties.

Who Takes the Maintenance Contract?

Maintenance agreements, as per the maintenance definition, are legal documents created between two parties –specifying that one party is responsible for maintaining the assets or services of another party in the contract.

Annual maintenance contracts can be established for a wide number of parties as well as assets or services like a building, equipment, computers, technologies, and specialized services like management and others. Irrespective of the specific type of maintenance agreement provided by an individual or a company, a written maintenance document is known to govern the relationship between the client and the service provider. The document is ensures that both the company as well as the client can understand as well as agree to the specific rights & responsibilities.

Purpose of the Maintenance Contract – Why Do You Need It?

In a typical maintenance agreement, the client can be an individual or a company receiving the warranty for the maintenance of company assets or services from the maintenance service provider in the contract. The main purpose of preparing the maintenance agreement is to ensure consistent fees as well as the regular availability of the maintenance service provider at emergencies. By securing the maintenance document or contract, the holder of the document garners savings through reduced fees or fixed incomes for the maintenance of the assets or services. Moreover, the client is also establishes and retains a regular relationship with the maintenance service provider.

The main feature of a typical maintenance agreement is that the awarding authority engages the specific maintenance contractor or service provider towards managing as well as maintaining a wide range of services for a fixed duration, usually 3-5 years. Management maintenance agreements are usually task-specific and input-focused rather than being output-focused. Management, as well as operational contracts, usually tend to have more performance or output requirements. While the management contracts are known to become performance-based, they might usually involve the specific operator in taking more risks, including maintenance risks.

Contents of the Maintenance Contract – Inclusions

Usually, a maintenance agreement template specifies the type of maintenance services that are expected by the clients. Some contents of this contract are:

  • List of Contracted Items: If, as a client, you are giving away some assets or items to be maintained by some third party or a maintenance contractor, it is required to specify the list of items that will be mentioned in the contract.
  • Preventative Maintenance: Some of the maintenance agreements are known to provide some form of preventative maintenance to the clients as well. This is to ensure that the purchases tend to remain in proper working condition.
  • Terms of the Contract: The agreement should specify the overall length along with the total amount of maintenance services that are called upon during a given term. The terms of the contract might vary and might have certain restrictions on the frequency as well as types of services.
  • Warranties and Representations by the parties
  • Waiver of Liability
  • Governing Law
  • Termination
  • Payment
  • Advance and Security Deposit
  • Details of service to be provided
  • Rights and Responsibilities of the parties
  • Covenants in the contract
  • Sub-contracting
  • Details of grievance redressal and customer support
  • Exclusivity of personnel and resources to the client
  • Method and mode of raising invoice and payment of dues
  • Payment for contingency situations

Additionally, the maintenance agreement or contract might also consist of vital information like the parties involved, types of maintenance services, duration of the service, clauses for violation of the contract, and so more.

How to Draft the Maintenance Contract?

You can create this contract by going through the following important steps as:

  • Create a section for the beginning of the contract and define the important terms like contract year, the parties involved, and the type of maintenance services.
  • List the specific list of maintenance services that will be provided by the maintenance contractor during the duration of the contract. In this section, it is recommended to go in detail while specifying the list of maintenance services.
  • Analyze the compensation structure for the provision of maintenance services. When you are preparing a contract for some individual contractor, it is imperative to specify the details like hourly rate, mode of payment, provision of extra compensation, and so more. In terms of preparing the contract for large service providers, it is essential to include the details like compensation, credit terms, early payments, and so more.
  • Draft a proper warranty section to list any specific promise that has been made between the parties.
  • Specify the guidelines for processing the legal problems that arise between the involved parties.
  • Waiver of liability
  • Include all the provisions for the termination of the contract.

Negotiation Strategy

Negotiating the right deal with the service providers does not always imply that you should ask for the services at the lowest price possible. There are several grounds on which the negotiation strategy can be prepared as well as implemented as far as the maintenance agreement of services is concerned. Some common grounds for negotiation are payment terms, delivery times, quality of services, and more. Most contractual parties view that a good deal has been made once all their unique business requirements are met properly. Both the parties should consolidate a negotiation with the feeling that they are content as well as satisfied with the terms & conditions of the given agreement.

Benefits & Drawbacks of the Maintenance Contract

There are several reasons why clients prefer signing over the maintenance agreement with the maintenance service providers. Here are some of its potential benefits:

  • Cost Savings Across the Life of the Contract: One idea that might withhold the clients from signing a contract with the service provider is that they might be required to pay upfront when repairs or damage control might not be needed. However, most service companies, as well as contractors, usually offer certain discounts or offers on their services for improved savings.
  • Increased Longevity: When you stick to a strict maintenance routine by preparing a proper maintenance contract, you can be assured of the improved longevity of the equipment as well as services provided by the maintenance service providers. It becomes less likely that you will be experiencing further system failure, and you can be confident that your business operations are at the peak of efficiency.
  • Dedicated Servicing Schedule: When you partner with a management maintenance service provider with the help of a maintenance contract, the representatives are responsible for taking care of the dedicated servicing schedules in your organization.

While there are several points of benefits of the contract, there can be some demerits as well, including certain limitations on the types of services being received, making daily or hourly payments, violations of the contract easily, and so more.

What Happens in Case of Violation?

A breach or violation of the terms & conditions of the contract by another party (specifically the maintenance service provider) can result in the termination of the contract. Upon the termination of the contract, there stands no liability on the part of the concerned party as long as the breaching party has been notified in writing and has been specified the basic intent of the violation.

As a client, whenever you are hiring maintenance services from a maintenance service provider, it becomes compulsory to abide by the terms & conditions of the maintenance agreement or contract. By doing so, both the parties remain protected by law and are offered the assurance of the security of services from one another. It is important to go through the terms & conditions properly before signing the contract.