Personal Service Contract

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Personal Service Contract

A Brief Introduction About the Personal Service Contract

A personal services contract is a contract that includes the performance of actions. In this contract, the skills or talent of a party are the material. Various organizations hire contractors to perform certain activities. The agreements are restricted because of time, duties, and fee (Jackso & Pascual, 2008). 

The agreement comes in different forms. This type of service contract can be summarized by the employee and employer relationship. A government cannot hive the contract unless it’s authorized by the agency. In this contract, the relationship between the employee and employer happens when it’s originating from contact terms legally (Dan & Parr, 2000). 

The contractor personnel needs to adhere to the control and constant supervision of government employees. It makes it mandatory for the person hired to complete the assigned tasks (Peel & Treitel, 2007). For instance, if a graphic artist is hired to draft a logo, then he cannot have another employee to perform work without the approval. 

Who Takes the Personal Service Contract– People Involved

Non-government Contractors like the people who work business or non-business tasks but are not the employees or the contractors are involved in this contract (Deakin, 2007). These people are the people who might work from their office or home. For instance, personal chefs, shoppers, drivers, pet sitters, etc.

Purpose of the Personal Service Contract– Why Do You Need It

Most of the time, when the government agency needs to get some work done, but they don’t need a full-time employee, then they consider taking a personal services contract (Jackso & Pascual, 2008). The purpose is to hire an employee for business or personal work only until the task gets completed and not for a full-time period. For instance, if a government agency hires a military for the private security of American contractors, then this will be a form of personal service contract. These contractors must follow the guidelines to avoid violation of the contract and other rules, regulations (Fairbanks, 1959). If the government agency wishes to continue controlling over these contractors like telling them how to work, where to work, when to work, then the contractor might be considered to be a full-time employee of the company. 

A personal service agreement should be enforceable; it should include an offer, an acceptance of the offer as well as the consideration. Consideration is something that will be valued and is exchanged between the two parties involved in this contract. For example, a form of monetary payment to the person hiring the employees in exchange for their services (offeredPeel & Treitel, 2007). Every party involved in this agreement should have the legal capacity of the contract. It’s not vital that the contract should be in writing, but if it’s written, then it is better for both parties.

Contents of the Personal Service Contract– Inclusions

  • Date– The agreement is made on which date in which city
  • Name– The name of the parties involved in the agreement with complete contact details.
  • Recital – This section includes the department details that wishes to hire the personal service contractor along with the terms and conditions of the agreement (DiMatteo, 1993).
  • Summary of Terms– This section includes the first and most essential terms of the agreement, like the reference date, manager’s name, location, management fee, security deposit, goals & objectives, etc.
  • Certification of funds – This part of the agreement contains details about the budget, fiscal provisions, along with termination details in case of non-appropriation.
  • Services – The services or activities that will be performed by the contractor will be included in this section.
  • Compensation – The amount that shall be paid every month from the day of the contract to the contractor. The breakdown of the cost should also be included in this section itself.
  • False claim – If any contractor or subcontractor submits a false claim, then he will be liable for the damage three times the actual price, and also, there will be a civil action taken against him/her.

How to Draft the Personal Service Contract

  • Firstly, to draft the contract, the name of the parties involved along with the country, and date on which the contract will be enforceable will be mentioned (Dan & Parr, 2000).
  • Secondly, the purpose of the contract will be mentioned clearly and concisely.
  • Thirdly the scope of task or activity will be included; the terms and conditions related to the contract along with the relationship between the contractor and the employee will be mentioned. Apart from this specific obligation for both parties will also be included.
  • Followed by the scope of the task is the compensation, which mentions the amount that will be provided by the contractor on what basis.
  • After that, details related to the termination of the contract are included, along with the reason for termination.
  • Work under this contract will be performed by the competent personnel and also under the supervision of the contractor.
  • Also, it should be mentioned about the responsibility for any damages to person or property in case of misuse or failure.
  • Details about the insurance about the place, workers’ commendation will also be mentioned.
  • Lastly, the signature of the parties involved is vital for this agreement

Negotiation Strategy

Both parties involved in the contract can negotiate with each other. For instance, the service provider can negotiate for the compensation he/she is receiving along with the delivery schedule (Jackso & Pascual, 2008). On the other hand, the contractor can negotiate in terms of services; he may clarify the metrics and specifications along with the key performance indicators.

Benefits and Drawbacks of the Personal Service Contract


One main benefit of the contract is that this agreement allows a high level of specifications when it comes to the details of the temporary employment. For instance, if the employee is expecting a certain wage considering the task or the activity to be performed for the contractor, then he can mention that in the contract list (Tannenbaum, 1954). 

Another advantage is that the agreement can be referred to in the case when a dispute arises between both the parties due to some clause like termination, penalty, or compensation. Written documents can be used as evidence whenever required. It is essential to foster a positive relationship between the contractor and the employees. In the case of this contract, the benefit is attained by both the parties involved because the contractor does not need to hire a full-time employee to get a specific task done, which saves his time and cost (Dan & Parr, 2000). Also, the temporary employee benefits because he will get good pay for a task and can also look for full-time employment opportunities. 


Contract work is paid based on activity or task, which has a flat fee structure. The disadvantage of this contract is that the employee doesn’t have a job guarantee, and the income may also fluctuate. There are chances that the employees under contract are being used as full-time employees and doing all the work for the contractor for which they will be paid a flat fee (offeredPeel & Treitel, 2007). Their performance doesn’t impact their income, like in the case of permanent employment. The benefit is only for the contractor as he will be getting work done at a cheaper rate, but the employee will not get benefits like health insurance, retirement plan, etc.

What Happens in Case of Violation of Personal Service Contract

Under the personal service contract, when both the contractor and employee agree to the terms and conditions of the contract along with the service offered and compensation amount, then they have to abide by the agreement. Failure to do so will lead to a breach of contract, and thus the breaching party will have to pay the penalty amount to another party. 

For instance, a celebrity bakes plans to breach the contract as he realizes that he will get a better offer in New York than in such case the court and the other party will take legal action against the celebrity baker and will restrict him to perform in New York. There are three conditions in which the personal service contract can be violated. 

Firstly, in the case of biased ground rules, secondly impaired objectivity, and their unequal access to information (offeredPeel & Treitel, 2007). Management practices that tract the contractor employees and government employees interchangeably can lead to a breach of contract of a violation. To avoid a breach of the contract, it’s important to regularly contract between the government and the service contractors regarding the procurement process. The list of Do’s and Don’ts should be attached to the agreement. 

A personal service contract is not an employment contract, as this agreement contains certain elements that are not present in the employment contract. The contract is like a huge umbrella wherein the temporary requirements of the agreement are mentioned to that the contractor or the employee does not end up with legal issues or breach of contract (offeredPeel & Treitel, 2007). The essential part of this contract is the term period and its responsibilities. It’s recommended that both parties should clearly understand the activity of the task, along with the compensation structure, to make sure that there is no misunderstanding and confusion after the agreement is made.