A services agreement is a contract between a customer or client and a person or company who shall be providing services. Most often, Service Contracts include details such as deadlines and payment agreements. Contracts also usually define the work that needs to be performed and what process is required to take place if changes need to be made.
A service level agreement (SLA) is a separate contract amongst a supplier as well as a customer within a services agreement. It states the level of service expected from the service provider, for example, the volume and quality of work, speed, and efficiency. The purpose of having such a document is to establish a mutual understanding of the level of services to be provided. A service level agreement is not the same thing as a services agreement. In this agreement, one could choose to attach a service level agreement as a schedule or describe the details and description of the services in the contract. Service level agreements tend to be unique to the situation.
When Do You Need a Services Agreement?
A services agreement is an agreement between two parties (for e.g., a customer as well as a supplier) for the supply of services. It states the agreed terms between both parties for the provision of services. The roles of the parties are mentioned in the details, as well as the transaction value and remedies in case of a violation.
Purpose of a Services Agreement
A services agreement is required when a business wants to engage another business’s services. Creating this agreement would ensure that both parties understand their obligations and protect the positions of both businesses in case of termination, or legal dispute.
Inclusions in a Services Agreement
Parties involved: In the creation of this agreement, there are usually two parties involved; the first being customer/client/employer and the second is the supplier/company/employee.
Effective dates: This agreement would state the date on which the license will start.
How to Draft a Services Agreement?
The services agreement is used
- when any business wishes to supply services to any other business
- when any business needs terms and conditions for carrying out its work
- to ensure that the business has a legal right to receive payment for its services
- to protect the position of the business
This contract also covers:
- the services provided
- payment terms
- service credits (optional)
- change control
- limitation of liability
- confidentiality, IP, data protection and anti-bribery
- ending the agreement
Benefits of a Services Agreement
A verbal agreement may be enforceable, but it is advisable to have Service Agreements in writing. Services contract gives the parties an opportunity to outline expectations on both sides of the agreement. Contracts define the scope of the work, how much the job is going to cost, when payments need to be made, and how disputes are to be handled.
Types of a Services Agreement
There are various types of service agreements.
General Service Agreement (General Service Agreement amid a contractor and a property or a business owner to provide services);
Consultant Service Agreement (Consultant Service Agreement amid a consultant and a client that identifies the terms and conditions linked to the consulting services that the consultant would provide);
Artist Service Agreement (Artist Service Agreement amid a business owner, or client, and an individual to perform bookkeeping or accounting services);
Child Care Service Agreement (Child Care Service Agreement amid a contractor/child care provider and an individual to provide child care services)
Master Service Agreements (Master Service Agreements used in long-term client/vendor relationships)
Professional Service Agreement(Professional Service Agreement is performed by an independent contractor that is qualified based on his/her skill, education, and technical abilities to provide the services)
Maintenance Agreement (Maintenance Agreement is between two parties wherein the other party promised to maintain the efficiency of material or belonging of the other party)
Performance-based contracts (Performance-based contracts, which identifies the expected deliverables, performance outcomes, and the payment is done after a successful delivery)
Key Terms/Clause of a Services Agreement
Service agreements clauses can cover matters like:
- Contact information for both parties
- Description of service and scope of work
- Compliance and insurance requirements
- Payment terms
- Confidentiality agreements
- Diagnosis and troubleshooting
- Upgrading of parts or software
- Dispatching of a business service representative for conducting in-home or on-site repairs
- Access to streamlined customer service
- Replacement of worn parts
- Refunds and returns
- Default terms
- Remedies and dispute resolution
What Happens In Case of Violation?
If either party cannot fulfill their part of the agreement, it must be discussed amicably first. If both parties are not able to agree on how to solve the problem, then they might need to consider mediation or small claims court.
This agreement could be terminated by giving written notice to the other party and also in some specific circumstances specified in this agreement,e.g., failure of the supplier towards paying for services or if one party commits a major violation of the agreement.
Sample Services Agreement
A sample of the Services agreement can be downloaded from below.