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What is a Service Agreement
A Service Agreement is a form of contract between a contractor and a customer. It allows both parties to properly document the terms of the service that has been agreed between them. It also offers security in case the agreement is terminated for any reason or the points agreed upon aren’t respected.
Service Agreements can be known by several alternate names, including:
General Service Contract
Service-Level Agreement (SLA)
Consulting Services Agreement
Usually, this kind of contract is used to formalize the provision of one-on-one services such as:
How to Write a Service Agreement
It is important to remember that a Service Agreement outlines the formal, documented terms of a deal. Therefore it must be written carefully in order to make sure it can be fully enforceable and impossible to misinterpret.
First of all, a Service Agreement must be written in plain language and with enough information to ensure that both parties’ objectives are properly understood. Both parties must be clearly defined to prevent any ambiguity over who is responsible for what.
The assistance that is being provided must also be explained in enough depth to help anyone reading or interpreting the contract. It should properly detail the precise actions that the provider is to be paid for and the goals they must meet.
It is very important not to define a service too broadly. Failure to properly explain the role of the contractor or defining the work too broadly can make the client liable to provide more compensation than they may originally think at first.
Additionally, any clauses to the Service Agreement must be properly included and explained. The clauses that you use will ultimately depend on the service being hired, yet, they should be carefully tailored to fit the needs and interests of both parties.
For example, this may include a security provision in case confidential information is being shared to carry out the service. This can exist as its own clause or can be combined with a full Non-Disclosure Agreement (NDA).
Last but not least, the contract should explain what happens if there is a breach on either side. This will help to plan ahead by providing termination conditions and dispute resolution (i.e. Arbitration).
What to Include in a Service Contract
In order to properly explain the nature of the agreement between the client and the service provider, a Service Agreement must cover a number of essential details. These include the following considerations:
The contractor and client’s information.
An outline of the services being provided.
The amount of money that is to be paid for these services (including the definition of reasonable expenses).
The payment schedule of the transaction amount.
Any confidentiality agreements, indemnities, or warranties (optional).
The dates that the agreement will operate between.
The signatures of both parties.
Service Agreement and Contract FAQs
If you’re still unsure how Service Agreements work or how they might prove practical for your personal circumstances, we’ve got the answers you need. Read our FAQs below for a more detailed explanation about some of the nuances of Service Agreements.
What is a Service Contract?
A service contract is another name for a Service Agreement. It is a written legal document that specifically details the nature and terms of an agreement between a client and a contractor. It can be enforced by law.
Service Agreements and contracts allow both parties to specifically formalize their goals for a project. It also functions as a proper record of the services and compensation originally promised by both client and contractor. This offers protection should any disputes arise in the future.
What is a Service Level Agreement?
A Service Level Agreement (SLA) is a binding contract that sets expectations on the level of service that a customer will receive from a supplier or contractor. This written agreement specifically details the goals and metrics that the service provider must meet in order to fulfill the contract. It is mostly used by companies seeking external suppliers.
An SLA functions in a very similar way to a conventional Service Agreement. However, it gives a much more precise view of what the services provider must achieve as part of the agreement between both the parties.
What is a Service Provider?
A service provider is a person or company that offers to provide professional assistance to a customer. In a Service Agreement, they promise to perform a task or service in exchange for compensation from the client and occasionally access to confidential information or special software or tools.
Service providers in this context can represent any professional that is offering skilled assistance to customers in general. This can include independent vendors such as gardeners, dog groomers, consultants, and computer service providers.
When Should I Use a Service Agreement?
A Service Agreement is a highly useful document for businesses that are planning to provide services. Alternatively, it can be used by individuals or companies looking to hire service providers.
It is best used in a situation when an oral agreement on the provision of services isn’t considered enough of a guarantee for their fulfillment. A written agreement may help provide assurances and a firm record of the services required by the customer and what they agree to pay the contractor in return.
Either a customer or a service provider can request a written Service Agreement be signed before specific professional tasks are performed. This can set an agreement in place for either a single transaction or for an ongoing provision of services over a longer period of time. However, most Service Agreements are often short-term in nature.