Entering into a service contract is standard business behavior. It may seem too formal or time-consuming and unnecessary paperwork, when in fact, a service contract plays several essential roles—protective, descriptive, and legally binding. With a properly drawn-up service agreement, both the client and service provider are protected from issues and misunderstandings and have a clearly defined plan of action.
Buying a service is similar to buying a product, but it will be more difficult for you to prove on what terms these services are bought or sold without any legal documents. If you need to receive some services during your business, instead of a handshake agreement, take an extra ten minutes to talk out and formalize the terms of the purchase and conclude the service contract so that these terms are transparent and understandable.
A service agreement is concluded between a client and supplier and legally hammers out the working terms and exchange of services for compensation. This is a reasonably flexible document governing the relationship between the parties. This document protects both the service provider and the customer.
A service agreement describes the expected type of services, deadlines, frequency and amount of payment for services, and other details about the parties’ cooperation. Both sides can also negotiate and come up with a list of actions in case of violation of the agreement or confidentiality conditions of any parties.
Service agreements also go by the following names:
A service contract must be used when a client plans to hire a temporary employee, an independent contractor, or a third-party service provider to solve their problems. A service contract protects the interests of the client and service provider and stipulates work conditions (payment, type of work, and terms).
The document acts as a clearly defined work contract for the service provider and protects their compensation rights. The service agreement specifies the rates for services and how often payment will be received. Also, with clearly defined working conditions, the service provider is protected from overworking above the service contract.
On the other hand, the client can protect themselves from an unscrupulous service provider by clearly setting the deadlines for the work and all required duties.
The quality of relationships in any business is determined by the clarity of tasks and the transparency of the conditions set for the contractor. A service contract is an official form of securing such relations. Both parties diminish the possibility of misunderstandings and have a clear vision of their rights and obligations.
Many service providers in our time conduct their work without formal registration, but having a service agreement, the clients and the service providers both shield themselves from disappointments and failures.
In this case, the general service agreement can solve feuds in the work process since most of the conditions are predefined. One has only to open the document to refresh the memory and decrease discord in the course of work.
Other factors that determine the importance of this document include:
As mentioned earlier, for your service agreement to protect your rights and business, you must clearly state all the terms of cooperation. Of course, drafting the service agreement template is quite flexible as its components may vary depending on the services provided. If, for example, the contractor is hired for a long-term period without indicating an end date, this component in the service contract template is omitted. Here are some mandatory conditions that must be in the body of the service agreement template to protect you in case of bad outcomes.
In general, the service agreements contract should stipulate such essential components as follows:
The agreement terms indicate for what period it’s concluded and who the parties’ representatives in the agreement are.
The agreement template outlines duties that the service providers must do or the result expected from cooperating with the other party. It’s also advisable to clarify any free service the other party is ready to offer. For example, if this is the work of a web designer, you can specify the number of free edits that are expected.
A mandatory part of the contract is a description of the payment for services. In addition to the compensation for the service provision, the document also indicates who pays legal fees and the payment schedule. You can also specify what penalties or consequences will await in case of late payment.
Suppose there is any information that needs to be kept secret and cannot be disclosed to third parties—for example, the salary size, the scope of the company, or the authorship of the work. In that case, this is all indicated in the document, including the punishment for violating these conditions.
During the cooperation, it is possible to create new products that affect the scope of intellectual property and authorship. Thanks to the agreement, it is possible to stipulate who owns the rights and avoid disputes after expiration.
Specify the cases in which both parties have the right to terminate cooperation ahead of time. For example, a service provider may stop working if a payment is delayed or stopped.
There are many cases where a free service agreement template can come in handy, even if it seems that you can do without it. But first, you will need to take a few steps to ensure a productive relationship with your provider.
Step 1. Do your research
Before signing an agreement, to avoid any tricks from unreliable independent contractors, make sure you know the industry well. Check out the typical responsibilities in this profession, what services you can expect, and the average bill for such services. Knowing the basics will help you be on the same wavelength with a potential employee and weed out suspicious and dishonest individuals.
Step 2. Choose an appropriate service provider
After that, decide on the service provider. Check review sites and portfolios to see if you both match in terms of style, price, and expectations. After that, please discuss with the provider their willingness to conclude an agreement with you. A reliable provider will not withdraw from the agreement and will be open to discussing the terms before starting cooperation.
Step 3. Prepare a service agreement
You can take a free service agreement template from our website and fill it in according to your personal needs. Discuss all the working conditions and terms of cooperation before adding them to the contract. You may seek legal advice to ensure that all terms are clearly stated. Thus, you will save time and save yourself from unnecessary paperwork to correct the details in the contract.
Step 4. Decide on an upfront payment
Decide whether you will pay an advance fee and determine its size. If you decide to pay upfront, please specify the return terms in case of unsatisfactory work.
Step 5. Sign the agreement
Send the contract for inspection to the second party so that you can review and dispute some points. The other party may also get the legal advice and demand iterations to the final template. After making the final edits, sign the contract if both parties agree to all the terms. The contract is considered legally binding after the signature without witness whereof.
If you want to avoid mistakes when filling out the contract, you need to understand what components should be in the contract. You are encouraged to use our free service contract template that contains all the necessary details and edit it according to your needs to get your own service agreement.
To do this, you can use this step-by-step guide designed to help you not get confused about the necessary components of the contract.
Step 1. Clarify the parties of the agreement
Indicate the date the document is drawn up and the parties involved in the contract—the client and the service provider. Parties can be whether private individuals or entities. Make sure you include the full name of both representatives or the business’s legal name if it is an institution.
Step 2. Define the terms
Next, you must specify the start date when the contract comes into effect and the duration. This contract may have an end date or be automatically terminated after all agreed services have been provided.
The contract can also have a monthly agreement. In this case, you need to specify the date when it is worth warning about the end of services.
Step 3. Clarify the scope of services
List all the services that are expected from a service provider. It may be the description of a final result or the list of all duties and responsibilities.
Step 4. Indicate the compensation
The following step is to clarify the type and amount of compensation. In this part, it is worth prescribing the type and amount of payment for services that have been confirmed and approved by both parties. Payment type can be:
If the client receives an advance payment, its volume must also be indicated in the agreement.
Step 5. State the compensation terms
Describe how the provider will be paid. It can be a one-time paycheck after the written notice, daily, weekly, bi-weekly, or monthly. If you have special conditions, this should be indicated in a separate field.
Step 6. Specify the type of insurance
It is worth pointing out when indemnity or liability limitations apply, in case of breakdowns, errors, and whether additional expenses for travel, transport, or uniforms are included.
Step 7. Indicate the governing law
The agreement must include the state that will govern it. This section is essential to fill in because it defines the laws under which the agreement is concluded.
Step 8. Provide the contact information
Include actual addresses, phone numbers, and registered mail addresses for ease of communication. Both parties can use these contacts to send notices or confirm payment. Often server providers are employees who provide intangible deliverables on a freelance or contract basis. They may be temporary employees on a time-limited assignment or contractors with no precise end date for the collaboration. It covers many general services such as dog walking, childcare, make-up, design, consulting, writing, editing, programming, etc. Oral or handshake agreements are considered legally binding and can be called in the court in case of its violation. At the same time, this contract is much weaker since it is much more challenging to prove them. Besides, any parties can distort the facts or conditions of the agreement before governing law officials. Written conditions will help resolve misunderstandings much more effectively. A master service agreement is an agreement between two or more parties that negotiates the terms of cooperation between several companies that work on a project. Usually, MSA covers general concepts like business ethics, intellectual property rights, access levels, dispute resolution, and payment terms.
Frequently Asked Questions
Who can be a service provider?
Is a verbal service agreement sufficient?
What is a master service agreement?
Often server providers are employees who provide intangible deliverables on a freelance or contract basis. They may be temporary employees on a time-limited assignment or contractors with no precise end date for the collaboration. It covers many general services such as dog walking, childcare, make-up, design, consulting, writing, editing, programming, etc.
Oral or handshake agreements are considered legally binding and can be called in the court in case of its violation. At the same time, this contract is much weaker since it is much more challenging to prove them. Besides, any parties can distort the facts or conditions of the agreement before governing law officials. Written conditions will help resolve misunderstandings much more effectively.
A master service agreement is an agreement between two or more parties that negotiates the terms of cooperation between several companies that work on a project. Usually, MSA covers general concepts like business ethics, intellectual property rights, access levels, dispute resolution, and payment terms.