General Service Agreement

What is a service agreement?

A service agreement is a legal contract used to establish business relationships between a client and a service provider, who delivers certain types of services. This is a complex document that sets up the scope of delivered services, timeline for provisions of services, as well as remuneration paid to a service provider.

A service contract is a legal arrangement between a client and a service provider, who acts as an independent contractor. Both a client and a service provider could be either an individual or an organization.

When Should I Use a Written Service Agreement?

There are a lot of services we receive on a daily basis, though it does not necessarily mean that for every such service a separate written service agreement should be concluded. Let’s first find out more about the benefits of having a written services contract template.

• Setting Up Clear Terms: A service agreement outlines the terms and conditions on how exactly the services will be provided to the client. It includes all payment terms, deadlines, scope of provided services, expected outcomes, parties’ liabilities, termination clauses, and many more. On top of that, having a written document diminishes any ambiguity with regard to earlier reached accords between the parties.
• Knowing What’s Next: A duly signed services agreement template guarantees legal predictability for both parties. In that case a service agreement acts as a road map to help parties to navigate through the services provision process.
• Legal Protection: When there is a dispute between the parties about the payment terms or any other clause, either of the parties can bring a dispute to the court. A written service agreement contract serves as a powerful tool in the legal proceedings. It represents written evidence of what the service provider and the client really agreed on in the past.

The law does not define the list of circumstances in which having a written service agreement is mandatory. Though from a legal point of view it is highly advisable to have a service agreement contract template signed between the parties, when

• Either of the parties is an organization or business entity;
• Ongoing services will be provided;
• Service fees are high;
• Creation of Intellectual Property will be made in the course of provisions of services;
• Confidential or sensitive information will be exchanged between the parties; or
• Either of the parties insists on having a written contract for peace of mind.

What is the difference between a service agreement and an employment contract?

At first look, a service agreement and employment contract might have lots in common. Indeed, both documents are dealing with the provision of certain services in exchange for remuneration between the parties. However, consequences for using the wrong document might be serious. For instance, the usage of a template for service agreement in employment relationships might be illegal in certain states.

Independent Contractor vs. Employee

A person who provides services under a service agreement is an independent contractor. An independent contractor is an individual or organization that has a certain expertise in delivering specific services and is hired by the client. A well-written service contract template ensures that both parties are equal and independent.

On the other hand, an employee does not have such a degree of independence. The work in employment relations is performed under supervision and in accordance with the employer’s internal guidelines.

Delegation of Work

Most service contract templates allow a service provider to engage their subcontractors or sub-agents in the delivery of services under the contract. This is a common practice despite a service provider being an organization or individual.

An employment agreement establishes personal relationships between an employee and employer. An employee is required to perform their work in person. The situation where an employee delegates all their work to someone else is practically impossible.

Performance Remuneration

A template for service agreement could be customized to reflect various payment terms. For example, a service provided can be paid in full upon completion of the project or in monthly instalments.

However, when it comes to employment relationships, an employee should be paid regularly—e.g., weekly, biweekly, or monthly. The employment laws of every state establish minimum guarantees with regard to the regularity of salary payments. In that case an employer may not implement payment terms less favorable than those defined in the state or federal laws.

Additional Guarantees

Typical service contract templates do not provide any cash or non-material compensation for service providers, except for the remuneration agreed upon in the contract.

Most employment contracts envisage various positive incentives for employees who work for a certain period of time within the company. Positive incentives may include cash bonuses, prolonged maternity or sick leaves, insurance, additional bonuses in case of disability, and many more.

What Is the Difference Between a Service Agreement and a Service Contract?

The second popular question after “How to write a service contract?” is “What is the right document’s title?” You can find lots of variations in titles. We made a short breakdown of key things you need to know while selecting a title for your agreement template:

• Agreement vs. Contract: There is no legal difference in those two words. They are interchangeable and do not influence a document’s legal validity in any way. Therefore, either you pick up a service contract template or service agreement template—both options are the same.
• Title vs. Substance: The document’s title does not define the document’s subject. For instance, Jack wants to hire an employee for regular work. At the same time, he does not want to pay social contributions for him. Therefore, Jack decides to label his contract with an employee as a service agreement. By doing so, Jack hopes that from now on he is in a non-employment relationship.

However, if the document’s content has clear employment features, then in case of a dispute, a court may confirm the existence of an employment agreement instead.

What Is an Example of a Service Contract?

A service agreement is widely used on a daily basis between individuals and business, or organizations and state authorities in order to exchange different types of services with each other.
The most common examples include:

• Personal or Housing Care: A non medical home care service agreement template might be useful to look after elderly family members. If you plan to find someone to mourn your lawn regularly, a lawn service agreement template should be used.
• Legal Professional Services: Provision of any professional services like medical care, dental care, or education services implies conclusion of certain types of service contracts. For instance, when you need to file a lawsuit or open a probate, this is where a legal service agreement template with your lawyer should be signed first.
• Business Services: Managing your own business might be challenging from time to time. You have to deal with lots of supplies and customers as well as government authorities. Having an option to delegate part of this work to someone sounds like a good plan. This is where a contract for services template should be used. For example, if you need to hire a new accountant, a bookkeeping service agreement template should be used.
• Daily Life: You need professional services every day, from catering services for your wedding anniversary and delivery of food on Sundays to beauty treatments, car repairs, and many more. The best way is to outline all those arrangements in a separate service agreement.

How to Create a Service Agreement Contract?

Creation of a contract template is an art process. It requires making sure that all tiny details and arrangements are clearly defined and put on paper. Every service contract has mandatory and non-mandatory clauses. Mandatory clauses are essential for the document’s validity. Non-mandatory clauses should be included in every service agreement sample. Without them, a document’s validity is not compromised.

What Should Be Included in a Basic Service Agreement Template?

In order to become valid, a service agreement shall contain the following mandatory elements:

• Parties’ Details: Full names, addresses, and contact details of the service provider and the client should be included. If either of the parties is an organization or business entity, it is worth selecting a specific manager who will be appointed as a first point of contact under this agreement.
• Price and Payment Schedule: The document should include information about the price a service provider receives in exchange for the provision of services. The price could be indicated as a fixed amount or as an hourly rate. The payment schedule defines the way and timing of how the price is to be paid. It could be a milestone payment model, where a service provider receives a part of their remuneration for completing every step of the project. If it is a short project, the one-time payment could be released upon full provision of services. Parties may agree on any other payment option suitable for them.
• Scope of Provided Services: The list of exact services that should be delivered is defined in the document. For complex and recurring services like bookkeeping or software development, it is a common practice to include certain KYEs for work to be performed.
• Start and End Date: Every service agreement should include details on when the provision of services starts and ends. Without specific deadlines, it is hard for a client to prove a service provider default. For a project that consists of several stages, it is crucial to set up a specific deadline for every step.
• Termination Clause: A good example of a contract for a service is having a detailed termination clause. The parties need to think in advance about possible circumstances in which either of them can terminate the contract. Those circumstances are known as default events. For instance, for a service provider, a default event can be failure to deliver a piece of work before the agreed deadline. On the other hand, for a client, a default event constitutes a failure to pay on time. Once the default event occurs, one party issues a prior written notice to a default party about termination. Usually a notice period can last from a few days up to a few weeks.
• Governing Law: This clause is particularly useful for ongoing services agreements. If there is any dispute in the future, parties should agree well in advance on the laws of which state will apply to their services agreement. It could be a law of a state where either of the parties reside, or a state where services are being provided. Faster Draft sample of service contract could be customized for any state within the USA.
• Parties’ Signatures: After all mandatory terms of this agreement are agreed upon, parties have to sign the document. Without the parties’ signatures, the document is not binding for the parties.

Depending on the type of services to be provided, parties may consider inclusion of the following additional clauses:

• Indemnification Clause: This clause provides both parties with mutual guarantees against third-party claims resulting in losses or damages.
• Intellectual Property (IP): If in the process of provision of services an intellectual property will be created, a service contract template needs to have an IP clause. For instance, a new mobile app will be created by a software developer. Parties have to decide on how the rights over a created IP object will be shared in the future between them.
• Confidentiality Clauses: If in the course of provisions of services, a service provider gets access to a client’s sensitive or confidential information, a confidentiality clause is a must. A confidentiality clause precludes a service provider from disclosing all or certain parts of information to third parties.

Which Things Should Be Avoided when drafting a Service Agreement Template?

When creating a service agreement template, there are lots of things you have to give careful thought first:

• Unclear or Ambiguous Provisions: Parties should avoid the inclusion of unclear terms inside the service contract template. For instance, a document may contain two contradictory clauses addressing the same issue, or a wording that is being used in different meanings throughout the contract template, or references to additional addendums that are not attached or created yet.
• Absence of Dispute Clause: Usually it is a good practice to include a dispute resolution clause in a contract template for services agreements. Even if the client and the service provider are on good terms, it does not guarantee the absence of conflicts along the road. The existence of a dispute clause helps with resolving disputes, as it defines the exact court a dispute should be heard in. It could also provide for mediation or arbitration.
• Service Provider’s Expertise: The federal law or law of certain states may require the obtainment of a license in order to provide certain types of services. Usually, this applies to provisions of professional services like insurance, banking, health care, education, and so on. Check in advance if a service provider possesses all the necessary documentation to provide the services in question. Absence of such documentation may signify low quality of work or possible scams.

How to Get Your Service Contract Agreement Template Online?

You have to follow three simple steps to get your Service Contract Agreement Template:

• Fill in the Questionnaire: Answer a few simple questions in the questionnaire. This will generate a customized independent contractor professional services agreement template for you.
• Download the Document: After the payment is made, you can download your personalized service agreement (format in Word or in PDF).
• Sign the Document: Print out a PDF or Word version of the document. The document should be signed by the service provider and the client.