Service Agreement Template

What Is a Service Agreement?

A service agreement is a contract entered into by two entities in which one agrees to provide a specified service to the other. It typically defines the boundaries of the service that is being provided and the compensation or payment that the service provider will receive. Signing a service agreement can help a project go more smoothly. It provides legal protection to both the service provider and the employer and ensures that everyone is agreeing to the same terms.

"Service agreement" is a broad term that can be used to describe any contract where two parties agree that one will provide a service and one will pay for the service. A service agreement might also be called a general service contract, a service level agreement, or a consulting services agreement.

There are various types of service agreements, including the following:

• General service agreement

• Consultant service agreement

• Artist service agreement

• Child care service agreement

When Is a Service Agreement Used?

A service agreement can be used for marketing services, advertising services, testing services, consulting services, management services, or any other professional services where one person has agreed to provide a service to another.

A service agreement might also be a warranty feature offered with a product. This type of service agreement means that the product's manufacturer agrees to fix or replace the product if it breaks or malfunctions within a certain period of t

Keep in mind that a service agreement isn't a bond. A bond holds only one person to the contract, while a service agreement holds both parties accountable. That way both parties are protected instead of just one.

Contracts That Are Similar to a Service Agreement

There are many contracts that are similar to a service agreement, such as the following:

• Independent contractor agreement

• Consulting agreement

• Cleaning services agreement

• Catering services agreement

• Computer services agreement

• Child care services agreement

Structure of a Service Agreement

There are specific guidelines for what language and terms should be included in a service agreement to make it legally binding and to protect both parties.

A service agreement should include:

• A description of what service will be provided

• A timeframe in which the service will be provided

• Identification of the person or people who will provide the service

• Notification of any supervision or monitoring that will be required

• Description of payment and payment schedule

• A provision called "choice-of-law"

• A contingency plan

When Is a Service Agreement Necessary?

A service agreement is necessary any time a contractor sells his services or anytime a business purchases a service from another entity.

Why Is a Service Agreement Important?

A service agreement is especially important because services are harder to prove than a product. When a company buys a product, there's a physical object to show for it. This isn't always the case when a company buys a service. A service contract makes sure everyone understands what will be delivered and when.

Some services, such as marketing or advertising, are subjective. For instance, a marketing agency can provide their services without your business seeing a return. This is where a service agreement can come in handy. It makes sure that both the marketing agency and your business know what the end result will be and the cost to get there.

When working with a contractor or as a contractor, protection is necessary. Even a contractor with a great reputation can fail. If something goes wrong, a service agreement acts as the protection for both parties.

How to Create Your Own Service Agreement

To create your own service agreement, consider the level of protection you need. For true legal protection, it's important to have your service agreement drawn up or reviewed by a lawyer.

It's possible to find legitimate service agreement templates online. You can also seek the help of one of UpCounsel's templates or highly-trained lawyers for help.

Here are some recommended steps for creating your own service agreement:

1. Identify the customer and the service provider.

2. Add both parties' contact information.

3. Describe the services that will be provided. The more detailed this description is, the better. It will reduce the chance of misunderstandings later.

4. Outline a schedule for payments.

   • What is the payment?

   • Is payment hourly, flat fee, or project based?

   • When will the contractor be paid?

   • Is there a limit or budget?

   • Late payment penalties?

5. Establish any necessary legal terms.

   • Confidentiality

   • Non-competition

   • Non-solicitation

6. If the services are creative, decide who owns the creative product.

7. Personalize in any other way that suits your business or the specific service transaction.

Reasons You Should Have a Service Agreement

There is a multitude of reasons why a service agreement will be beneficial to your business, whether you're a contractor or large company.

It Saves Money and Time

When you run a business, time is money. The time spent creating, discussing, and signing a service agreement will be much less than you would spend sorting out a misunderstanding with a contractor.

Because a service agreement outlines the specifics of payment, it also helps prevent any surprise costs. When you sign the agreement, you should know exactly what the service will cost you.

It Prevents Misunderstanding

A service agreement, at its very core, lists the services that will be provided, the time frame in which it will be provided, and the compensation. Once both parties sign, it should be clear what is expected.

Because everything is agreed upon up front and written down on paper, the risk of a misunderstanding is greatly reduced.

If a misunderstanding does come up, the service agreement should make clear who is right and how to solve the problem.

It Reduces the Risk of Litigation

Misunderstandings can lead to litigation, and lawsuits are expensive. A service agreement reduces the risk of misunderstandings and therefore the potential for litigation.

FAQs

What is a service agreement?

A service agreement is a contract that specifically lays out a service that will be provided by one entity and the payment that will be provided by a second entity.

Does a service agreement need to be written down?

A handshake might seem like enough, but it's very important to write out the agreement. A written agreement gives both parties protection in case something goes wrong.

A written agreement also provides more legal protection than a spoken agreement.

What happens if a contract isn't followed?

A broken contract can be scary or annoying. If something doesn't work out, you can consider small claims court or consult with an attorney to find out your legal options.

If you need to create a service agreement or you find yourself in the situation of a broken agreement, you can hire a knowledgeable attorney to help you through the process. The attorneys at UpCounsel are experienced and ready to help.