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A service contract is an agreement between a business and the clients or customers they serve. It outlines the terms and conditions of the services you will provide, the work done, and the payment associated with the service.
Creating a formal record of what your services include, your terms and conditions, and other legal provisions can help ensure that you avoid legal problems down the road.
Here are 12 things to include in a service contract to protect you and your business.
Like any legal agreement, a service agreement should always start with the names and descriptions of each party involved. This means the service provider and their direct client. This might also include other parties and representatives, but usually only in more complex agreements.
Next, it’s very important to define the scope of work, sometimes called the statement of work, and what is included in the contract. Again, this helps ensure that customers aren’t expecting more than was included in the quote and order.
Time frames are another important part of any service agreement. The service provider should include the date when the contract is effective and when they expect to start and finish providing the service.
Often, these service agreements also include information about what will be done in the event of a delay and what penalties, if any, will apply for late delivery or completion.
The fees and payment terms of the service contract should all be included in the agreement. In addition, if there are any penalties or interest for late payment, these should also be included in the contract.
Many service contracts are paid in stages. For example, commencement is often subject to the provision of a deposit, and there may be several predetermined stages in which payment will be made.
Service providers are often subject to regulations that stipulate what kind of insurance they must have and what kind of legal steps they must take to be legally allowed to provide this service.
Insurance and compliance terms in service agreements outline what those insurances and regulations are and what steps the service provider has taken to comply with them.
Suppose the client is responsible for any kind of regulatory requirements or insurance. In that case, this will also be included in this section.