Hardware Service Agreement: Everything You Need to Know
A hardware service agreement is a contract used between a business providing computer hardware maintenance as well as a business contracting that maintenance.3 min read
2. Hardware Service Agreement Basics
Updated November 25, 2020:
Hardware Service Agreement Overview
A hardware service agreement is a contract used between a business providing computer hardware maintenance as well as a business contracting that maintenance. Under such agreements, a maintenance service provider will undertake tasks that include commissioning new hardware, conducting repairs, and carrying out preventative maintenance. A hardware service agreement will generally not cover software except insofar as it relates to the servicing of the hardware, although hardware service agreements that also cover software are available.
Hardware Service Agreement Basics
A typical maintenance service agreement will contain some or all of the following clauses:
- Interpretations and Definitions.
- Payments and Fees.
- Client Obligations.
- Service Provider Obligations.
- Party Relationship.
- Force Majeure.
- Entire Agreement.
- No Waiver.
- Dispute Resolution.
All clauses contained in the contract should be selected and written so that they are compatible with one another. They should also be read and understood thoroughly before the document is signed.
A hardware service agreement may add 10% to 30% in additional yearly costs to the hardware’s price, thus potentially consuming a good portion of your yearly operating budget. With such a price tag, great care should be taken to make sure you have not purchased too much support or, even more critically, too little.
For some businesses, an ideal hardware service agreement will allow for 24/7 support with a two hour response time. However, such coverage may not be necessary for all businesses, especially due to the cost, so a realistic analysis of hardware risk should be undertaken before any agreement is entered into. To do so, the following two questions should be asked:
- How great is the risk that the hardware will go down?
- How costly will an extended delay in hardware usage be?
To determine the answers to these questions, each piece of hardware covered and each service offered in the contract should be considered carefully, as well as the necessity of each hardware component to the running of your business. Only after this is done can you gain an accurate view of your hardware coverage needs.
Additionally, it is also important to determine what will and won’t be covered by the hardware service agreement, which includes what can and cannot be covered. Some devices, for instance, age out of coverage, so it is important to maintain an accurate, up-to-date inventory of all your hardware so as to both more easily have it serviced and to make sure you are not paying support for devices that cannot be serviced. Leaving these details in the hands of the service provider may mean a longer wait to get service, as it requires them to search their often large database to determine what hardware you have, as well as increased cost, as it is not their responsibility to cancel service on devices that cannot be serviced.
Because of this, some may believe that simply entering into a hardware service agreement with the most comprehensive benefits is the best way to go, but this may not necessarily be the case. Rather, it may be better to take the time to figure out what services you will actually need, and then find or tailor an agreement whose strength is covering those specific needs. This will likely take more time up-front, but it could save you more money in the long run.
A final element of hardware service agreements to consider is that they are typically structured so as to increase the yearly cost of service year-by-year. The idea behind this is that aging hardware will be more difficult to maintain, and thus more costly, which may very well be true, but it is not necessarily a cost that a business has to be burdened with.
For example, a business could maintain in-house IT staff who are trained to maintain the business's hardware, or they could keep back-up hardware to replace any hardware that goes down, rather than pay to insure against the possibility that it might go down. Whether or not such solutions are ideal when measured against the pros and cons of a typical hardware service agreement will depend on the needs and means of each business.
If you need help understanding the nuances of a hardware service agreement, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.