Maintenance Contracts: Everything You Need to Know
Maintenance contracts are defined as the contract between two parties creating an agreement, which signifies one party will maintain an asset that another party owns. 3 min read
Maintenance contracts are defined as the contract between two parties creating an agreement, which signifies one party will maintain an asset that another party owns. Maintenance contracts can be in place for several areas such as equipment, landscape, a building, information technologies, computers, and more. In simple terms, it is an agreement to maintain something.
Regardless of the type of maintenance services your company provides, a written maintenance contract governs the client relationship and service provider, ensuring both the client and the company understand and agree to their rights and responsibilities.
Steps for Writing a Maintenance Contract
Create a maintenance contract by following the guideline below:
- Start by creating a section at the beginning of the contract to use for official definitions. Define any ambiguous terms you will be using throughout the contract, such as "contract year," "the work," and "the technician."
- Define the two parties — the service provider and the client.
- List the maintenance services your company will be performing early in the contract. In this section, go into detail and list a wide range of services. Specify the services for a job such as facilities maintenance, which would include electrical work, painting, plumbing, troubleshooting, and installing fixtures, for example. Be sure the contract includes the full range of tasks to be performed. This is in case there is a dispute and the specific service has not been listed.
- Discuss the compensation structure for services. When writing a contract for an independent maintenance contractor, include the hourly pay rate, methods of payment, and any provisions for additional compensation.
- With contracts for larger service providers, include all agreed-upon provisions such as compensation, price discounts or early payment, and credit terms.
- Draft a warranty section for listing any promises either party made. Samples of warranties include something as simple as parties agreeing to be in compliance with legal statutes for the duration of the contract. It may also be complex like a money-back guarantee for the time a contractor spent performing the work the client is dissatisfied with.
- Clarify the guidelines for processing legal disputes. This should include indemnity clauses, which clearly state that parties are in agreement about what each will and will not be held liable for.
- Include provisions for the termination of the contract. Consider including a clause stipulating that the contract becomes null and void should either party be convicted of any criminal act(s).
- Another example regarding termination is stipulating that a breach of the contract by one party can result in termination. Upon terminating the contract, there will be no liability on the part of the other party, as long as they have notified the breaching party, in writing, of their intent to end the relationship.
Information About the Maintenance Contract
A maintenance contract is used when you are being hired as a maintenance contractor for a job, or if you are hiring a maintenance contractor to do a job.
Initially, a maintenance contract agreement is outlined so that it specifies the:
The initial agreement serves as a quote. Once the negotiation process is over and the parties are in agreement, an official contract is written.
Pay close attention to the terms and conditions of the contract to ensure they are in compliance with what the parties agreed to. It is advised that you have your attorney read through the contract before signing it.
To close a contract formally, you will need a maintenance contract cancellation letter. The cancellation letter officially ends the business relationship between the two parties.
Examples of Maintenance Contracts
Office Equipment Maintenance Contracts
- A maintenance contract for office equipment is worth the cost, depending on how essential the item is and its cost.
- For large pieces of office equipment, a contract can be invaluable. The contract will most likely have a service provider for emergencies should the equipment fail.
- Maintenance contracts for equipment are necessary when the equipment involved is deemed expensive.
- Management contracts and Operation and Maintenance (O&M) contracts govern a type of public-private partnership (PPP) agreement.
- A management contract is task-specific, focusing more on input versus output.
- Management/O&M contracts are used in the water sector and the energy sector.
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