1. Information About Service Agreements
2. Creating a Service Agreement
3. When Is a Service Agreement Used?
4. Reasons to Have a Service Agreement

Sample contracts for service providers are agreements by two parties where one party agrees to provide a specific service to the other party. The contract outlines and defines the parameters of the service being provided, along with the payment or compensation the service provider is to receive.

Information About Service Agreements

A service contract or agreement supports the smooth operation of a project by providing the service provider and the employer with legal protection, since it ensures all parties are agreeing to the same terms. 

Service agreements are also known as a general service contract, service level agreement, and a consulting services agreement. A service agreement may also be referred to as an artist service agreement and as a childcare service agreement. The purpose remains to bring together one party to provide a service and the other party to pay for that service. 

Additional contracts that are similar to a service agreement include some of the following:

  • Catering services agreement
  • Computer services agreement
  • Cleaning services agreement
  • Independent contractor agreement.

Creating a Service Agreement

It is recommended you have an attorney draw up or review your service agreement. If you use a service agreement template, get advice about the local regulations in your area that might apply to your situation. 

In the agreement, include contact information for the service provider and the customer. Describe the services to be provided along with a description of what the service provider will do or the duration of the agreement.

Determine the pay rate and any applicable taxes. Be sure to:

  • Outline the payment schedule.
  • List who will be providing any resources.
  • State whether penalties for late payments or for nonperformance will apply.

State the terms you've agreed to regarding:

  • Confidentiality
  • Nonsolicitation
  • Noncompetition.

Address ownership of materials, and include any applicable indemnity clauses

When Is a Service Agreement Used?

As a service provider, any time you take on a project where you will perform a service for a client or customer, a service agreement should be in place. Having a service agreement means:

  • It will protect your interests as a service provider and ensure you are paid for the services rendered.
  • It allows for a variety of areas to be covered, such as marketing, testing, advertising, management, consulting, or any other professional service where one person agrees to provide services for another.
  • A customer in need of hiring a service provider to perform a paid task can establish the details of the task, including the duties to be performed, compensation, the arrangement of the task, and a confidentiality clause, if required.
  • It also serves as a warranty feature that may be offered. For example, a manufacturer may include a service agreement stipulating the company will repair, replace, or fix a product within an established time frame.
  • A service agreement is not a bond. Bonds hold a single person to the contract, while service agreements hold both parties responsible, ensuring both parties are protected instead of just one. 

Reasons to Have a Service Agreement

There are various reasons to have a service agreement in place:

  • Services are harder to prove compared to a product; this is one reason the agreement is important. When a company buys a product, there's a physical object. With services, there is not. 
  • When a company buys a service, the service contract ensures all parties understand what the service is and when it will be delivered. For example, an advertising or marketing service provider provides these services. But it doesn't mean the company buying the services will see a return on their investment in the service provider. The agreement outlines what the end result will be and the cost to get there, so everyone is on the same page.
  • Whether you operate as a contractor or represent a large company, a service agreement is beneficial in more ways than one. Overall, an agreement saves time and money. Taking the time to create, discuss, and sign a service agreement is less costly than not having an agreement and being in a position of sorting out a misunderstanding with a contractor.
  • When working as a contractor or if you are working with a contractor, a service agreement provides a level of protection that is necessary.
  • A service agreement helps eliminate surprise costs, as the agreed-upon amount is listed within the agreement. 
  • A written service agreement reduces the risk of litigation because of misunderstandings.

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