Writing contracts for services can be a great way to have a formal and legally binding agreement that can protect all parties involved. When a business and a self-employed individual enter into an agreement it is referred to as a contract of service. It is important to note the difference between a contract of service and contract of services.

A contract of service is an agreement between an employer and an individual who becomes employed by the company. In a services contract, a finite amount of work will be determined between the employer and the self-employed individual. A self-employed person does not receive the same rights and benefits that an employed person does, and he or she is expected to pay for provisions such as health benefits and pensions.

You will want to create a services contract to form an agreement for a specific act or set of acts such as:

  • House painting
  • Installing an audio system in a car

Services contracts are considered distinguishable from contracts for goods which are often used by contractors, freelancers, and consultants. The service contract basically functions as an agreement to certain terms of a service performed by one party in exchange for compensation from another.

From a customer's standpoint, a services contract is used to hire a provider to perform a set task. The contract will include such things as:

  • Duties
  • Compensation
  • Confidentiality

A provider will use a service contract to define the service and ensure compensation is guaranteed. Service agreements can be known under many names including:

  • General Service Contract
  • Service Level Contract
  • Consulting Services Agreement

What is the Difference Between a Contract for Services and a Contract for Goods?

Contracts are used for many things in life but are often prevalent when it comes to making purchases or entering into an agreement for services. No matter if you buy a television, rent a house, hire a cable repairman, or own a cell phone you will encounter contracts throughout your everyday life. There are marked differences between contracts for goods and contracts for services.

Contract for Goods

These contracts can also be called contracts for products and are made between two or more parties who are agreeing to the terms of sale of goods. These contracts will often include details such as:

  • Quantity
  • Price
  • Payment terms.
  • Penalties for default

There are a few important things to note about contracts for goods:

  • The buyer can include terms in the contract such as the ability to inspect for quality.
  • A shipment contract can be included, which involves transportation of the goods from the seller to the buyer. When this occurs, the seller is only responsible for the goods until they are handed over to the shipping party. Any damage after will not be the seller's responsibility.

Contract for Services

A contract for services is an agreement between two or more parties that agree to a performance of a task or service in exchange for compensation. Services contracts will include:

  • The services to be performed.
  • Setting the standard to complete services.
  • Terms for the failure of delivery of services.
  • Allowances for acts of God.

Both contracts for goods and services are similar in the fact that they are both legal obligations that require consideration. Though the ideas behind these two types of contracts are similar, they are different in the governing laws that were created to enforce them. To avoid confusion, it is essential to consult with an attorney before writing or entering into a contract,

Do You Have to Have a Service Agreement in Writing?

Whenever entering into an agreement or contract, it is always important to have the agreement in writing to protect both parties and prevent disputes. Often times service contracts are entered into by families, individuals, or small businesses who may conduct business on handshakes.

What Do You Do if a Contract is Broken?

In the event things don't work out as planned, one party may feel the need to get out of the contract. If the other party breaks the contract you may want to seek compensation in small claims court.

Service Contracts By Industry

Many industries utilize service contracts. Some of the industries where it is recommended to have a service contract include:

  • Writers, photographers, and creatives – Graphic design, freelance writing, and editing contracts.
  • Construction and home improvement – Carpentry contracts, construction agreements, and construction contracts.
  • Event planning – Bartending and catering contracts.
  • Cleaning and landscaping – Housekeeping agreements and interior design contracts.
  • Human resources and office personnel – Administrative services, financial services agreements, and human resources contracts.

If you need help with writing contracts for services, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.