As a service provider, you want to protect your interests and ensure payment for your work when it is complete. An effective way to make this happen is to require clients to sign a service agreement. This document is designed to detail the services to be performed and the compensation to be paid. A service agreement ensures a service provider knows their compensation, and a client knows everything that will be done to ensure the work done is to their satisfaction.
You can download a service agreement template online, and in this article, we’ll describe what it usually contains.
Avoid Oral Service Agreement
Legal professionals advise people to avoid entering into an oral service agreement. Should a dispute occur between the customer and you, the terms and conditions of the oral agreement will be difficult to prove. When a business relationship involves a written agreement, a court is likely to uphold its terms and conditions even if it disagrees with what is in the service agreement.
Minimize Risk with a Service Agreement
Both the customer and you benefit from a service agreement. It will define the type and length of your relationship. A service agreement can make things go smoothly because all the important questions and possible issues will have been resolved prior to the start of the work. When all the parties involved in a service agreement honor their commitments, it significantly decreases the chances of an unpleasant experience or legal action taking place.
Personalize your Service Agreement
The relationship between your customer and you will be unique. It’s important both sides work to personalize the service agreement that will be in effect during the working relationship. Tech companies may have different agreement needs than a company that recycles trash. This personalization process could involve adding or removing necessary sections from a template service agreement for example.
Basic Information in a Service Agreement
A service agreement needs to clearly identify the service provider as well as the customer. There should be contact information contained within the agreement for both parties. A clear and detailed description should be listed for all services to be provided. The more details provided in this section, the less chances of any misunderstandings. It is also a good way for a customer to know what to expect and for you as the service provider to know what a customer expect of you in return.
Compensation Clause in a Service Agreement
The section of a service agreement covering compensation can be handled in many ways. Just to give a few examples, you can be paid by the hour, per week, each month or once a year. It’s also possible to be paid a certain amount at the beginning of a project with the remainder when it is finished.
It may be important to include certain terms in the service agreement including for instance a non-competition clause, a confidentiality clause, a non-solicitation clause. This will depend on the type of work being performed for the customer. Many companies will provide sensitive information because it is essential for certain types of services to be performed for them. This could include everything from marketing plans to scheduled release dates of products and more. A non-solicitation clause will prevent a service provider from trying to get a company’s employees to work at another business. A non-competition clause will keep the service provider from helping a company’s competition or starting a similar business and becoming the competition.
The law treats independent contractors differently than employees. It’s important to accurately establish this in a service agreement. The court system uses numerous factors to determine who is and is not working as an employee. A court will look at things such as who controls the work and work product. It will also look at who is providing the tools for the job as well as if expenses are reimbursed, the length of the relationship, if insurance coverage is provided and more.
You can hire a lawyer or professional to draft your service agreement, but you can also purchase a service agreement template online.