Drawing up a proper service agreement can mean the difference between smooth business and complete chaos when the other party hasn’t kept to what you thought was a solid arrangement.
Also known as a service-level agreement, you’ll want to know that the individual or company you’re working with knows exactly what is required, when by, and for how much. Even though it’s not always legally binding, you’ll need to ensure the document is as clear as possible so the services you agree upon are delivered – this may require a solicitor.
Here at First4lawyers, our business solicitors are specialists in this area of employment law. So if you need help drawing up or reviewing a service agreement, please do not hesitate to contact us.
Failing to keep to service agreement could mean one party is in breach of contract, and legal action can be taken. Likewise, it might be that a disagreement arises during the life of the contract – at which point, solicitors experienced in goods and services disputes might be required.
What is a service agreement?
In business law, a service agreement sets out the rights and obligations of a person or company that has agreed to work for, or provide a service to, another business.
Unlike an employment contract, a service agreement is a more formal document. It focuses primarily on the performance and service quality a company expects from the other party and what will be exchanged in return for those services. It can also cover any specifics around dates, equipment requirements, and even intellectual property.
Service agreements may also be drawn up to specifically outline a company director’s relationship with a business. Since the recession of 2008, there has been greater onus on laws regulating directors’ relationships with their company, such as the Companies Act 2006. This legislation imposes various duties upon service agreements, such as:
- All service agreements longer than two years in length require shareholder consent.
- The company must keep a copy of the service agreement at its registered office for at least one year following its expiry or termination.
- A company must not make termination payments exceeding £200 without the permission from its shareholders.
- Any terms which attempt to excuse a director from liability for default, negligence, breach of duty or breach of trust are void in law.
I need legal advice with regard to service agreements – what should I do?
It is important to ensure that the terms of the service agreements drawn by your company have a strong legal basis, even though they may not be legally binding.
At First4lawyers, our highly-experienced team of business solicitors can help with drawing up service agreements that address and protect the needs of your company as a whole.
We can also use our expertise to review of your existing service agreements. This will help to ensure that the documents provide protection for your business and comply with current legislation.
To speak to one of our specialist employment law solicitors today, please contact an advisor at First4lawyers.