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How to write a service agreement

If you’re employing someone to deliver a service for you, you may want to write a service contract or agreement. It’ll give you a document signed by you both before work begins that lays out exactly what’s expected of them. Also known as a service level agreement, it makes things clear and can protect you if there’s a dispute.

Typically, there are a few specific things that every service agreement should include:

  1. An overview of the service
  2. Details surrounding payment
  3. Clauses, penalties and disputes
  4. Confidentiality and data protection terms
  5. Ownership rights
  6. Change clause
  7. Guidance surrounding liability and insurance

Explanations of what to write under each are below.

No two service agreements are necessarily the same. It’s always best to speak to an expert to ensure all the essential factors are covered. Our professional business law solicitors can answer any questions you have, and help you to create a service contract that meets the needs of your business. Get in touch with our team to find out more.

What to write in a service agreement

1.       An overview of the service

This section should describe the service being provided, and outline the quality, speed and efficiency you expect. It should also state the length that the service will last for and the schedule for delivery, including things such as if the supplier will work over weekends.

You should also clearly state what the notice period is, should either party want to terminate early.

2.       Details surrounding payment

Clearly outline the rate you’ll pay for the service, when you’ll pay, and how (e.g. bank transfer). This section should also include any terms that the service provider might have for you, like penalties for late payment and when they expect to receive a response to an invoice.

Add guidance about expenses and resources: whether or not you’ll provide these and, if so, on what terms.

3.       Clauses, penalties and disputes

You should make it clear what will happen if the service provider doesn’t deliver, and who they can speak to if they have any grievances.

If a conflict arises, this is the section that will give you an idea of what to do about it. If in doubt, get professional advice to make sure you have a proper process in place.

4.       Confidentiality and data protection

If you’ll be disclosing private details to the supplier, or they’ll have access to your company’s information, clearly outline your expectations around confidentiality. Detail what they are and aren’t allowed to share, and how long they will need to follow these guidelines for.

5.       Ownership rights

This is especially important if your service provider will be creating original material for you, such as design work. Clearly state who will own any work created for your business by the supplier. You should also state what will happen if these terms are broken. 

6.       Change clause

In this section, how or if either party can change the service contract. This allows for flexibility on both sides, if any unforeseen obstacles arise or circumstances change.

7.       Guidance surrounding liability and insurance

This section will vary greatly, depending on the service provided. However, it should clearly state who is liable for what, and who’s responsible for any insurance aspects. It might cover things like health and safety, and what sort of insurance is required, and in whose name.

Other things to include in a service agreement

Depending on what service is being provided, there can be a whole host of other factors you’ll need to include, to ensure all facets are protected in case something goes wrong.

Without a solicitor looking into your situation, it’s hard to know exactly what these might be. However, they could be things like:

  • An anti-soliciting agreement, to prevent a service provider attempting to hire your employees
  • Guidelines preventing the service provider from working for your competitors
  • Anti-bribery and anti-fraud policy
  • Specific clauses about the nature of the service itself or the location it is being delivered (i.e. environmental restrictions)

Depending on the nature and scale of a service contract, there can be a whole host of bespoke legalities that must be included to protect both you and the service provider. Our expert advisors will take the time to understand your situation and can help you move toward getting a service contract that suits the needs of your business.

For more information on creating business contracts, check out our guide about how to outsource business services.

 

Note: First4lawyers offers this information as guidance, not advice. Before taking any action, you should seek professional assistance tailored to your personal circumstances and not rely on First4lawyers’ online information alone