Agreement & Contract

How to Draft a Service Agreement?

LegalKart Editor
LegalKart Editor 05 min read 269 Views
Last Updated: May 02, 2023
How to Draft a Service Agreement?

Oral understanding cuts both ways. It can be risky, but it can also be beneficial sometimes. However, while meeting various service providers, your client may get muddled up with the scope of work you’ve stated.                 

You may miss out on including significant information, for instance, when extra charges apply. These mistakes and lack of understanding can cause disputes and also lawsuits if they aren’t properly written down. Thus, it is important to have service agreements.

Read also What Are The Conditions to Expect In A Master Service Agreement?

The Need For A Service Agreement

When you buy things like a car, computer, etc., you usually get it straight away. It’s not like you have ordered something and you have to wait for it to arrive. You know precisely what you should expect and what you’re getting.

However, that may not be the case when you are buying a service. You can’t do there, what you do at a machine. There are various instances of long-term services for which the people pay, and they often pay the fee, or at least a part of it, long before they see what their money buys.

To cite an example, a developer can make customized software for a company. It may go through a lot many steps before delivering any work. Herein you will need to figure out what the company wants, design the software, install it, and test it and various other aspects.

A written service agreement will ensure that everyone is on the same page while the work is done. It also ensures that both people get their decided fees within the decided time frame.

Agreements are not there for each and every service. For instance, if you take your car to an oil change shop, you and the owner may agree on the price, what will be done, and when. But if the work is to be done over a long period of time, both parties need to write standards, goals, and prices to protect them. A large number of businesses and professionals are using service agreements.

Also read Master Service Agreement: How Is It Important in IT Outsourcing?

How to Write a Service Agreement?

The following steps will explain how to write a service agreement:

‘Customer Agreement,’  ‘Client Agreement,’  ‘service agreement,’ or some other title that best fits your situation should be the title of the agreement

The name of your company should also be there in the title. For instance,  ‘Listing Agreement,’ is a contract that real estate brokers make when they agree to help people search for homes for sale

Suppose you hire an accountant, they may something called a ‘Tax Preparation Agreement,’ and so on

A service agreement can have various parts that can be standard. In fact, you can make what’s called a ‘Template’ which will include most of the things you’ll need most of the time

You may need to change your template in order to suit the specific arrangements you need to make with a single customer. Mostly, you can fill in the blanks in your template decision even before starting over with each new client.

What does a Service Agreement Include? 

Certain businesses may need extra sections. However, in general, a service agreement should include the following sections and topics:

Description of the People who have Agreed to the Deal

The people who are involved, their names and addresses should be at the top of your agreement

There will be some more information about one or both of the parties. Whether it is a business, an LLC, a corporation.

Those who are working as the general contractor nay say, “This is a contract between Somesh Jain’s Beautiful Homes, which is a limited liability company and is based at 100 Main Street, and Vinita Jain, an individual who lives at 100 Pine Street.”

A Clear Description of What Will be Done

Just remember that you can’t change your fee if you end up doing more work.

For example, a caterer should know for how long they should be at the event, there would be how many servers, how many people are to be fed, and other details of the food.  

You should list everything that has to be used in the agreement. And state clearly, how much time it will take to complete the agreement. In this way, the caterer can cover the agreement’s cost. (for instance: if only organic food is to be served, the product may cost more than conventional produce, and clearly stating the food as organic will enable the caterer to take its added expense into account).

There Should Be A List Of Fees and Payment Schedules

Make it clear whether the charges are hourly or weekly or flat-rate per project. You may also make it clear whether the price includes things like travel costs for a consultant who will have to go to different places at work.

The Contract Should Have a Due Date and Expiry Terms

There should be a date when both parties have agreed to the terms of a contract. Very frequently, the effective date is on which the one both parties sign the contract.  

Besides, you should include a work schedule. At the bare minimum, work done on a project should contain start and finish dates. As a project moves through different stages or steps, you can list other due dates as well.

For an instance, in an IT maintenance contract, ongoing services usually last for a year or six months. When that period ends, there are options to renew the contract.

There Should Be A Place Where People Can Sign

Service agreements should always & always be signed and dated by both or all the parties so that no one can say later that they didn’t sign. Besides, it’s a good idea to have the signatures notarized, as well.

Also, read Know All About The Service Agreement.

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