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Understanding The Key Terms In A Service agreement

Understanding The Key Terms In A Service agreement

Need to update your service agreement? Not sure where to begin? Read on to learn the essential terms that should be included in every service agreement!

1st October 2019

Selling Is Service and Service Is Service Agreements!

Are you thinking about updating your service agreement? Unsure what are the most important terms to include? A service agreement sets out the terms and conditions between you as the service provider and the recipient of your services. Drafting a service agreement is vital to protecting your business from liability. This article examines which terms are essential for a service agreement.

Provision of services

Furthermore, a provision of service term forms the most critical aspect of any service agreement. The provision of service defines the tasks a business will perform for its customers. For example, if your company builds websites, it might identify the scope of the website that you will produce for that business. This provision is essential because it forms the core of your relationship with the customer. In the case of a dispute, parties will often refer back to this term to define whether the work completed fell within the scope of the agreement. Therefore, always consider the wording of your provision of services term.


Second, to the provision of the services agreement term, payments and deposit terms should be included in almost every agreement. Most services will consist of some form of a deposit to secure the service. The agreement should also include a payment schedule that defines when a payment should occur. However, the term can also include measures for late-payments and lost deposits. Payment terms must be clear and precise to ensure that parties are aware of their responsibilities. Therefore, always consider the wording of your payment terms.

Warranty, alterations, and rejection of services in Service agreements

Furthermore, warranty, alterations, and rejection of services term are essential to any service agreements. A warranty is a written promise to replace a faulty product. If your company chooses to offer a warranty, it should be included in the service agreement. However, warranties differ from consumer guarantees. Consumer guarantees cannot be excluded and protects consumers. For more information about the effects of warranties, visit the ACC website. Alterations and rejections terms also provide a guide to the parties if a term in the agreement needs to be changed. 

Intellectual property

Furthermore, This provision outlines who owns the intellectual property in an agreement. Intellectual-property is an intangible property such as creativity, patents, copyrights. Typically, parties keep all intellectual property that they own. Intellectual property becomes incredibly essential in licensing agreements. This term prevents misuse and the parties from claiming ownership over your property. Therefore, intellectual property terms are crucial to securing your intellectual property.

Termination and dispute resolution clauses

All agreements should include some form of termination and dispute resolution terms. A dispute resolution term defines how disputes in agreement should be resolved. Typically, parties will choose the forum for the dispute to be close to their proximity, EG, in an NSW court. The types of dispute resolutions can include mediation, arbitration, and conciliation. Furthermore, if the parties can not resolve the dispute, a termination term may need to be employed. A termination term describes how to terminate the relationship and who is responsible for such an incident. If there is an illegal act from one of the parties, the other is entitled to end relationship. Therefore, these terms essential for dictating how relationships should be resolved.

Protect and serve

Thus, service agreements dictate a service-based business. This article has highlighted how important these agreements are for protecting parties interests. However, there are a variety of terms that this article has not explored. Therefore, always ensure that all aspects of your service are covered by your service agreement.

Joshua Cutrone

Josh is a Legal intern at Lawpath. He is a Commerce/Law student at Macquarie University. He has an interest in cyberlaw and blockchain technology.