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  • Calendarlast updated June 2019
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Document Overview

A Services Agreement sets out the terms and conditions between you as the service provider and the recipient of your services. If your business is providing services, or you are looking to provide services to another entity, you need to set out the terms and conditions of those services. A Services Agreement sets out, in writing, terms including the services to be provided, how and when the services will be provided, and payment details regarding the services. It can also help prevent disputes arising throughout the term of the agreement.

Use this Services Agreement if:

  • You would like to provide services to another entity; or
  • You would like to receive services from another entity.

What does the Services Agreement cover?

  • Provision of services;
  • Materials;
  • Timing;
  • Pricing;
  • Payment;
  • Warranty, alterations and rejection of services;
  • Confidentiality;
  • Copyright and intellectual property;
  • Non-solicitation of personnel and clients;
  • Limitation of liability and waivers;
  • Mediation; and
  • Termination for provider and recipient.

Other names for Services Agreement include:

  • Consultancy Agreement; 
  • Purchaser Agreement; 
  • B2B Agreement;
  • Buyers Agreement; and 
  • Services Contract. 

What’s the difference between a Service Agreement and a:

a) Service Level Agreement?

b) Contractor Agreement?

c) Consultancy Agreement?

Service ‘level’ agreements are different to Service Agreements. A service level agreement outlines the level of service the customer should receive from provider. Usually, such a level is outlined through various performance measurements. Unlike Service Agreements, they do not regulate how the service is to be provided or delivered. Service Agreements instead are contracts between parties focussed on the providing of a service, they do not necessarily include the level of service required, rather that the service is performed.

A Service Agreement focuses on the performance of services by the provider to a third party. The agreement is often wider than a contractors agreement because the agreement usually sets out the rights and obligations provided by between the two parties. A contractor agreement on the other hand will be more job specific, often these contracts have specific terms for the work being completed and include set periods of time, payment and service. Both agreements can be implemented between both businesses and individuals.

A Service Agreement is also different to a consultancy agreement. Consultancy agreements are used specifically for professional consulting services and therefore include specific clauses surrounding the rights and obligations of professional services provided. They are like Service Agreements but are tailored to the service provided by a consultant to a client.

Is a Service Agreement legally binding?

A Service Agreement is a contract between two parties, so yes it is legally binding. If the Service Agreement is not performed as promised, it will be likely the agreement is breached. Essentially, it sets out the terms of service agreed to between the parties in writing so each party understands their rights and obligations.

What can I do if my Service Agreement has been breached?

Primarily, it will be important to determine where the breach has occurred. Once this is understood, it is generally better that both parties come to an alternative agreement as to the steps forward. This might be in the way of completing of services differently, in a different time period, compensation for damage incurred or a refund for work. In some cases where a Service Agreement is breached it may be best to obtain legal advice. Where a compromise cannot be reached between the parties or irrevocable damage has occurred is may be best to engage with a lawyer to determine which party is in the wrong or whether an amicable outcome is possible.

How does a Service Agreement deal with liability?

A Service Agreement will outline obligations by both parties to the contract, if either party breaches the agreement they may be liable. Depending on the agreement, a service contract will therefore limit or impose liability on either party. Service contracts may include clauses that reduce liability on the half of the provider where damage is incurred. For example, suppliers may enforce ‘exclusion clauses’ to exclude implied warranties, liability for consequential losses based on their services or liability to replace goods or services where a warranty is breached. Besides this, the Service Agreement may also include a ‘defect liability period’ which enforces the period of time which a customer can argue there is a defect with the product or service. Ultimately, there are many different ways a Service Agreement may deal with liability.

Who generally owns the intellectual property between a client and contractor?

Generally, intellectual property created by an individual will be owned by them, unless the rights are assigned through some sort of agreement. Therefore, where a contractor does work for a client, the intellectual property will be held by them unless the rights are assigned to the client through a written agreement. Most contractor agreements will include provisions assigning applicable intellectual property to the receiver of the service.

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