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If you are working in the construction field, then a Professional Services Agreement can help better protect your business. When providing a service, there’s always a risk of a thing or two going wrong. Clients can claim something different to what you agreed on, demand extra work and even refuse payment.
However, having the correct documentation prepared before running into trouble can be the difference between a quick solution or a lengthy dispute.
The consequences of not having an agreement prepared can mean you end up doing additional work for no charge, getting a bad reputation for your business, having to pay compensation and so forth. It’s always best to get things in writing.
So, if you’re working in construction, it’s wise to get a Construction Professional Services Agreement.
A Construction Professional Services Agreement:
- Provides details of the work to your clients
- Include any contract terms necessary to your agreements
- Promotes exclusivity (if this benefits your business)
- Can be used for multiple clients
If you are providing a construction-based service to clients, a Professional Services Agreement is highly recommended.
What Is A Professional Services Agreement?
A Professional Services Agreement (also referred to as a simple Service Agreement) is a contract between a business and their client. It is a legally binding contract that sets out:
- The service that is going to be provided to the client
- What the agreed upon payment for the service is
- The time frame within which the service and payment should be completed
As mentioned earlier, getting all your agreements in writing is highly advisable. Despite the fact that verbal agreements are legally binding, they continue to be problematic.
It’s hard to prove the existence of a contract that is not tangible and even harder to discern the terms of that agreement, if the parties seem to disagree on it at any point in time.
So, it’s wise to get the relevant terms in writing.
What Is Included In A Professional Services Agreement?
A Professional Services Agreement covers all the important details of the relationship between your business and client. As the name suggests, it covers commercial relationships of a more professional nature, so the terms covered will need to be tailored to these needs.
For example, the standard or quality of work expected may be higher than that of a standard Service Agreement.
A Professional Services Agreement usually includes:
- The scope of work to be completed
- Terms of the contract
- Payment
- Warranties
- Customer rights/duties
- Intellectual property
- Liabilities
- Dispute resolution
- Termination of the contract
- Force Majeure
The actual agreement will depend on the industry and the specific requirements of the business.
What Are The Different Types Of Professional Services Agreements?
Professional Service Agreements can be used in various industries. Some of the Professional Service Agreements we provide here at Sprintlaw include:
- Marketing Service Agreement
- Solar installation Services Agreement
- IT Services Agreement
- Directors Service Agreement
- Electrical Services Agreement
- NDIS Plan Management Services Agreement
- Delivery Service Agreement
- Cleaner Service Agreement
If you would like to learn more, chat to our friendly legal consultants today.
What About Exclusivity Clauses?
Professional Services Agreements formally bind the relationship between your business and the client. However, they do not exclude you from seeking other clients or your client from engaging with other businesses.
If you would like to limit who your client interacts with in order to attain more security for your business, then you could look into getting an Exclusivity Clause added to your agreements.
An Exclusivity Clause will limit interactions either by geographical location or product. The purpose of this cannot be to simply eradicate any possible competition, but rather, to ensure your business does not suffer any losses if the client decides to take their business elsewhere for the duration of your agreement.
| Example Paul owns a timber business, where he provides materials for his customers. Sandra runs a construction company and wants Paul to supply timber for the next 6 months. Paul agrees to this and draws up an agreement. Worried that Sandra could potentially leave their agreement if another business approaches her with an offer, Paul asks Sarah about adding an exclusivity clause to their agreement. Sandra agrees to this. According to the clause, Sandra will only purchase timber from Paul for the next six months and Paul will only supply timber to Sarah’s business in her locality. The exclusivity clause works to eliminate risk for the parties. |
If you are looking to benefit from a exclusivity clause in your agreements, then it’s best to discuss this with a legal professional.
Do I Need A Professional Construction Services Agreement?
It’s advisable to invest in a Professional Services Agreement for your construction business. The Agreement not only documents the relationship between you and your client, but iit also provides the additional coverage of ensuring your client is aware of expectations in writing, removing the risk of miscommunication.
The agreement will depend on the specific requirements of your business. For some business owners, getting a different Agreement per client is a waste of time, as their terms of business remain the same for each client.
In response, a Master Services Agreement can be prepared. In this case, there is one main agreement that is handed to every client. The only information that changes are the details of the job per client.
| Example Jane runs a home building service. Her business has a prototype of three different house designs. Once her clients pick a design they would like Jane to build for them, she hands them a Construction Professional Services Agreement. Jane uses a Master Agreement for each design, where the terms remain the same and are often attached to the back of the agreement for clients to read. The front of the agreement has the details that will vary from each client, such as their details, date of construction, location and other key details. |
Next Steps
A Construction Professional Services Agreement is a great way to protect your business while engaging with customers. To summarise, the agreement:
- Can be used as a Master Agreement with the circumstantial details only changing per client
- Is a legally binding contract between you and the client
- The agreement can be customised to meet your businesses requirements
- Exclusivity clauses can be written in to the contract
If you would like to learn more about getting a construction professional services agreement, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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