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A Professional Services Agreement is a way for service providers to manage the expectations of their clients and protect their business from disputes.
It’s worth noting that these are actually the same as standard Service Agreements, but a Professional Service Agreement is often tailored to the needs of people working in professional industries.
If this sounds like your business, consider the following:
- What should the agreement cover?
- Does my business need a Professional Services Agreement?
- What is the scope of my agreement?
- Is my industry considered a Professional Service?
A Professional Service Agreement is beneficial for almost any business that offers a service, however, the agreement itself will depend on the specific circumstances. Therefore, it’s advisable to always consult a lawyer to draft one for you.
In this article, we’ll go through what a Professional Services Agreement covers and how it can protect your business..
What Is A Professional Services Agreement?
A Professional Services Agreement is a contract that businesses provide to their clients to legally bind their commercial relationship. Put simply, it provides more specific detail around the services being provided to the customer, how they are expected to pay for those services and how liability will be app. any other details around liability.
A Professional Services Agreement can also be used as a ‘Master Services Agreement’. This means that instead of having a new agreement for every client, the same agreement is used for all services, and it outlines all the information required.
The only information that changes for each agreement are the names, dates and other specific details of the arrangement.
Additionally, if you have a business that doesn’t engage with new clients regularly, then a new agreement for each client may make more sense.
What Does A Professional Services Agreement Cover?
A Professional Services Agreement will typically cover:
- The scope of the services being provided and any deliverables
- Payment
- Deadlines
- Duties of the customer
- Obligations of the business
- Warranties
- Liabilities
- Confidentiality
- Owners of any intellectual property
- Dispute resolution methods
- Process regarding events occurring out of the control of both parties
- Ending the contract
Like we mentioned, each Agreement will be different depending on the business’ needs. It’s wise to chat to a lawyer about the specific clauses you want to include to protect your business, as this also depends on your specific industry.
Do I Need A Service Agreement?
A Service Agreement will offer a greater level of protection for your business. It works by clarifying the exact scope of the services your business offers to help ensure there are no misunderstandings with clients. They can also help decrease the chances of costly legal disputes arising later down the track.
If you operate a business that offers services to clients, then a clear Service Agreement is strongly recommended.
| Example Jemma is a professional caregiver for children. In her years of experience, Jemma has found the expectations of her clients are often hard to manage. Jemma sees a lawyer about drawing up a Professional Services Agreement. Together, Jemma and her lawyer create an agreement that is specific to Jemma’s business. The agreement outlines the specific tasks Jemma can do with the children such as taking them to the park and relevant housekeeping duties. Jemma now goes through the agreement with her clients thoroughly before asking them to sign it. The agreement also sets out the terms for invoicing her clients, when payments are due and other key terms relevant to her services. |
How Do I Determine The Scope Of A Service Agreement?
The scope of work in a Service Agreement will depend on the type of business you operate and the industry your business operates in. No two businesses are the same, therefore, no two service agreements will ever be identical. A carpenter’s Professional Services Agreement will look very different to that of an IT consultant as the nature of their duties differ greatly.
Usually, a scope of work will cover:
- A description of the service and deliverables being provided
- Fees
- Key dates and deadlines
When creating a Professional Services Agreement, it’s important to be as detailed as possible (this includes the wording of certain clauses, too!). You don’t want to mislead your clients in the wrong direction and set false expectations.
Seeking the help of a legal professional is highly recommended. Our expert lawyers at Sprintlaw aid businesses with their Service Agreements, depending on the nature of your business activities.
Types Of Service Agreements
As mentioned before, the kind of service agreement will be specific to the business or the industry it operates in Let’s go through the different types of Service Agreements you may have.
Marketing Service Agreement
Marketing is a broad industry, so there are lots of services that can be covered. A Marketing Services Agreement outlines the specific services that are to be provided to a client , such as managing social media, content creation or strategy development.
It might also outline certain rights around the use of IP with clients. This all really comes down to the specific services you’re offering.
Director’s Service Agreement
Directors are integral to the smooth running of a company. If you have appointed a director, a Director’s Service Agreement is a great way to ensure everyone is on the same page about the director’s duties and responsibilities.
This can also encourage people within the company to raise concerns if the director is breaching any of their duties or any rules set out in the Company Constitution.
Healthcare Provider Service Agreement
There are strict legal regulations for any employee in the health industry. For example, businesses collecting health information are required to have a Privacy Policy, even if their annual turnover is less than the threshold set out in the Privacy Act.
A Health Service Provider Agreement is integral in making sure both the service provider and consumer are clear on expectations. Alternatively, if you provide healthcare services remotely, then a Telehealth Services Agreement may be more suitable for you.
When Do I Need A Professional Services Agreement?
You will need to have a Professional Services Agreement if your business offers skilled services, such as software development. As a general rule, Professional Services Agreements should be given to clients and signed by them at the beginning of the relationship, prior to either party performing their duties.
| Example Katrina is a web designer who currently works as an independent contractor. Since her job requires a certain level of skill and expertise, she provides a Professional Services Agreement to all her clients so they have an understanding of the level and scope of the services she provides. Katrina ensures that once a client has expressed an interest in her services and wants to move forward with the relationship, she customises the specifics of the Agreement to the client and goes through it with them. If they choose to sign it, a working relationship is then established between them. |
Key Takeaways
A Professional Services Agreement will aid in protecting your business from disputes and assists in keeping your relationship with clients positive. It’s always a good idea to chat to a lawyer before drawing up an Agreement.
So, what are the main takeaways?
- A Professional Services Agreement is a contract between a service provider and their client
- The specifics of the agreement will depend on the business and the industry
- The agreement can be reused by adjusting the details specific to a client
- A scope of work will outline the important details regarding the service
- It’s usually good practice to present a client with a service agreement prior to beginning a working relationship with them
Check out some more of our service agreement packages below:
- IT Services Agreement
- Solar Installation Services Agreement
- NDIS Plan Management Services Agreement
- Delivery Services Agreement
If you would like to discuss getting a 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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