Understanding IT Services Agreements

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If you’re a business providing IT services to clients, it is important to get in place an IT Services Agreement to protect your interests and manage your relationships with your clients.

A comprehensive IT Services Agreement covers various aspects of your arrangement with your clients, from payment to intellectual property and confidentiality.

In this article, we’ll walk through what an IT Services Agreement is, why you need one, and what it covers.

What Is An IT Services Agreement?

IT Services Agreements set out the terms and conditions on which your clients engage your IT services.

The contents of your IT Services Agreement will vary depending on your business and the scope of services you’re providing. It could include managed services, hosting services, IT consulting and more.

Typically, your IT Services Agreement will include provisions that give a clear outline of what services you’re providing, details about payment and confidentiality, and limitations specific to your business.

Why Do I Need An IT Services Agreement?

If you’re an IT business, an IT Services Agreement solidifies your business deals, secures your revenue streams and protects your liability. It sets out the terms of engagement and ensures clear expectations with your clients about your services and fees.

A good IT Services Agreement will include as much detail as possible about the arrangement. This will ensure both parties are on the same page about what’s been agreed to, and will help to avoid disputes down the track.

What’s Included In An IT Services Agreement?

Scope of Services

This section of the agreement sets out the scope of services to be provided by the service provider. It is a crucial part of the agreement, as it makes it clear what services are to be provided and when they’ll be delivered.

The scope of services details what services you will provide, when you will provide them, and how you will undertake this. It also serves to highlight what services you will not be providing to your client.

Additionally, other specific terms can be incorporated into the agreement, such as creating a schedule of milestones to be achieved, providing progress updates on the project, or “acceptance test clauses” which ensure that the service has been cleared for any issues and is of an acceptable standard.

Payment

Payment clauses specify how and when payment for your services will be made, including the terms of any payment structure.

All terms relating to payment will be found in this section of the agreement — such as if you require payment upfront, if you will invoice the client upon completing certain milestones, or if you will receive a fixed sum periodically.

Here, it’s also important to break down the figures to demonstrate to your clients how you will earn your fee and how you work. This also provides an opportunity to show your clients that you are aware of their right to value.

Making sure your payment terms are clear and easy to understand is important to ensure that you get paid and build a good relationship with your clients.

Intellectual Property

In providing IT services for clients, you may be involved in developing and constructing new software and applications for them. In this case, who will own the rights to any new developments you produce in the course of your engagement with the client?

This is where the intellectual property section of your IT Services Agreement comes in. It should clearly set out who will own any new IP developed in the project, as well as ownership of existing intellectual property that the parties developed before their relationship.

Client Responsibilities

While there is much to be expected from your services and performance in working for the client, an IT Service Agreement should also set out what you’ll need from your client to fulfill your obligations.

Some things you can expect your clients to provide you with include:

Data (as an aside, it might be a good idea to get a Privacy Policy if your business will be collecting a lot of data from your client)
Materials
Access to their systems

Sometimes, the timely delivery or completion of your services will depend on the client’s co-operation, so an IT Services Agreement should clarify your rights and what will happen if your client is making it difficult for you to satisfy your responsibilities under the agreement. .

Confidentiality

When you’re doing work for a client, they’ll likely need to give you access to their personal or business computer systems, which may hold sensitive information relating to themselves or their business (such as clients lists, price lists and other personal or business secrets).

It is good practice to promise your clients that you will maintain the confidentiality of all personal and company information you have access to in working for them, and that this information will only be used for your work for them.

If you’d like to learn more on the importance of maintaining confidentiality, check out this article.

Termination

It is important that when clients engage your IT services and something goes wrong, you know your rights to terminate the agreement, and you’re aware of the available courses of action in the event of a dispute.

Even if you have a long standing relationship with your client, preparing for when things don’t work out is always a good idea.

Key Takeaway

Getting your IT Services Agreement right is important for knowing where you and your client standin the agreement. It’s also a good way of laying out the scope of services you provide, limiting your liability, and providing terms for confidentiality and intellectual property.

A strong IT ServiceS Agreement will help you complete your work feeling protected and satisfied in knowing what you and your clients can expect from each other.

If you need help establishing or improving your business’ IT Services Agreement, it’s wise to contact a lawyer. You should avoid using standard templates to make sure your terms are up to scratch and to save yourself from potential headaches in the future. Contact us if you’re keen to learn more!

Adam Watters

Adam is a legal intern at Sprintlaw. He is currently completing his double degree in Law and Commerce at Macquarie University. With interests in contracts and accounting, he is looking to complete further study and gain experience in the area of commercial law.

Embeth Sadie

Embeth is a senior lawyer at Sprintlaw. Having previously practised at a commercial litigation firm, Embeth has a deep understanding of commercial law and how to identify the legal needs of businesses.