Posted by Minna Boyle on 4 December 2018
When you’re running a business, it’s important to have a contract with your customers. But so many types of customer contract exist – Client Agreements, Consulting Agreements, Service Agreements, Business Terms & Conditions and various others. What’s the difference?
The truth is, there’s no big difference between all these customer contracts. These are all similar types of agreements that fulfill a similar function: to form a contractual agreement between your business and your customers. We’ll have a closer look at Service Agreements in this article.
What’s the Difference Between Service Agreements And Terms & Conditions?
Service Agreements are Business Terms & Conditions that you use when your business is offering a service. The name you use is not too important. Whether you call it a Service Agreement or T&Cs, it is a contract setting out the terms and conditions by which customers engage your business.
When Do I Need A Service Agreement?
If you’re running a business that provides services to customers, it’s always a good idea to have a Service Agreement in place. It will help clarify what the role and responsibilities of you and your customer are, and reduce the chance that a dispute will occur. It can also help to limit your liability if something goes wrong, secure your revenue streams and provide other important protections and limitations specific to your business.
How Do I Use It?
Service Agreements are sometimes written as a formal contract with your customers to be signed by both your business and your customers.
However, it’s often easier to have your Service Agreement written in a way so that they can just be attached to the back of an invoice, form or a proposal, and are drafted so that your customer can accept the terms without needing to sign it.
Rather than having a signing block, Service Agreements often include a sentence that says something like: “You will be taken to have to have accepted these terms and conditions if you order, accept or pay for any services provided by us after receiving or becoming aware of these terms.” – and yes, this can be a valid contract!
Service Agreement Example
Alli runs a web design business. Before building a website for a new customer, Alli writes up a proposal for the client which includes details of the website to be built and the price payable. Alli attaches a Service Agreement to the proposal, which include terms detailing how payments are to be made, what happens if a delay occurs, who will own intellectual property in the website, limitations and disclaimers about Alli’s service, and rules regarding how the agreement can be terminated. The Service Agreement states that by paying for the proposal, the client will be taken to accept Alli’s standard terms. This way, if there is ever a dispute about the scope of the services, Alli can simply refer back to this proposal and the standard terms.
What’s In A Service Agreement?
Here are the sorts of issues that are typically covered in a Service Agreement.
- BUSINESS OBLIGATIONS – What is the scope of the services to be provided by the business? Are there any limitations on the services? What happens if there are changes to the services?
- CUSTOMER OBLIGATIONS – What will the business require from the customer in order to perform the services? What happens if this is not provided?
- PAYMENT – When does payment need to be made? What is the process for payments? Are there any late fees?
- INTELLECTUAL PROPERTY – Who will own the intellectual property in work products that are created for or provided to the customer?
- LIABILITY – To what extent your business be liable if something goes wrong or someone suffers loss as a result of the services?
- TERMINATION – How can either party get out the agreement? What is the effect of termination – what happens to outstanding fees and partially completed work?
- DISPUTE RESOLUTION – What happens if there is a dispute? Is there a process that needs to be followed (eg mediation) before the dispute is taken to court?
Need Help With A Service Agreement?
Putting together a Service Agreement can seem like a daunting process, as it’s hard to know what you should put in it and how to word it. It’s a good idea to invest in a lawyer to assist you with this process, as this one-off cost can help prevent disputes, misunderstandings and save you from problems and headaches in the long run.
At Sprintlaw, we have a team of experienced lawyers who can assist with your Service Agreement and other legals your business may need help with. Get in contact with one of our consultants for a no-obligation chat about how we can help.