A service agreement is a contract between the provider of services and the client. The contract legally binds the parties – the service provider and the client- and provides them security. Additionally, the contract includes the services provided by the company as well as the rights and obligations of both sides. What exactly is the definition of a service provider? Service providers are freelancers or contractors who can provide almost any type of deliverable. Additionally, it covers low-skilled labor to high-end consulting such as Branding consultants catering companies, child care providers, dog walkers, freelance accountants, stylists, graphic designers and much more.
Although it is a crucial element of any agreement or contract, many people aren’t aware of its significance. Before you begin working with your client, you must create an agreement of service to make sure that you have the same expectations for the work to be completed.
Understanding the ins and outs of service agreements will help you draft an efficient agreement that can benefit your business. We explain the definition of a service-level agreement, how they’re utilized, the terms it should contain, and some tips for writing the right one to meet your goals in business.
Why are we required to have an agreement for service? And what is included in it? Let’s look into it in detail.
Why do we require A Service Agreement, and what are the things included in the Service Agreement?
The use of sample agreements is essential to both service providers and the customer to ensure both parties have the same right to say and security. It doesn’t matter if it’s one-time delivery or long-term business relationships, having a service contract in hand will allow you to be prepared to face problems, and ultimately, you will have an equal voice and rights on the subject. What are the elements included in a service contract?
What are the terms an agreement of services includes?
While there are a variety of service agreements that are available in Singapore, they all generally have the same essential conditions. This section will look at the different components, providing an explanation for each one and the reason why it is required.
The scope and the nature of service (s) that are provided
Always provide a clear description of the obligations and responsibilities of each of the parties for the entire duration of the agreement. This clause is crucial and requires careful consideration when writing it, as the contract will be specific to what has been stipulated and signed.
Even if there were previous discussions with the other side about the services to be received or performed, it is crucial to outline the duties in full in the contract in order to avoid any confusion which can cause issues during the process.
The terms of remuneration comprise the terms of payment. They outline the exchange of money in exchange for services. Each service contract must clearly state the amount the service provider will receive at the time when the payment will be received, as well as the manner in which payments will be handled.
In line with the nature and scope of the services provided, the terms of payment should be clarified to avoid confusion and protect each party. The terms should also outline the requirements that the service provider must follow before they can receive their payment. In addition, they should define who is accountable in the event of a payment.
Intellectual property rights are created through the service provider’s engagement. When a service is offered, it is usually an end product made. This word clarifies whether the customer or service provider is able to assert a claim to ownership rights on any tangible product or intellectual property produced during the contract.
Here are some examples of what it could look like:
1/ Company Ownership:
Company holds all rights, titles and interests, including the intellectual property rights for the service and all the technologies that are associated with it, including the algorithms and methods that are developed for the company and all derivatives, modifications or enhancements in relation to any of the above developed by or for the company regardless of whether they were made or developed for the service.
2/ Ownership of Customer/Service Providers:
The Customer holds all rights, titles and interests, including the intellectual property rights in and over (a) content of the Customer content and (b) all information and reports supplied to the customer by the company based on an analysis of Customer content subject to the company’s rights inherent within the service.
3/ Indemnity clause:
If a service is executed, mistakes or accidents are sometimes possible regardless of whether someone intended it or not. Indemnity clauses have been put in place to safeguard one side if they are hurt in any way during the process of doing a job for them. They protect one from the possibility of the loss or damage that has been incurred or may happen.
Companies usually use indemnity clauses to ensure that they get a particular product or service or to safeguard themselves from being held liable. For instance, if you are involved in an activity that involves dangers, like skydiving or scuba diving, you will likely be required the ability to execute an indemnity clause that shields the business from liability if accidents occur prior to the receipt of the service.
4/ Termination clause:
The termination clauses establish the conditions and terms for the termination of a contract. The clause outlines how parties may be able to terminate the contract and who is accountable if the incident should occur.
Sometimes, the termination is unexpected, for instance, in the event that one party is guilty of an unlawful act or the service provider fails to perform the agreed-upon service completely. Also, those termination clauses allow both parties to end their relationship without any obligations tied to it.
5/ Conflict of interest:
A conflict of interest happens when an individual’s private desire, whether related to friends, family financial or social issues, can affect their judgment, decision-making or even actions. An agreement on conflict of interests stipulates that if there are potential conflicts, the interests should be made public, and if there is a conflict of interest during the contract, it must be reported. Additionally, it says that the contracting party must avoid having any conflicts of interest in the term of the contract.
So, here are a few items that should be included in the terms of the service agreement.
Strategies for Writing a Service Agreement
However, you do have an idea of what the format of a service contract is. It is crucial to adhere to specific guidelines when creating an agreement. These are:
- Ensure that you include the official names of both the service provider and the client. This will allow readers to identify who the person is.
- When you write the agreement, ensure that you mention the services offered by the company as well as the scope of work.
- The amount to be compensated must be clearly stated. Only then will both the service provider and the customer be able to determine the correct estimation of the amount of compensation.
- Indicate who owns the rights in full. This will assist in avoiding legal disputes over rights of ownership.
- Provide confidentiality, if required. In this way, the service provider will not divulge confidential information regarding their job, company and so on.
- Make sure to include the limits on liability, like insurance requirements, if necessary.
- After all the details are clear, the agreement is legally binding and becomes effective the moment they sign it.
Having a master service agreement is crucial to the smooth operation of your business.