Services Agreement: Definition, Top Terms to Know

What Is a Services Agreement?

A services agreement is a written contract between a service provider and a client. Also known as a service contract or a general services agreement, this document is legally binding and provides some level of protection for both the provider and the client.

This type of contract lists the services that the provider will perform and details the time frame and compensation for the project. Most service contracts also list the rights and requirements of both parties, including liabilities and confidentiality guidelines. Many also discuss dispute resolution in case either party breaches the contract.

When Do You Need a Services Agreement?

You can prepare a services agreement any time your firm provides services to another organization or when you contract another person or business to provide services for your organization. Services agreements can apply to either one-time deliverables during a limited time frame or ongoing partnerships over a long period of time.

No matter what your services agreement covers, you should always sign one before any consulting or other services commence. When you take the time to prepare a mutually beneficial services agreement in advance, you can set expectations and ensure protections for both parties.

What Is a Service Provider?

You may also refer to service providers as contractors or freelancers. They can provide almost any kind of intangible deliverables, from unskilled labor to high-level consulting. Although this label can apply to a wide range of professionals, some common examples of service providers include:

• Branding consultants
• Caterers
• Child care providers
• Dog walkers
• Freelance accountants
• Graphic designers
• Hairstylists
• Makeup artists
• Musicians and DJs
• Public relations specialists
• Web developers
• Writers and editors

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What Goes Into a Services Agreement?

No matter how customized a services agreement is, it typically includes standard information:

• Services: Explains the general nature of the services and often includes an attached schedule that discusses the scope of the work and the deliverables involved.
• Compensation: States the total amount or the periodic amount that the client agrees to pay the service provider in exchange for the work and may include an attached schedule.
• Term: Lists the start and end date or the number of days, weeks, or months the contract is in effect.
• Ownership: Clarifies whether the client or the service provider can claim ownership over any physical products or intellectual property produced during the project.
• Relationship: States that the service provider remains an independent contractor who is not employed by the client.
• Liability: Confirms whether the client or the service provider has limited liability for any aspects of the project.
• Insurance: Lists the type of insurance coverage the service provider must have, such as workers' compensation, commercial general liability, professional liability, or property insurance.
• Change in the Work: Specifies whether either party can change the scope of work and what procedure they must follow to do so.
• Confidentiality Clause: States whether either party must keep the project confidential.
• Noncompete Clause: Clarifies whether the service provider can work with one of the client's competitors.
• Nonsolicitation Clause: Specifies whether the service provider is prohibited from soliciting the client's customers or peers.
• Assignment : Clarifies whether the service provider may subcontract the project.
• Termination: Explains how many days' notice either party must provide before ending the agreement.

How Do You Create a Services Agreement?

To develop a services agreement, follow these seven steps:

1. State the service provider and client. Take care to list the legal names and include the mailing addresses for all parties involved.
2. List the services included. In the main body of the agreement, state the nature of the services concisely. In an attached schedule, describe the scope of the work and mention any deliverables.
3. State the compensation amount and outline the schedule. Along with the payment amount, include payment dates or frequencies.
4. Clarify which party retains ownership. Whether the services include physical goods or intellectual property (IP), state whether the service provider or the client assumes ownership.
5. Include any confidentiality or competition terms. If the client requires the service provider to refrain from discussing the project or working with competitors, state any guidelines the provider must follow.
6. List any applicable indemnity or liability limitations. Include any insurance requirements.
7. Execute the agreement. Once both parties agree to the terms and sign the contract, the services agreement becomes legally binding.

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Do You Need a Lawyer for a Services Agreement?

Whether you need to change a few details on a standard services agreement or you'd prefer to develop a completely custom contract, it's always important to have an attorney create the document. When you contract a lawyer to assist with your legal needs, you can get several important benefits:

• Customization: A contract template with standard language may not meet your needs, especially if you need to add extra clauses to your agreement. A lawyer can customize any aspect of your agreement while ensuring that the contract still protects your interests and binds both parties legally.
• Protection: A services contract should protect all involved parties and ensure that you avoid liability for outcomes that are beyond your control. By working with an experienced attorney, you can make sure you receive adequate protection while still retaining any recourse you may need.
• Negotiation: Depending on the complexity of your services contract, you may need to add more clauses or adjust the wording until both parties agree to sign. When you work with a lawyer to finalize your agreement, you can get knowledgeable advice throughout the contract negotiation process.

What Legal Considerations Apply to a Services Agreement?

Before signing a services agreement, it's important to understand what the contract means for you or your business. Keep these standard legal considerations in mind:

• Liability: A services agreement can limit liability for either party, but terms should be reasonable to stand up in court.
• Obligations: Clients must agree to work with the service provider by sharing required information and providing equipment or venue access.
• Rate Changes: Both parties should agree whether or not the service provider may change the rate and how much notice they will provide.
• Termination: Either party should be able to end the contract with a written notice, and the agreement should end automatically if either party violates the terms.

What Other Agreements Do Contractors or Freelancers Need?

Whether you're a contractor or your business needs to contract a freelancer, you may need several agreements to ensure your organization runs smoothly. Standard agreements for contractors and service providers include:

• Catering Agreement: Covers catering services for corporate, private, and other special events
• Child Care Services Agreement: Includes day care, after-school care, babysitting, and other child care services
• Consulting Agreement: Covers consulting services for one-time or ongoing projects
• Event Agreement: Includes venue rentals and event planning services for corporate and private clients
• Letter of Intent: Outlines organizations' or individuals' understandings or agreements and may be legally binding contracts
• Marketing Agreement: Covers marketing, advertising, and public relations services
• Performance Contract: Outlines musicians', singers', and dancers' agreement to perform at a venue or during an event
• Production Agreement: Includes media production services, such as art installations, photography shoots, or video editing

Whether you're a service provider or you need to contract a freelancer, the ContractsCounsel team can help you protect your business with a legally binding agreement. Receive a free proposal and get a services agreement that meets your organization's unique needs.