Looking to create your service contract? A service contract template is used to formalize your business relationship with the service provider or client. It covers areas such as consulting, remodeling, photography, cleaning and so on. Below you will find a service contract template available for your needs with a single click.
What is a Service Contract?
A service contract is a legally binding agreement in written form between two parties, where one party promises to provide a specified service to the other party in lieu of monetary compensation.
The service contract shall lay out the service scope, pay terms, confidentiality, liability insurance, amendment, termination, etc in case of disputes concerning the business relationship.
A service contract may serve as legal protections for both the service provider and the service receiver in the event that any party is at fault.
A service contract is also known as service agreement, general service contract and service level agreement.
Types of Service Contracts
There are many types of service contracts used in practice, based upon the type and the terms of the service that is provided. Check the common ones below:
Time and Materials Contracts:
Time and Materials contracts are one of the most popular service contracts used for professional service engagement. In a Time and Materials contract, the service provider may bill the client for the amount of work being performed by hour or day, as negotiated on by both parties beforehand.
Time is tracked for the individual provider working on the project.
The service provider shall include any expenses incurred as part of the project in the bill as well.
In a fixed-price contract, the client and the service provider negotiate a fixed price for work deliverables, which shall be well defined to ensure the accuracy of the estimate.
Any risk involved in the project is shifted entirely towards the service provider for the agreed amount, regardless of the effort required.
Not-to-exceed contracts are a hybrid of a time and materials contract and a fixed price contract.
The billing of a not-to-exceed contract occurs in the same manner as a time and materials contract yet with a cap on the amount of money the service provider can charge for the services.
If the billing reaches this maximum cap, the service provider is no longer allowed to bill the client, yet still need to complete the required deliverables at no extra charges than the max cap.
Not-to-exceed contracts are highly beneficial for the client and least preferable for the service provider. This type of service contract may come in handy in case the time and material charges are less than the maximum cap, where service providers will be paid for the work done only.
Exclusively used for lawyers in earlier times, retainer based contracts are now applicable to other services as well.
In a retainer-based contract, the client pays the service provider an upfront amount for the delivery of a particular service during a set time period.
If the billing of the service provider is less than the amount paid by the client up front, the service provider is allowed to keep the balance. In case the billing exceeds the amount paid by the client, the service provider can invoice them for the additional costs incurred.
Recurring Service Subscription
In a recurring service subscription, the client pays the service provider with a monthly fee for recurring deliverables. Generally, these service subscriptions do not have any variations in the deliverables.
Most software solutions and other web services offered on the internet follow the recurring service subscription model.
Managed Service Contracts
A managed services contract is a binding agreement between a managed services provider (MSP) and its client that specifies both parties' responsibilities, including service scope, minimum response time and liability protection for the MSP.
In a managed service contract, the service provider provides a specific level of service to the client for an extended period of time.
Examples of this type of service contracts can be found in outsourced IT services, maintenance contracts for equipment, and outsourced bookkeeping services.
What is Included in a Service Contract?
Inclusions of a service contract may vary depending on the service seeker, service provider, service type,as well as the particular wishes of all parties involved.
Here are several key provisions to look for when entering into a service agreement,
Identification of parties:
A service contract shall clearly identify the service provider and the client receiving the service.
Description of Service:
A service contract shall describe the type of service that is being promised, as well as the service scope.
Timeframe of Service:
A service contract shall include the duration of the service as well as penalties for late work (if any).
Quality of Service:
A service contract shall specify demands for service quality as well as compensations for poor service, in consideration of possible disputes regarding the quality of service being promised after services are completed.
If agreed by both parties, a service contract may include an early termination clause, which states the scenarios in which the service provider or the service seeker is allowed to end the contract before the service is completed fully.
Ownership of Materials:
The service contract shall specify which party will retain ownership rights of the materials produced during the service contract depending on what is agreed upon in the contract by both parties.
The Do’s and Don’ts of a Service Contract
When entering into a service contract, it’s vitally important to proceed with care.
- Do read the service contract carefully, including the appendices and exhibits (if any) within as they may contain important information. Consult an attorney if it’s a long-term business with a substantial budget.
- Do specify what exactly is covered in the service contract, what services shall be provided and what services should not be expected.
- Do avoid ambiguity and unclarity and make sure that all the points on the service contract are understood correctly by both parties.
- Do not agree to any terms of a service agreement that you do not understand, as they may not be in your best interest.
- Do not execute a contract unless all the blanks in the contract are filled completely. This prevents malicious elements from adding any unwanted provisions in the agreement without your consent.
Why Do I Need A Service Contract?
If you are the service provider:
A service contract proves useful in the way it documents pay terms, insurance clauses, and service scope, etc. when a service provider plans to perform services for his or her clients.
It ensures that the rights and interest of the service provider are legally protected in case of late payments or violation against the service contract from the other party.
If you are the client:
The client may add terms about confidentiality, non-solicitation, and non-competition regarding sensitive information about the client as well as his or her business in the service contract.
Under the service contract, the client is entitled to demand compensation or penalties for scenarios which include but are not limited to: late work, poor service quality, as well as non-performance.
It’s also possible to include additional clauses into the service contract, such as indemnity, return of property, liability, or legal expenses depending on your personal needs.
This is exactly where a customized contract template comes in handy. CocoSign helps you personalize your service contract with its attorney-drafted template!
I. The Parties. This Service Contract (“Agreement”) made ___________________, 20____ (“Effective Date”), is by and between:
Service Provider: ___________________, with a mailing address of ___________________, City of ___________________, State of ___________________ (“Service Provider”),
Client: ___________________, with a mailing address of ___________________, City of ___________________, State of ___________________ (“Client”),
Service Provider and Client are each referred to herein as a “Party” and, collectively, as the "Parties."
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises and agreements contained herein, the Client hires the Service Provider to work under the terms and conditions hereby agreed upon by the Parties:
II. Term. The term of this Agreement shall commence on ___________________, 20____ and terminate: (check one)
☐ - At-Will: Written notice of at least ____ days’ notice.
☐ - End Date: On ___________________, 20____.
☐ - Other: _______________________________________________________.
III. The Service. The Service Provider agrees to provide the following: _____________________________________________________________________
Hereinafter known as the “Service”.
Service Provider shall provide, while performing the Service, that he/she/they shall comply with the policies, standards, and regulations of the Client, including local, State, and Federal laws and to the best of their abilities.
IV. Payment Amount. The Client agrees to pay the Service Provider the following compensation for the Service performed under this Agreement: (check one)
☐ - $____ / Hour
☐ - $____ / per Job. A “Job” is _______________________________________.
☐ - Other: _______________________________________________________.
Hereinafter known as the “Payment Amount”.
V. Payment Method. The Client shall pay the Payment Amount: (check one)
☐ - When Invoiced
☐ - Daily
☐ - Weekly
☐ - Bi-Weekly
☐ - Monthly
☐ - Other: _______________________________________________________.
Hereinafter known as the “Payment Method”. The Payment Amount and Payment Method collectively shall be referred to as “Compensation”.
VI. Retainer. The Client is: (check one)
☐ - To pay a retainer in the amount of $__________ to the Service Provider as an advance on future Services to be provided ("Retainer"). (check one)
☐ - Retainer is Refundable.
☐ - Retainer is Non-Refundable.
☐ - Not required to pay a retainer before the Service Provider is able to commence work.
VII. Inspection of Services. Any Compensation shall be subject to the Client inspecting the completed Services of the Service Provider. If any of the Services performed by the Service Provider pursuant to this Agreement are defective or incomplete, the Client shall have the right to notify the Service Provider, at which time the Service Provider shall promptly correct such work within a reasonable time.
VIII. Return of Property. Upon the termination of this Agreement, all property provided by the Client, including, but not limited to, cleaning supplies, uniforms, equipment, and any other items must be returned by the Service Provider. Failure to do so may result in a delay in any final payment made by the Client.
IX. Time is of the Essence. Service Provider acknowledges that time is of the essence in regard to the performance of all Services.
X. Confidentiality. Service Provider acknowledges and agrees that all financial and accounting records, lists of property owned by Client, including amounts paid, therefore, client and customer lists, and any other data and information related to the Client’s business is confidential (“Confidential Information”). Therefore, except for disclosures required to be made to advance the business of the Client and information which is a matter of public record, Service Provider shall not, during the term of this Agreement or after its termination, disclose any Confidential Information for the benefit of the Service Provider or any other person, except with the prior written consent of the Client.
a.) Return of Documents. Service Provider acknowledges and agrees that all originals and copies of records, reports, documents, lists, plans, memoranda, notes, and other documentation related to the business of the Client containing Confidential Information shall be the sole and exclusive property of the Client and shall be returned to the Client upon termination of this Agreement or upon written request of the Client.
b.) Injunction. Client agrees that it would be difficult to measure damage to the Client's business from any breach by the Service Provider under this Section; therefore, any monetary damages would be an inadequate remedy for such breach. Accordingly, the Service Provider agrees that if he/she/they should breach this Section, the Client shall be entitled to, in addition to all other remedies it may have at law or equity, to an injunction or other appropriate orders to restrain any such breach, without showing or proving actual damages sustained by the Client
c.) No Release. Service Provider agrees that the termination of this Agreement shall not release him/her/they from the obligations in this Section.
XI. Taxes. Service Provider shall pay and be solely responsible for all withholdings, including, but not limited to, Social Security, State unemployment, State and Federal income taxes, and any other obligations. In addition, Service Provider shall pay all applicable sales or use taxes on the labor provided and materials furnished or otherwise required by law in connection with the Services performed.
XII. Independent Contractor Status. Service Provider acknowledges that he/she/they are an independent contractor and not an agent, partner, joint venture, nor an employee of the Client. Service Provider shall have no authority to bind or otherwise obligate the Client in any manner, nor shall the Service Provider represent to anyone that it has a right to do so. Service Provider further agrees that in the event the Client suffers any loss or damage as a result of a violation of this provision, the Service Provider shall indemnify and hold harmless the Client from any such loss or damage.
XIII. Safety. Service Provider shall, at his/her/their own expense, be solely responsible for protecting its employees, sub-Service Providers, material suppliers, and all other persons from risk of death, injury or bodily harm arising from or in any way related to the Services or the site where it is being performed (“Work Site”). In addition, Service Provider agrees to act in accordance with the rules and regulations administered by federal law and OSHA. Service Provider shall be solely responsible and liable for any penalties, fines, or fees incurred.
XIV. Alcohol and Drugs. Service Provider agrees that the presence of alcohol and drugs are prohibited on the Work Site and while performing their Services. If the Service Provider or any of their agents, employees, or subcontractors are determined to be present or with alcohol or drugs in their possession, this Agreement shall terminate immediately.
XV. Successors and Assigns. The provisions of this Agreement shall be binding upon and inured to the benefit of heirs, personal representatives, successors, and assigns of the Parties. Any provision hereof which imposes upon the Service Provider or Client an
obligation after termination or expiration of this Agreement shall survive termination or expiration hereof and be binding upon the Service Provider or Client.
XVI. Default. In the event of default under this Agreement, the defaulted Party shall reimburse the non-defaulting Party or Parties for all costs and expenses reasonably incurred by the non-defaulting Party or Parties in connection with the default, including, without limitation, attorney’s fees. Additionally, in the event a suit or action is filed to enforce this Agreement or with respect to this Agreement, the prevailing Party or Parties shall be reimbursed by the other Party for all costs and expenses incurred in connection with the suit or action, including, without limitation, reasonable attorney’s fees at the trial level and on appeal.
XVII. No Waiver. No waiver of any provision of this Agreement shall be deemed or shall constitute a continuing waiver, and no waiver shall be binding unless executed in writing by the Party making the waiver.
XVIII. Governing Law. This Agreement shall be governed by and shall be construed in accordance with the laws in the State of ___________________.
XIX. Severability. If any term, covenant, condition, or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired, or invalidated.
XX. Additional Terms & Conditions. _______________________________________
XXI. Entire Agreement. This Agreement constitutes the entire agreement between the Parties to its subject matter and supersedes all prior contemporaneous agreements, representations, and understandings of the Parties. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all Parties.
IN WITNESS WHEREOF, the Parties hereto agree to the above terms and have caused this Agreement to be executed in their names by their duly authorized officers.
Client’s Signature _______________________ Date ____________
Print Name _______________________
Service Provider’s Signature _______________________ Date ____________
Print Name _______________________