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4 Elements to Include in a Service Agreement

SERVICE AGREEMENTFor a service provider, there are risks associated with beginning a new client relationship. If you take payment upfront, the client may demand more work than should be included in the price. If you wait to be paid after the work is provided, the client may refuse to pay. Owners of service businesses should notice this and realize that a Service Agreement can establish your rights and responsibilities extremely effectively.[1] By spending the effort to create this important contract, you can avoid future headaches and frustration.

Four elements you need to include in a Service Agreement

  1. Job specifics

The first item you want to discuss in your Service Agreement is the scope of the services you will provide. Specifically outline what you plan to do, when you plan to have it completed, and who will own the finished product. Ownership rights are particularly important for freelancers. If you maintain ownership rights of your finished product, your client will not be legally able to modify it in the future. However, if your client has ownership of your work, they will be able to modify it themselves whenever they want. 

  1. Payment terms

Before you start working with your client, make sure your Service Agreement outlines your payment terms.[2] Specify if and when mid-project payments are supposed to be completed and what the consequences will be if payments are not made on time.

If you are planning on working on a lengthy project, it’s a good idea to break the project into billable sections to ensure you don’t pour your time and skills into a client that doesn’t end up paying. However, if there is no clear division point for your project, you might want to set a maximum dollar amount that your client can accrue before billing. This will also prevent you from pouring time and energy into a project that doesn’t pay.

  1. Communication

Some clients need more attention than others. To prevent a client from taking over your nights and weekends, it is important to specify working hours when your client may reach you. One way to manage this is by charging a premium rate for emergency calls after-hours. If a client abuses your time, at least you will be well compensated. You can also include expectations for frequency of reporting, and how long a client can expect for you to respond. By including these points in your Service Agreement, you set expectations and prevent complaints if you do not respond to late-night or weekend calls or emails.

  1. Termination

Even good things must come to an end. However, if you have a client relationship that goes badly, either you or your client may want to end the relationship. It is critical to include information about what events lead to a breach of your agreement, whether by you or the client and your rights and responsibilities. A service agreement should address issues like emergencies or serious illnesses that might necessitate a sudden termination of the contract. Defining the way the relationship will end, will save you from future frustration and confusion.

A thoughtful Service Agreement will leave little question about how you plan to conduct yourself and what you expect from your client.

Do You Want to Create the Best Terms of Service Agreement?

If you want to create the best Terms of Service Agreement, you should get help from a skilled business lawyer. At J. Muir & Associates, we are able to help you create important business documents and clear contracts. By spending a little extra time creating these documents, it could save you from a future visit to a courtroom. Give us a call today at 786-533-1100 or contact us online to ask any questions you might have about Terms of Service Agreements.

 

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