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How to Write a Service Contract Agreement

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❶A service agreement is a contract that specifically lays out a service that will be provided by one entity and the payment that will be provided by a second entity.

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What Is a Service Agreement?

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A service agreement is a contract entered into by two entities in which one agrees to provide a specified service to the other. It typically defines the boundaries of the service that is being provided and the compensation or payment that the service provider will receive. Signing a service agreement can help a project go more smoothly. It provides legal protection to both the service provider and the employer and ensures that everyone is agreeing to the same terms.

A service agreement might also be called a general service contract, a service level agreement, or a consulting services agreement. A service agreement can be used for marketing services, advertising services, testing services, consulting services, management services, or any other professional services where one person has agreed to provide a service to another.

A service agreement might also be a warranty feature offered with a product. A bond holds only one person to the contract, while a service agreement holds both parties accountable.

That way both parties are protected instead of just one. There are specific guidelines for what language and terms should be included in a service agreement to make it legally binding and to protect both parties. A service agreement is necessary any time a contractor sells his services or anytime a business purchases a service from another entity. A service agreement is especially important because services are harder to prove than a product. A service contract makes sure everyone understands what will be delivered and when.

Some services, such as marketing or advertising, are subjective. For instance, a marketing agency can provide their services without your business seeing a return.

This is where a service agreement can come in handy. It makes sure that both the marketing agency and your business know what the end result will be and the cost to get there. When working with a contractor or as a contractor, protection is necessary. Even a contractor with a great reputation can fail.

If something goes wrong, a service agreement acts as the protection for both parties. To create your own service agreement, consider the level of protection you need. Describe the services that will be provided. The more detailed this description is, the better.

It will reduce the chance of misunderstandings later. When you run a business, time is money. The time spent creating, discussing, and signing a service agreement will be much less than you would spend sorting out a misunderstanding with a contractor.

Because a service agreement outlines the specifics of payment, it also helps prevent any surprise costs. When you sign the agreement, you should know exactly what the service will cost you. A service agreement, at its very core, lists the services that will be provided, the time frame in which it will be provided, and the compensation. Once both parties sign, it should be clear what is expected.

Because everything is agreed upon up front and written down on paper, the risk of a misunderstanding is greatly reduced. If a misunderstanding does come up, the service agreement should make clear who is right and how to solve the problem. Misunderstandings can lead to litigation, and lawsuits are expensive. A service agreement reduces the risk of misunderstandings and therefore the potential for litigation. A service agreement is a contract that specifically lays out a service that will be provided by one entity and the payment that will be provided by a second entity.

A written agreement gives both parties protection in case something goes wrong. In some situations, a service contract may only last for a period of months, and therefore may not be worth the cost. In some situations, a service contract may only cover a very limited set of repairs, and therefore may not be worth the cost. Know who you will be contracting with. If you are purchasing an item and want to enter into a service contract, you need to research the company or individual you will be contracting with.

If you enter into a contract with another party, and that other party goes out of business or cannot repay claims, you may not be able to receive the benefits contemplated in the contract. If the dealership has been around for a long time, has a proven track record of holding up their contractual promises, and seems to have a solid financial foundation, then you may be okay entering into a service contract with them. However, if the dealership seems untrustworthy or has not been around for a long time, you may want to consider not signing a service contract with them.

Think about alternative options. Instead of entering into a service contract, consider saving that money by putting it into some sort of savings account.

In this situation, the money you save can be used for any repairs you may need. However, if you think you may need a substantial number of repairs, or if repairs would be prohibitively costly without a service contract, your money may be better spent entering into a service contract. At the beginning of every contract, you should include a title, a date, and any general information about the parties to that contract. For example, your service contract may be titled, "Vehicle Service Contract" and might open with a paragraph stating: Define the product at issue.

Before you get into the body of your service contract, you need to define the product being bought, which is the product that will be the subject of any maintenance or repairs. For example, if you are entering into a vehicle service contract, you will want to include a description of the vehicle being covered under the contract. To have a valid and enforceable contract, each party must give up something of value. In a service contract, the seller of an item will be giving up their services, which will be used when the item needs to be repaired or maintained.

On the other side, the buyer of an item will usually give up money, which can either take the form of an up-front lump sum or something similar to a deductible.

If you will be writing this provision to include a lump sum payment, consider stating: In exchange, Seller shall provide Buyer with the services set forth in this Agreement. For each request for Repair or Maintenance made by Buyer to Seller, Buyer shall pay seller in the amount of [dollar amount].

Determine the length of coverage. A service contract will usually be a term contract, meaning it will stay in effect for a period that is defined in the contract. The length of coverage can be defined by any number of factors, but is usually defined by a length of time or by the occurrence of some event.

Include a near-exhaustive list of what will be covered. Once you have defined the parties, the product, and the length of coverage, you will begin drafting the body of the service contract. One of the most important provisions of your contract will be the discussion of what will be covered under the agreement. In a service contract, coverage will include any number of maintenance or repair activities.

For example, if you have purchased a sound system from a seller, that seller may request language that looks like this: For example, the designer might have to choose photos or a specific layout before going on to design the shell of the brochure. State when the designer should have each step completed and turned in to you for review. Also spell out the number of revisions that you are allowed to request and the length of time you have to review the work and provide feedback.

This should include the overall price of the project along with a timeline of payment. There are numerous types of payment structures that you can use -- everything from one lump sum to installment payments as the work is being done.

Decide the one that best fits your needs and include it on the contract. Decide who will be responsible for expenses, if applicable. Expenses might include the cost of materials or if any travel is required to complete the project.

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Service contracts are agreements for specific acts, such as painting your house or tuning your car, and are distinguishable from contracts for goods. They’re used predominantly by contractors, freelancers, and consultants and, generally involve one party paying another party to perform a certain act.

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A service agreement, such as when hiring a graphic designer, is something you should put in writing. Written contracts make it easier to take legal recourse should the relationship go awry.

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Writing a Service Agreement Letter Use this sample service agreement letter as a template for your formal notification. A service agreement letter is used by a professional service provider or other trading business partner to clearly define the agreed terms and conditions for the service. sample contract templates you can view, download and print for fanout.ml are contracts and agreements for many home and business arrangements, including home maintenance services, modeling and photography contracts, rental contracts, event contacts and more.

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A Letter of Agreement is one kind of freelance writing contract; it is a bit less formal than a contract and details the arrangement of the job. The Balance Small Business Sample Contract, a Letter of Agreement. May 23,  · If you need to write a legal contract to protect an exchange between two parties, write, “This is a contract between ” and include the names of both parties, then detail the agreement in clear language that is easy to understand%(56).