Service Agreements
Written by: Gabrielle Andersen l Insight Team
This month, in the seventh instalment of our Commercial Law Series, we are looking at Service Agreements.
Service Agreements are contracts between a provider of services and their client. Their purpose is to outline the services being provided and the terms and conditions expected in relation to the provision of those services. They are sometimes negotiated between the particular parties involved, or can be agreements provided to clients on a “take it or leave it” basis. They will also outline the rights and obligations of each of the parties, which can become particularly important if either party has an issue in relation to the provision of the services, or the service itself.
Types of Service Agreements
Service Agreements are often known by a variety of names, including supply contracts, supply agreements or consulting and consultancy agreements.
Sometimes Service Agreements are generally referred to as terms and conditions. We covered terms and conditions in the sixth instalment of our Commercial Law Series: Terms + Conditions. Businesses may prefer to supply terms and conditions to clients instead of a more formal Service Agreement, and the choice to do so will often depend on the type of service being provided or the costs involved.
While there is often overlap between Service Agreements and terms and conditions, Service Agreements are usually a more formal contract for a specific engagement and will state the names of the parties the agreement relates to. Service Agreements are usually longer than standard form terms and conditions and are predominantly used for a particular project, relationship, or venture. Service Agreements will be in a more formal contract form, with each party signing, whereas terms and conditions will often state general rules or expectations in relation to the customers use of that particular business, service or website.
Why are Service Agreements Needed?
Service Agreements are a really important tool for businesses in managing client expectations. Not only do they confirm the service being provided, they also can specify limits on that service. They also enable the business to enforce conditions in relation to that service, such as timeframes for providing the service and the payment of fees. In doing so Service Agreements can protect businesses and ensure clients aren’t misled in relation to the services being supplied.
Key Terms Your Service Agreement Should Cover
- The names of the parties: this is important as it confirms exactly who is being bound by the agreement, and will also outline each party’s contact details.
- A description or scope of the service being provided: this is where the actual service being supplied is specifically outlined, however some Service Agreements may refer to a previous quote or invoice specifying the services.
- The timeframe for the provision of the services: such as whether there is a period within which the service must be supplied, or the Service Agreement may be for a one off supply, or specify an extended or ongoing period of time, depending on what exactly is being supplied.
- The fee/s for the service: the agreement should state the exact fee payable and how this will be charged, such as whether there is a one off fee or invoicing occurring in instalments.
- Payment terms: these will usually address how and when the supplier of the service must be paid, whether any deposit is payable, and what will occur if the payment isn’t forthcoming.
- The terms of the engagement: such as whether the business or person supplying the service is engaged simply for the supply of the service. For consultancy agreements, these will usually specify that an individual or entity is being engaged by a business as an independent contractor.
- Limitations of liability or waivers: these specify the extent of any liability in relation to the provision of these services and who may or may not be responsible if anything goes wrong. Businesses will often desire provisions which have very clear terms limiting their liability, as well as specific waivers by the client in accepting the provision of the services.
- Termination provisions: these will set out the process that either party must take in wishing to terminate the agreement. An example could be – by providing seven days’ notice in writing, or you may wish for there to be provisions specifically that the agreement may not be terminated unless a breach of one of the terms of the Service Agreement occurs.
- Provisions covering confidentiality and restraints on poaching any other clients ,or suppliers: these may be important if in supplying the service the client will be privy to the business’s confidential information, trade secrets or know how, or may be introduced through the supply of services to employees, other clients or the wider network involved in the business’s contracts and suppliers.
- Intellectual property protections: in supplying the service the business may also be providing access to their intellectual property, so it is important that the agreement confirms that this intellectual property remains with the supplier. These terms will be particularly important if a business ever discovers that there has been unauthorised use of their intellectual property and wishes to take legal action against such use.
- A very clear dispute resolution process: this will specify the process to be followed if there is ever a disagreement in relation to the provision of the service, or any other matter covered by the Service Agreement.
Being Careful To Avoid Unfair Contract Terms
As touched on in previous articles, Obligations To Your Clients: Consumer Law Advice, the Australian Consumer Law (ACL) governs relationships between businesses and their consumers, and will again be relevant for businesses in preparing their Service Agreement.
In particular, if your Service Agreement or terms and conditions are considered at law to be “standard form contracts”, the ACL provides specific protections for any consumers who are party to such agreements.
Standard form contracts are any agreements that have been prepared by one party to the contract where the other party has little or no opportunity to negotiate the terms. As mentioned above, these are often referred to as contracts that are offered on a “take it or leave it basis”.
Service Agreements and terms and conditions often fall into this category, so it is important that they don’t contain any terms that would be considered unfair. The ACL has very clear guidance on what they consider unfair contract terms, and if any such terms exist in a standard form contracts they will be void.
Having your Service Agreements or terms and conditions prepared by a lawyer is therefore crucial if wanting to ensure that your agreement is valid and enforceable.
How Canny Insight Can Help Your Business with Expert Legal Advice
Canny Legal is here to assist with your legal needs, whether it’s preparing Service Agreements for your business, reviewing agreements you’re already using, or advising you on a Service Agreement you’ve been provided by another business.
Canny Legal will ensure your agreements meet the needs of your business and your expectations in providing or receiving the particular service, and take into consideration and legal framework in which your business operates, including the Australian Consumer Law.
Get in touch with our team today to let us help with your Service Agreements.
