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WHAT CLAUSES SHOULD I INCLUDE IN MY SERVICE AGREEMENT?




In this post, we address the most important clauses of a service agreement (description of services and payment) and provide the general structure of a service agreement.


Preliminary, a contract is a promise made by a person in which she offers something of legal value in exchange for receiving something of legal value. A service contract generally involves a promise or commitment to provide services in exchange for payment. The parties to a service contract are generally the provider of the services and the customer who pays for the services.


The most important parts of a service contract are the description of the services and the payment to be received as consideration for the services provided. Although the service contract indeed varies according to the type of industry (vehicle repair, remodeling of a building, cleaning services, removals, financial advice, sales advice, etc.), all these contracts contain at least the promise of providing services in exchange for payment; therefore, those are the essential and most important terms in a service contract.


Description of Services


The service provider must a) indicate precisely what services will be provided, b) indicate whether the costs of materials are included in the service or must be covered by the client, c) establish limits and exclusions regarding the service, and d) establish the conditions when the service provider has discharged her duties under the agreement (finished the work).


Services to be provided. - Using as an example a service contract for remodeling a bathroom, it is necessary first to establish a general description of the project and then specifically list in full detail each of the tasks that are going to be carried out, such as removing the slabs, placing new tiles, removing the toilet, put in a new toilet, remove the shower area, put in a bathtub, etc. As far as possible, it should be indicated how many hours of work are estimated so that, if the project is delayed due to the client's fault, the service provider could request an increase in the cost of the project or for the additional work that has not been included in the contract.


Cost of materials. - The contract must indicate whether the cost of the materials is included in the total to be paid by the client and specifically detail the quality of the materials to be used. It is common to find misunderstandings in which the client expected a higher quality or better characteristics in the selected materials. If the quality and features of the materials are not explicitly detailed, it can generate severe conflicts between the parties.


Limits and exclusions regarding the service. - Since the value of the services is limited and previously established, the services must be clearly delimited, excluding those functions or tasks that do not correspond to the service provider. Using the previous example, any plumbing, painting, and any other type of work that the lender has not contemplated within the labor budget for the project should be excluded. When the provider uses an independent sales team, it is essential to exclude specific tasks in this section. Include an exclusion of verbal representations that the seller may have incorrectly promised. Likewise, it is essential to detail if the client will bear the cost of taxes and construction permits.


Conditions for payment. - Finally, the contract must describe when the provider finishes his work and the standard of satisfaction for the work. Work should generally be finished when the remodeling has been completed and the area being worked on has been cleaned. However, sometimes further inspections, adjustments, and repairs are necessary. This must be previously established in the contract. It is advisable to place an objective condition for the completion of services. Sometimes, the provider uses phrases such as " the service provided will be of complete satisfaction to the client ." This can cause severe problems for the contractor if the client is honestly unsatisfied with the work. In those cases, it is better to state that the work will be carried out in a professional and workmanlike manner according to the community's standards in which the services have been provided.


Payment for Services


The payment of the services must be detailed in the best possible way, including: a) if the client must pay an advance or the total value of the project, b) if the project is paid in full before starting, detail if the client must pay interest on amounts paid out of time, c) detail the consequences of late payment of services, indicating that non-payment will be considered a material breach of contract.

Structure of the Service Contract


Generally, service provision contracts contain the following structure:

1. Contract Title

2. Description of the parties (service provider and client)

3. Service's description

4. Obligations of the service provider

5. Customer Obligations

6. Expenses and other fees

7. Warranty and parts­/labor not included in the warranty

8. Term or deadline for the execution of the Contract (time of duration and validity of the contract)

9. Limitation of liability

10. Responsibility regarding Insurance Policy

11. Notifications (modalities of communications between the parties)

12. Separability Clause

13. Modification of the contract (generally indicating that the consent of both parties in writing is required).

14. Applicable Law

15. Jurisdiction of the case (designating the court in which the case will be presented or detailing the arbitral tribunal to which the dispute will be referred)

16. Force majeure clause

17. Other miscellaneous clauses include:

a. Intellectual property protection

b. Confidentiality

c. Jury trial waiver

d. Relationship between the parties (as an independent contractor)

e. Allocation of rights and obligations

f. Entire agreement.



Contact Us


If you have any doubts or questions about this topic or any other topic on our blog, do not hesitate to contact us to evaluate your case. We have prepared service contracts for different industries, from financial services, construction and remodeling, coaching and training, moving, vehicle repair, medical and health services, sales management and logistics, etc.


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The information in this publication does not constitute legal advice or advice and is provided for educational purposes only. Reading this post calling our office does not create an attorney-client relationship. Before taking any action related to the information in this publication or any other publication, you should consult with an attorney admitted to the practice of law in your state.


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