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Laws – These agreements are governed by the Department of Labor’s Service Contract Act of 1965.
Service Contract Benefits
Drafting a service contract, also known as a service-level agreement or general service contract, has a number of advantages over a verbal agreement.
For the client, it provides a promise of delivery of services, including deadlines and start dates. It also makes it clear that the service provider is operating as an independent contractor and responsible for their own taxes.
For the service provider, it ensures that the client has signed off on the rate and fees, and agreed to pay upon a certain event. The contract also shows that the service provider is able to do the job as they see fit.
What Should Be Included
Each agreement will look different depending on the provider and the client’s needs.
Service contracts generally contain the following information:
- Parties – The names, addresses, and signatures of the service provider and the client should be included.
- Duration – Both parties should agree on the contract’s beginning and ending date. They must also agree on the notice either party must give when terminating the agreement early.
- Services – A description of the services the contractor is hired to carry out must be provided.
- Payment Terms – The parties should discuss and sign off on the payment method, amount, and frequency.
- Retainer – The document should specify whether the client is required to pay a retainer and whether the retainer is refundable.
Sample
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SERVICE CONTRACT
1. THE PARTIES. This Service Contract (the “Agreement”) made on [MM/DD/YYYY] (the “Effective Date”) is by and between [SERVICE PROVIDER NAME], with a mailing address of [SERVICE PROVIDER ADDRESS] (the “Service Provider”), and [CLIENT NAMES], with a mailing address of [CLIENT ADDRESS] (the “Client”).
2. TERM. The term of this Agreement shall commence on [MM/DD/YYYY] and terminate on the date of [MM/DD/YYYY].
3. SERVICES. The Service Provider agrees to provide the following: [DESCRIBE SERVICES TO BE PERFORMED]. Hereinafter known as the “Services.”
4. PAYMENT AMOUNT. The Client agrees to pay the Service Provider $[RATE]/Hour for the Services.
5. PAYMENT METHOD. The Client shall pay the Compensation every week, beginning on [MM/DD/YYYY].
6. RETAINER. The Client is REQUIRED to pay a Retainer in the amount of $[RETAINER AMOUNT] to the Service Provider as an advance on future Services to be provided (the “Retainer”). The Retainer is Non-Refundable.
7. INDEPENDENT CONTRACTOR STATUS. The Service Provider, under the code of the Internal Revenue Service (IRS), is an independent contractor and neither the Service Provider or their employees or contract personnel are, or shall be deemed, the Client’s employees.
8. ADDITIONAL TERMS AND CONDITIONS. [ADD ADDITIONAL INSTRUCTIONS, TERMS, CONDITIONS].
IN WITNESS WHEREOF, the Parties hereto agree to the above terms and have caused this Agreement to be executed in their names.
Client’s Signature: _________________________ Date: _______________
Printed Name: _________________________
Service Provider’s Signature: _________________________ Date: _______________
Printed Name: _________________________