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Contents |
Purpose of a Service Contract
A service contract is an agreement detailing the job a service provider will perform for their client and what they should expect to receive as compensation. This arrangement benefits both parties as the client can contract temporary workers at competitive rates instead of hiring employees. The contractor can secure a job and carry it out as they see fit. This agreement may otherwise be known as a service-level agreement or a general service contract.
Laws
These agreements are governed by the Department of Labor’s Service Contract Act of 1965, which provides wage and safety standards for service providers signing contracts where payment terms exceed $2,500.00.
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 all be included in the completed document.
- Duration – Both parties should agree on the contract’s beginning and ending date. They must also agree on the number of days’ notice that either party must give to terminate the agreement before the conclusion of the agreed-upon term (in case of a material breach) concluding the contract.
- Services – A description of what the service provider will be required to perform for their client should be relayed in the agreement,
- Payment Terms – The payment method, amount, and frequency for the contracted services must be discussed and detailed in the document.
- Retainer – The document should specify whether the client is required to pay a retainer and whether the retainer is refundable.
Service Providers, Explained
A service provider is an individual or company that contractually provides specialized services to its clients. Sometimes referred to as freelancers, these individuals are hired for one-off gigs for their clients. By employing a service contract, both parties can protect themselves from misunderstandings regarding deliverables, deadlines, and payment expectations.
Depending on the field and the laws in their jurisdiction, these individuals may require special licensing and certification.
Sample
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SERVICE CONTRACT
1. THE PARTIES. This Service Contract (the “Agreement”) made on [MM/DD/YYYY] is by and between:
Service Provider: [SERVICE PROVIDER NAME], with a mailing address of [ADDRESS] (the “Service Provider”), and
Client: [CLIENT NAME], with a mailing address of [ADDRESS] (the “Client”).
The Service Provider and the Client are each referred to as a “Party” and, collectively, as the “Parties.”
IN CONSIDERATION of the provisions contained in this Agreement and for other good and valuable consideration, the Client hires the Service Provider to work under the terms and conditions hereby agreed upon by the Parties:
2. TERM. The term of this Agreement shall commence on [MM/DD/YYYY] and terminate upon the completion of the services OR either party providing [#] days’ notice to the other.
3. SERVICES. The Service Provider agrees to provide the following Service(s): [DESCRIBE SERVICE(S)] (hereinafter the “Services”).
4. COMPENSATION. The Client agrees to pay the Service Provider the following compensation for the Services performed under this Agreement: [DESCRIBE COMPENSATION] (hereinafter known as the “Compensation”).
5. PAYMENT METHOD. The Client shall pay the Compensation within [#] days upon the Client receiving an Invoice from the Service Provider.
6. RETAINER. The Client is (☐ Required | ☐ Not Required) to pay a Retainer. If required, the retainer shall be in the amount of $[AMOUNT].
7. INDEPENDENT CONTRACTOR STATUS. The Service Provider, under the code of the Internal Revenue (IRS), is an independent contractor, and neither the Service Provider’s employees nor contract personnel are or shall be deemed, the Client’s employees.
8. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of heirs, personal representatives, successors, and assigns of the Parties.
9. DEFAULT. In the event of default under this Agreement, the defaulted Party shall reimburse the non-defaulting Party or Parties for all costs and expenses reasonably incurred by the non-defaulting Party or Parties in connection with the default, including, without limitation, attorneys’ fees.
10. GOVERNING LAW. This Agreement shall be governed under the laws in the State of [STATE NAME].
11. SEVERABILITY. This Agreement shall remain in effect in the event a section or provision is unenforceable or invalid.
12. ADDITIONAL TERMS AND CONDITIONS.
[ADD ANY ADDITIONAL TERMS AND CONDITIONS HERE].
13. SIGNATURES. IN WITNESS WHEREOF, the Parties hereto agree to the above terms and have caused this Agreement to be executed in their names by their duly authorized officers.
Client’s Signature: ___________________ Date: [MM/DD/YYYY]
Print Name: [CLIENT NAME]
Service Provider’s Signature: ___________________ Date: [MM/DD/YYYY]
Print Name: [SERVICE PROVIDER NAME]