Updated on February 25th, 2023
A professional service contract defines the working arrangement between a client and a professional service provider. These agreements allow businesses or institutions to hire contractors with specialized skills, education, and licensing. The contract will clearly define the scope of the services, as well as the payment terms and agreement timeline.
What to Include
A well-drafted professional services agreement will provide a platform for a streamlined business relationship. Most contracts will contain the following clauses:
The contract should relay precisely what services the provider is expected to carry out for the contracting client. The document should relay the expected deliverables, the scope of work, and any pertinent deadlines or milestones.
The service providers pay rate should be relayed in the contract. The document should also clearly state whether the service provider will be paid when the services are complete, upon the furnishing of and invoice, or on a recurring basis.
The term of the agreement, including when the services will begin and terminate, should be included in the contract. Some agreements will have a fixed termination date, while others may continue until the contracted services are concluded.
Clients outsourcing specialized services will often need to ensure that their proprietary business information is protected from competitors; a confidentiality clause provides this protection.
Many client-provider relationships benefit from a retainer fee that the provider charges for their ongoing services. If both parties agree to a retainer, the agreement should state the amount and whether it is refundable.
Professional Services, Defined
Professional services are those provided by companies and individuals that require a high level of specialized experience and expertise. Often, the contractor being hired will work in the finance, legal, or marketing industries. The agreement would then enable them to be brought on as an independent third party so the client can focus their energy on their area of expertise.
Due to the specialized nature of the professional service provider’s expertise, many may have been granted a professional license or certification to carry out their services. Some examples of professional services are:
- Marketing Analysis
- Technical Support