Last Updated May 22, 2024
What is a Service Agreement?
A Service Agreement is a contract that defines the terms of a business relationship between two parties (i.e., a service provider and a client).
A written agreement is crucial because it clearly sets expectations about the services to be provided. Of course, this is essential when a job’s terms are complex or need a detailed explanation. But it’s equally as important for simple terms of service because it helps the parties enforce the contract and avoid disputes.
This Service Agreement template is suitable for general business-to-business relationships as well as for individual clients. We also offer templates for specific services such as:
How to write a Service Agreement
Customize LawDepot’s Service Agreement template to suit your unique situation. Simply fill in the form to generate your contract, then make any final changes with the document editor. Then, download your document as a PDF or print a copy to present to your client.
Our template includes all the main clauses needed for a typical Service Agreement. The information you’ll need to draft your agreement is as follows:
First, specify how long services are needed (e.g., for a single job, a fixed term, or indefinitely) and where the work will be done (as this affects the laws that apply to your contract).
2. Party details
Provide the contractor and client’s name and address. You can also specify whether each party is an individual or a corporation (which affects the format of the signatures at the end of the document).
3. Service details
Next, clearly describe the service details (i.e., provide a scope of work).
Remember: it’s crucial to be clear and specific when describing the tasks required. If possible, include important dates, project milestones, and a list of deliverables.
With LawDepot’s Service Agreement, you can add each service detail as a separate paragraph and they all appear as a bullet point list in the document.
4. Compensation
State whether the contractor bills a flat fee, an hourly rate, or some other method of payment. If needed, you can also specify whether that fee includes sales tax.
Describe when the contractor should be paid (e.g. when services are complete or at certain stages of completion).
To help guarantee the contractor gets fairly paid, they may require a deposit or charge late payment fees. Typically, a reasonable deposit amount is worth about 10-50% of the total contract amount. Reasonable late fees are often up to 25% per year on unpaid sums.
5. Terms and conditions
Customize these common service contract terms to suit your situation:
- Ending the contract early
- Addressing work-related expenses
- Assigning ownership of intellectual property
- Requiring a duty of confidentiality
6. Final details
Does your situation require a clause that we haven’t already addressed in the template? No problem. We give you the option to write your own clause and provide tips on how to phrase it. You can also use the document editor to delete or change items as needed.
Are Service Agreements legally binding?
Yes, in most cases a Service Agreement is a legally binding contract.
Keep in mind that there are legal elements that all contracts must contain in order to be binding:
- Offer and acceptance: The service provider offers to work in exchange for compensation, and the client accepts the price for the service.
- Consideration: Each party exchanges something of value. In this case, the service provider gets paid while the client benefits from the services.
- Intention: The parties mutually agree to enter into a binding contract. This element is also known as a “meeting of the minds”.
- Legality: All elements of the contract must abide by Canadian Laws. For instance, the client cannot hire the contractor for services that are against the law (e.g., laundering money).
- Capacity: Each party must have the legal capacity to enter the contract.
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