Service Agreement Templates

Service agreements can cover a range of different situations. These contracts define the services that a service provider will render and the terms and conditions of those services. Take a closer look at how the right agreement can benefit both purchasers and service providers by clearly setting out both parties’ expectations.

Understanding a Service Agreement

What is a service agreement? According to the Service Contracts Model Act, a service agreement is a contract to provide maintenance, repair or replacement of property or to reimburse the purchaser for those services. It can, but does not necessarily, cover additional services. For example, a vehicle service agreement could cover towing.

This type of service agreement is similar to an extended warranty. It may be provided free with the purchase of a new product. Alternatively, the customer might buy the service agreement separately from the purchase price.

The selling point of this type of service agreement is that it often covers defects and malfunctions that are not covered by the product’s express or implied warranty of fitness.

Professional service providers also use these agreements when rendering services as independent contractors. The agreement creates a relationship that allows parties to contract for services without hiring employees.

Although this type of service agreement does not fall within any of the types of employment contracts, it is analogous to them. In these types of service agreements, one party typically agrees to provide their labor, judgment and experience in exchange for pay.

For example, consultants, skilled laborers, attorneys and other professionals often use service agreements when hired by clients.

Key Components to Include in a Service Contract

So what is a service agreement’s content like? In your agreement, ensure you include the following:

• The services covered
• The duration of the agreement
• How to terminate the agreement
• The cost of the agreement and whether any additional costs may be charged
• Any excluded services

Additionally, all contracts require mutual assent and consideration. Mutual assent means that both parties accepted the terms.

Consideration, on the other hand, means that both parties make promises. In many service contracts, consumers pay extra. However, service contracts can also be included with products. For instance, a new car might come with a one-year service contract that covers maintenance and certain repairs.

Types of Service Agreements

Service agreements are used in many industries. Here are some examples:

• Cleaning companies might create a cleaning service agreement.
• Consultants can create a consulting service agreement.
• HVAC repair and maintenance companies may create an HVAC service agreement.

Service agreements can cover a single event, such as tree removal, or repeated events, like lawn mowing. The repeated events can even include regularly scheduled maintenance, such as vehicle oil changes in a vehicle service contract.

They can also cover events that may or may not occur. For example, you might buy a service agreement to cover furnace repairs in case it breaks down. If it never breaks, the service provider might never render services.

Benefits of Using a Service Agreement

So what is a service agreement’s primary advantage? The benefit to service providers is that they commit customers to pay for the company’s services. In some cases, the customers prepay for the services.

The benefit to consumers is that they know the contracted services will be provided at an agreed price. This means they don’t need to search for a provider when services are needed.

Moreover, prepaid service agreements sometimes overlap with warranties. If the service provider cannot repair the product as agreed, the consumer may be entitled to a replacement.

How to Draft an Effective Service Agreement

Providers often use templates for their service agreements so that all their contracts are consistent. Typically, you will negotiate the terms, such as payment and the service schedule. You can then fill in the template with the agreed-upon terms.

When you prepare your template, you should carefully consider the terms to include. The value of a template is that it includes the clauses that you want in all your contracts. Moreover, it includes the terms that you might forget to include.

For example, if you provide carpet-laying services in customers’ homes, you will probably include a clause granting permission to enter their premises. You may also include language requiring customers to secure any pets for your safety.

Conversely, when you are hiring service providers, you might need language to protect you from on-the-job accidents. Thus, your service contract might include a disclaimer of liability for injuries.

Using the Right Service Agreement Is Vital

A clear service agreement helps both service providers and customers. All parties will know what they are getting up front, reducing the likelihood of conflicts down the line.

If you’re in need of legal document templates, ConsumerShield can help. Browse our templates and guides today.