What are the Important Aspects of a Service Contract?
People sign contracts almost every day, whether signing unknowingly for a social media application or knowingly
while buying a new car (like a vehicle service contract) from a dealership. Contracts have become a part of
day-to-day life.
Having said that, most of the contracts that people sign are service contracts. A service contract is predominantly
signed between a service providing company (such as a cleaning service) and a customer. This contract protects both
parties when in need and ensures a healthy business relationship.
What is a service agreement contract?
A service contract (also called extended warranty) is a legally binding document signed between a service provider
and a customer (or client). It is an exchange of service for compensation.
Such a contract describes the terms and conditions of the service, such as the description of work, payment terms,
rights and obligations of both parties, and more. This contract can be in a verbal format (like a customer visiting
a salon for a haircut) or in written format (like a web designer might have with the website owner).
A written contract becomes necessary when the terms of a deal are tricky or need to be explained in detail.
Types of service contracts
There are different types of service contracts with various services and payment structures. Below is a list of the
types of professional service contracts that are primarily used:
- Independent contractor agreements/ contracts
- Consulting contracts
- Employment contracts
- Time and materials contracts
- Fixed-price contracts
- Not To Exceed (NTE) contract
- Retainer based contracts
- Managed service contracts
What are the benefits of having a service contract?
Signing a service contract minimizes the disagreements and maximizes productivity. Apart from this, there are
several other advantages of a service contract, and that is:
- Cost benefits: A service contract can save a lot of money in routine maintenance and unexpected repair.
- Product quality: Under the contract, the service providing company/ contractor will be less likely to
install or construct a faulty or poor quality product.
- Resolve disputes: It also outlines the clauses that will help resolve conflicts and disruptions between
both parties.
- Provide assurance: A customer can be stress-free when something goes wrong with the service or product.
With a contract in hand, the issue will be resolved by the service provider in a timely manner.
How do you write a service contract?
A contract outlines the duties and level of protection that both parties need. For proper legal protection, it is
essential to have a well-vetted service contract that includes terms and conditions as mentioned below:
- Parties to the contract: A contract starts with this section. It identifies the parties in the contract,
i.e., the customer and service provider.
- Recitals: This section describes the willingness of both parties to enter into the contract.
- Terms and conditions: This is an important section of any contract. It outlines all the required terms
and conditions to be followed by both parties. Below are a few major terms of the contract:
- Services: It outlines the description of services. It includes accurate and clear details of exactly
what a service provider will do under the contract.
- Deliverables: This section outlines the deliverables and warranties a service provider will provide
under the promised amount of time.
- Term of contract: It outlines the duration of the contract and the effective date of the contract.
- Payment: In this section, all the payment terms are mentioned, such as the agreed amount and payment
mode.
- Return of property: It talks about the customer’s rights upon completing the service or by the end of
the contract.
- Taxes: This section outlines all the taxes that a service provider should take care of.
- Insurance: This section provides information about the insurance policy that a service provider
should have in place for the employees.
- Relationship: This gives a brief description of the relationship the customer and the service
provider will have under the contract.
- Termination: It speaks, how the contract can be terminated and under what conditions.
- Confidentiality: This clause helps both parties to maintain the confidentiality of sensitive
information.
- Indemnification: Under this clause, each party holds the other party harmless from any claims,
damages, and injuries.
- Arbitration: This clause helps both parties to resolve disputes or disagreements under the contract.
- Miscellaneous: In this section, all other important terms and conditions are mentioned, such as
governing law, severability, notice, waiver, and force majeure.
- Acceptance and signature: Once both parties agree to all terms and conditions, they can sign the contract
and seal the deal under this section.
Why choose Revv for service contracts?
Here are a few benefits of using Revv for contract management:
- A wide range of customizable, pre-drafted, legally-vetted, and ready-to-go contract templates
- All the contract templates are available with e-signature, enabling faster deal closures
- All contracts are easily accessible across devices and platforms
- Seamlessly payment methods directly in the contract with Stripe integration
Revv helps to scale up your business process and save your time. The advanced features help safeguard your dealings
and draft contracts in minutes.
Start using Revv and make legal documenting easier!