Service Agreements: 5 Key Points
What is it?
A service agreement typically refers to the contract between an employer and a person or company hired by the employer to perform a specific task.
Application for small business people
Service agreements are essential for small businesses that need particular work done, but may not have the necessary skills, knowledge or experience to carry out the work themselves. In these situations, the small business may need to engage the services of an expert. Examples of these professionals include accountants, lawyers, marketing advisers and IT specialists. When a small business hires such an expert, the terms of engagement will typically be set out in a service agreement.
Small business people may also be the service providers under a service agreement. In these circumstances it is important that they clearly understand what they are expected to do and the rate that they will be paid. Issues of professional indemnity and insurance are also significant in case any there is any suggestion that their work is not good enough.
In providing specialised services to a small business, the service provider will usually have access to the businesses processes and financial data. For this reason, service agreements will typically contain confidentiality clauses. The service agreement may also require the provider to report to the small business owner on a periodical basis to ensure that suitable progress is being made on the project.
6 key things to consider
When entering into a service agreement, it is important to consider the following six key elements:
- What are the parameters of the work to be performed?
- What are the fees charged by the service provider and who will be responsible for disbursements?
- What are the payment terms and conditions?
- Is the service provider entitled to outsource the work to a third party?
- What is the term of the service agreement?
- In what circumstances can the service agreement be terminated by either party?
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Joe Kafrouni, Accredited Specialist in Business Law, Kafrouni Law
Disclaimer: This article is general information only and is not legal advice. Before acting on it, get advice on your own circumstances. To the extent the law allows, Kafrouni Law accepts no liability for any loss arising from reliance on it. This article is the copyright of Kafrouni Law.
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