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:

  1. What are the parameters of the work to be performed?
  2. What are the fees charged by the service provider and who will be responsible for disbursements?
  3. What are the payment terms and conditions?
  4. Is the service provider entitled to outsource the work to a third party?
  5. What is the term of the service agreement?
  6. In what circumstances can the service agreement be terminated by either party?


Joe Kafrouni
Legal Practitioner Director
Kafrouni Lawyers


The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

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