Service Agreements Simplified

Note: Readers are cautioned not to rely on this information as legal advice and to always consult with an attorney in their jurisdiction.

Services agreements, and service agreements that set forth levels of service, can help clarify each party’s goals, limit the liability of the parties, and ensure that both parties get the services and payments they expect.

So what does a service agreement contain? And how will it help you in the mong run? Let’s take a look.

1. Description of Services

It is important to clearly define the services that are to be performed, and any deadlines for work product or performance. Without clarity, each party, even in good faith, may have different ideas — but they may not discover this until the work is completed and one party is not satisfied. The more detail about the relationship stated in the contract, the lower will be the risk of misunderstanding or unfulfilled expectations later.

Service levels that are designated for technical or other performance should be set forth in an exhibit to the agreement and stated in detail; these some times also include financial penalties or rewards. There is no set formula for determining these levels and numbers.

2. Payment Details

The agreement should include a provision that states:

  • how much is to be paid,
  • when it is to be paid,
  • what is included in the payment (expenses, taxes, travel),
  • procedures for invoicing, and
  • penalties for late payments.

3. The Relationship Between Parties

The agreement should include a provision that clearly states that the relationship is not a partnership, joint venture or employer-employee. Since some of these relationships can be implied by law, this is an important provision.

4. Dealing with Confidential Information

The agreement should include a provision that states that:

  • the parties will exchange confidential information,
  • how that information will be identified and handled,
  • restrictions on disclosure and misuse, and
  • exceptions to what is included in confidential information.

Depending on whether the agreement is for provision of services or the hiring of a service provider, and which party drafts the agreement, the exceptions may be more broad or more narrow.

5. Ownership of the Work Product

The service provider will want to make sure the agreement does not include a provision stating that the customer owns the work product, so that the Provider may continue to perform similar services for other customers without the risk of legal interference or restriction.

The company that hires the service provider will want to ensure that they fully own the work product and that the agreement contains the legal language as required by copyright law.

In either case, the owner of the work product may agree to give a license to the other party to address its required uses.

6. Outline of Representations and Warranties

These may include the following or other warranties:

  • That the service provider will re-perform defective or non-conforming services for a time period indicated
  • That the services will be performed at or above industry standards
  • That the service provider will not infringe third party rights in performing services
  • That the service provider is not violating any other agreement by performing services

The type and number of warranties included will depend on whether the agreement is drafted by the service provider or hiring company. The service provider should be sure to include the correct legal language, in the correct font size (no I’m not joking) to waive the warranties implied by the Uniform Commercial Code.

Despite its name, the Uniform Commercial Code varies by state, but generally is uniform nonetheless. The UCC implied warranties include:

  • that the item will do what it is intended to do,
  • that it may be fit for a particular promise if so stated,
  • that it does not infringe third party rights and
  • that the seller has proper title to sell the item.

7. Details of Indemnification

The hiring company should ensure that the agreement contains a provision stating that the service provider will indemnify the company for any breaches of the warranties.

Indemnification means that the provider will have to pay the company for any third party litigation costs that result from its breach of the warranties.

8. Identification of the Limit of Liability

The service provider should include a provision that limits its liability to the maximum amount it receives under the agreement, and for both direct and indirect damages. This wording must be attorney-drafted to be effective. Properly drafted, this is an extremely beneficial provision to lower risk.

9. Outline of Term and Termination

The agreement should include a provision that outlines how long the agreement will be in effect, and the options and results for termination.

10. Insurance Details

The hiring company should require a minimum level of insurance coverage from the service provider so that it can be sure that any negligence or liabilities are financially covered.

11. The ‘Force Majeure’ Clause

The service provider should ensure inclusion of a force majeure clause. Loosely translated from the French, this means a ‘superior force’.

A force majeure clause means that in the event of war, acts of God, strikes, weather and other uncontrollable forces, the parties are excused from performing.

12. Rules for Non-Solicitation

To protect both parties, the agreement should include a mutual restriction on each party soliciting employment from the employees of the other.

Conclusion

Services level agreements and service agreements help to clarify goals and ensure a meeting of the minds, limit risk, and ensure both parties get what they want.

Include these 12 elements in your service agreements and not only will you ensure that all the invovled parties know where they stand, but also that they’re protected if anything goes wrong.

Replay

Category: business Time: 2002-04-29 Views: 1
Tags:

Related post

  • Hosted Anti-Spam Service vs. Anti-Spam Appliance 2009-07-29

    We're currently using Content Catcher, a hosted spam solution. For less than what we pay them per year, we could purchase an anti-spam appliance to run in house. From a simple dollar perspective, it looks like a no brainer. What are the downsides to

  • 55gb to new hosting service; what does "unlimited storage" mean? 2010-07-12

    I want to change web hosting-vendors, from "Vendor O" to "Vendor N" for a particular site I'm managing. I have problems with Vendor O. I manage several sites currently hosted with Vendor N and everything is satisfactory. By the way: Al

  • It is safe to store photos and documents on skydrive / google cloud services? 2012-04-25

    I have over 20GB of photos and documents stored on my hard disk without a backup. I'm thinking about saving all of them in a cloud service such as Microsoft Skydrive or google cloud, but I'm wondering if it is really safe... I mean, can I trust these

  • For a real-time PvP game, what network service would get the job done? 2012-07-26

    The game is between two players, real time, and has to be very synchronized - latency will certainly favor one player over the other. It's built for iOS and Android and every touch on one end has to be instantanious on the other end. The game will be

  • Creating a rule to display Terms Of Service upon Ubercart checkout 2013-07-18

    I have a small web store running Ubercart and with one of the items I must display a terms of service agreement. I have it displayed upon checkout as a requirement to proceed. Some of my other items do not need this service agreement to be purchased.

  • Is there a service that will auto scan a 'Terms if Service' to assess privacy issues? 2015-10-12

    Terms of Service agreements are very tedious and extensive, I am wondering if there exists yet in the privacy tools that are evolving a tool that will scan a TOS for common issues to privacy. --------------Solutions------------- No, and there likely

  • Symfony 2 Service How To Feed My Own Data Into My Service? 2016-02-08

    Ok, I have set up a few services in the pass but not many, so my knowledge about them are some what limited. I have set it up like so, upload: class: MyBundle\Classes\Upload arguments: [@doctrine.orm.entity_manager, %FormData] So I trying to set up m

  • Handling deleted users - separate or same table? 2011-07-20

    The scenario is that I've got an expanding set of users, and as time goes by, users will cancel their accounts which we currently mark as 'deleted' (with a flag) in the same table. If users with the same email address (that's how users log in) wish t

  • Open Source Funding Site microPledge Calls for Help 2008-10-09

    In the open source world, "software bounties" are a familiar concept - money is raised for a developer to implement a new feature, write documentation, or create a new piece of software. Since it launched last August, Christchurch, New Zealand-b

  • Good Riddance to Deadbeat Clients 2009-03-13

    Everybody has them: slow-pay and no-pay clients. If you've been at it long enough, eventually you end up with brilliant projects, coupled with unpaid invoices. Worse still, sometimes the sites you build are live and operational while you're still wai

  • What are the basic steps to set up an FTP server? 2009-06-11

    I have been trying to setup an ftp server in windows XP. I would like to know about its configuration. What domain/Ip should I use, so that other system on internet can connect to it. Please provide detail steps so that I would easily do this. ------

  • Off-brand laptop batteries? 2009-07-06

    I tend to err on the side of paying too much for quality stuff, but $180 for a standard replacement battery for a Dell laptop makes the $80 knockoffs look pretty tempting. I wouldn't consider it (batteries really aren't something I want to take a cha

  • 7 Great Rip-offs - and How to Avoid Them! 2009-11-20

    Almost all web developers find themselves chasing payments from certain clients in any given year. Some circumstances I've endured more often than others. In this article, I've identified seven of the most common ways web professionals fall into the

  • How to monitor multiple remote sites over the internet? 2009-12-21

    my company is beginning to offer managed services agreements for our customers, meaning that we remotely administer small clusters of servers at the customer site. The hosts we're managing are behind the customer firewall, and our access is via VPN.

  • Internet connection too slow 2010-03-14

    After a full scan of my system I now think that it is the ISP. I have used super antispyware, Avast, Norton AntiVirus and Spybot Search & Destroy. The Internet connection is still slow. And the truth is we have recently upgraded the connection from 5

  • Is it possible to build a cheap memcached server? 2010-05-23

    Is it possible to build a cheap memcached server? --------------Solutions------------- It's always "cheap" to build a "server" (I use those terms loosly, as you'll see below), but we can't answer this question for you. Only you can, by

  • How secure is cloud computing? 2010-05-29

    By secure, I don't mean the machines itself and access to it from the network. I mean, and I suppose this could be applied to any kind of hosting service, when you put all your intellectual property onto a hosted provider, what happens to the hard di

  • Whats the average lifespan of a server? 2010-06-20

    i'd really like to know what the lifespan of a server is, or could be. Is there something like lifespan in the world of PCs at all? Lets assume it runs 24/7, how many hours/days/years/etc could it be used? --------------Solutions------------- Do you

  • How do you determine the monetary value of an established domain / website? 2010-07-10

    I have some domains that I've been building for the last few years and now I'd like to sell them. I tried several services (including Sedo) to try and ascertain just how much money each domain was worth, but not one service agreed with any other serv

iOS development

Android development

Python development

JAVA development

Development language

PHP development

Ruby development

search

Front-end development

Database

development tools

Open Platform

Javascript development

.NET development

cloud computing

server

Copyright (C) avrocks.com, All Rights Reserved.

processed in 0.658 (s). 13 q(s)