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Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

Creating a service agreement is of paramount importance for businesses of all sizes; it sets out the terms and conditions of the service being provided, details each party’s rights and responsibilities, and specifies how any disputes should be handled. This legally-binding document offers protection to both provider and customer alike from potential risks or harm. With that in mind, the ��������Ƶ team has outlined five reasons why having a service agreement matters:

Firstly, a service agreement makes sure that all parties understand exactly what is required from them and what will happen should any terms not be met. Secondly, it safeguards both provider and customer against unwelcome risk. Thirdly, payment terms are clarified - avoiding misunderstandings or issues concerning money down the line. Fourthly, a binding contract is established between both parties; breaching this could lead to legal action if necessary. And finally, a reference point is provided in case any disputes do arise - allowing for swift resolution without fear of uncertainty or confusion.

At ��������Ƶ we appreciate just how important service agreements are and understand their potential value to businesses today; we have one of the world’s largest open source legal template libraries with millions of datapoints which teach our AI what market-standard agreements looks like - so anyone can craft their own high-quality legal documents without an expensive lawyer. Our library provides step-by-step guidance on completing your own agreement as well as information on accessing our templates today – so why not give it a go?

Definitions

Establishing: Introducing or setting up something in a certain way.
Scope: The range of something, such as the limits of a project.
Outlining: To describe or explain something in detail.
Expectations: The ideas or beliefs that someone has about how something should be done.
Payment Terms: The details of how and when payments should be made.
Confidentiality: Keeping information private and secure.
Non-Disclosure: Not revealing or sharing information.
Intellectual Property: Creative works or inventions that are protected by copyright, trademark, or patent law.
Termination Clauses: The sections in a contract that specify how it can be ended.
Dispute Resolution: The process of settling a disagreement or conflict.
Indemnification: When one party agrees to take responsibility for any losses or damages suffered by another party.
Applicable Law: The laws or regulations that apply to a particular situation or agreement.
Signatures: A signature is a mark or symbol used to signify that a person has agreed to a document.

Contents

1. Establishing the Parties Involved
2. Identifying who is involved in the agreement and their respective roles
3. Outlining the contact information for each party
4. Defining the Scope of Services
5. Outlining the services to be provided by each party
6. Defining the expectations of each party
7. Payment Terms
8. Discussing how payments will be made
9. Specifying when payments are due
10. Describing the consequences of late payments
11. Confidentiality and Non-Disclosure
12. Describing the obligations of each party when it comes to the sharing of confidential information
13. Outlining any restrictions on the use of confidential information
14. Intellectual Property
15. Establishing ownership of any intellectual property created during the agreement
16. Describing the terms under which intellectual property can be used by each party
17. Termination Clauses
18. Setting forth the different ways the agreement can be terminated
19. Describing the obligations of each party in the event of termination
20. Dispute Resolution
21. Describing the process for resolving disputes between the parties
22. Establishing the criteria for when a dispute will be resolved through mediation or litigation
23. Indemnification
24. Describing the obligations of each party in the event of a legal dispute
25. Outlining the process for indemnifying the other party in the event of a legal dispute
26. Applicable Law
27. Specifying the law that will be used to interpret the agreement
28. Outlining the jurisdiction in which any legal disputes will be heard
29. Signatures
30. Describing the process for signing the agreement
31. Specifying the date upon which the agreement will become effective

Get started

Establishing the Parties Involved

• Gather contact information for both parties involved in the agreement
• Determine the legal names of the parties
• Establish the address and any other relevant contact information for each party
• Determine the roles each party will have in the agreement
• Determine if any additional parties need to be involved in the agreement
• Check that all the parties have been identified and all their information has been gathered
• Write up the names and contact information of each of the parties in the service agreement
• Once all the parties have been identified and their respective information has been gathered and written up, this step is complete and you can move on to the next step.

Identifying who is involved in the agreement and their respective roles

• Identify all parties involved in the agreement and their respective roles
• Outline each party’s role and responsibilities
• Make sure all parties involved agree on the roles and responsibilities of each
• When all parties have agreed on their roles and responsibilities, this step is complete and you can move on to the next step.

Outlining the contact information for each party

• Ensure all contact information of both parties is provided in the service agreement (name, address, phone number, email address, etc.)
• Make sure contact information is up-to-date, and both parties agree to notify each other of any changes
• Check that all contact information is accurate and properly formatted
• Once all contact information has been provided and verified, this step is complete and you can move on to the next step.

Defining the Scope of Services

• Decide on the specific services that need to be provided - consider both parties’ needs and expectations
• Identify what services are included in the agreement and what services are excluded
• Identify the duration of the agreement and how it can be terminated
• Make sure to include a clause that stipulates that any changes to the agreement need to be documented in writing

Once you have defined the scope of services and included them in the agreement, you can move on to the next step.

Outlining the services to be provided by each party

• Identify and list the specific services each party will provide
• Determine who is responsible for each service
• Describe the services in detail, including when and where they will be provided
• Note any additional services that may be provided as needed
• Once all services have been outlined and agreed upon, document them in the service agreement
• Check this step off your list when all services have been outlined and documented in the service agreement.

Defining the expectations of each party

• Consider the services that each party will provide and create an outline of the expectations of each party.
• Think about the roles and responsibilities of each party and what they must do to fulfill their obligations.
• Include details such as who will provide the necessary materials, who will be responsible for any costs, etc.
• Once you have outlined the expectations, review them with both parties to ensure they are in agreement.
• When both parties have agreed to the expectations, you can move on to the next step.

Payment Terms

• Identify the payment amount and frequency
• Discuss the payment method(s) that will be used (e.g. credit card, check, wire transfer, etc.)
• Outline the consequences for late payments
• Agree on a payment schedule and payment due date
• When the payment terms are agreed upon, add them to the service agreement
• Check off this step when the payment terms are included in the service agreement

Discussing how payments will be made

• Decide on what payment method works best for both parties – cash, check, credit card, or a combination
• Discuss the format of the payment: one-time payment, installments, or a combination
• Agree on the currency of payment
• Specify who will pay any applicable taxes or fees
• When the agreement is signed, both parties should receive an invoice
• Once all the payment terms have been discussed, the parties can move onto the next step
• Completing this step means that both parties have agreed on the payment terms and the details of how payments will be made

Specifying when payments are due

• Agree on the date when payments are due (e.g. 10th of the month)
• Note any potential grace period for delayed payments (e.g. 5 days after the payment due date)
• Outline any penalties or additional fees for late payments (e.g. 10% of the total fee amount)
• Specify the consequences for late payments (e.g. services will be suspended until payments are made)

Once all parameters regarding payment due dates, grace periods, penalties and consequences have been agreed upon and specified in the service agreement, you can check this off your list and move on to the next step.

Describing the consequences of late payments

• Outline the consequences of late payments, such as a late fee, suspension of services, or termination of the agreement.
• Make sure the consequences are enforceable, reasonable, and proportionate to the services provided.
• Specify the amount of any late fee or other penalty.
• When you’re done, make sure the late payment clause is a part of the agreement and is legally binding.

Confidentiality and Non-Disclosure

• Include a clear clause outlining the confidentiality and non-disclosure agreement between both parties
• Specify the parties’ obligations in upholding the confidentiality of information
• Describe what information must be kept confidential, and for how long
• Note any exceptions to the confidentiality agreement
• Clarify any penalties that may be incurred for violating the agreement
• When finished, review the confidentiality agreement thoroughly to ensure it meets all legal requirements
• Check off this step and move on to the next step to describe the obligations of each party when it comes to the sharing of confidential information.

Describing the obligations of each party when it comes to the sharing of confidential information

• Review the definition of confidential information in the agreement
• Outline the specific obligations each party has with respect to the sharing and handling of confidential information
• Ensure that all obligations are adequately detailed and that they are in compliance with any applicable laws or regulations
• Specify how confidential information will be stored, protected, and accessed
• Outline any restrictions that each party must adhere to regarding the sharing of confidential information
• Specify any applicable penalties for breaching the confidentiality agreement
• When all obligations have been outlined and agreed upon, both parties should sign and date the service agreement.

Outlining any restrictions on the use of confidential information

• Establish what’s considered confidential information
• Decide how long the restrictions will last
• Identify who is responsible for maintaining the confidentiality of the information
• Specify how confidential information can be shared
• Set out any consequences for a breach of confidentiality
• Include any other relevant restrictions
• Check your agreement to ensure all restrictions are properly and clearly stated
• Once you have outlined any restrictions on the use of confidential information, you can move on to the next step: Intellectual Property.

Intellectual Property

• Determine whether the service provider or the customer will own the intellectual property created during the agreement.
• Include a clause in the agreement stating who will own the intellectual property created during the agreement and the associated rights.
• Additionally, insert a clause stating that any intellectual property owned by the service provider prior to the start of the agreement will remain their property.
• Once these clauses have been added and both parties have agreed to the terms, you can move on to the next step.

Establishing ownership of any intellectual property created during the agreement

• Determine which party owns any intellectual property created in the course of the agreement
• Set out who will have the right to use the intellectual property after the agreement has been terminated
• Make sure that any intellectual property created during the agreement is clearly identified in the agreement
• When the parties agree to the ownership of the intellectual property, you can check this step off your list and move on to the next step.

Describing the terms under which intellectual property can be used by each party

• Define the scope of use for each party and the intellectual property in the service agreement
• Establish the restrictions on the use of the intellectual property, such as prohibiting its use by third parties
• Include any restrictions on how intellectual property can be used, such as prohibiting its use for commercial purposes
• Specify any requirements for attributing credit to the creator of the intellectual property
• Include a clause that allows for the termination of the service agreement if either party breaches the agreement
• When applicable, include a clause that establishes the rules for licensing or transferring the intellectual property
• When you have written down all the terms and conditions of use for the intellectual property, you can check this step off your list and move on to the next step.

Termination Clauses

• Outline the conditions that would lead to the agreement’s termination
• Describe how the termination process would work and detail any notice, termination fee, or other obligations that would arise in the event of termination
• Specify the conditions under which either party can terminate the agreement without cause
• Set a timeline for termination of the agreement
• Include any other relevant detail

Checklist:

• Outline termination conditions
• Describe termination process and related obligations
• Specify conditions for termination without cause
• Set timeline for termination
• Include any other relevant detail

Once you have all of the items on the checklist above completed, you can move on to the next step: setting forth the different ways the agreement can be terminated.

Setting forth the different ways the agreement can be terminated

• Identify the different ways the agreement may be terminated – for example, termination by breach, termination by convenience, or termination by expiration
• Include language making clear that either party may terminate the agreement with notice
• Specify the amount of notice that must be given prior to termination
• Make sure to include any termination fees that may be applicable to the agreement
• Describe any circumstances in which a party may terminate the agreement without notice
• When you’ve finished, you’ll have completed this step in creating your service agreement and can move on to the next step - describing the obligations of each party in the event of termination.

Describing the obligations of each party in the event of termination

• Outline the expectations of both parties when the agreement is terminated.
• Include details such as deadlines for returning any materials, payment obligations, and other requirements.
• Ensure that the obligations of each party are clearly stated and easy to understand.
• Once you have described the obligations of each party upon termination, you can check this step off your list and move on to the next step.

Dispute Resolution

• Define the process for resolving disputes between the parties. This can include arbitration or mediation, or another process agreed upon by the parties.
• Describe how the parties will work together to resolve the dispute. This can include meeting with a third party mediator, or discussing the dispute between the parties and coming to a mutually agreed-upon resolution.
• Make sure to include any timelines or other requirements that must be met in order to resolve the dispute.
• Describe any remedies or other actions that may be taken if the dispute cannot be resolved.
• Make sure that the dispute resolution provisions are clearly written, easy to understand and enforceable.

You’ll know that you’ve completed this step when you have drafted and agreed upon a dispute resolution process for the parties in the service agreement.

Describing the process for resolving disputes between the parties

• Clearly define and document the dispute resolution process for both parties to follow
• Ensure the dispute resolution process is fair and balanced for both parties
• Include a timeline for the dispute resolution process
• Specify the methods of communication to be used between the parties (e.g. email, in-person, etc.)
• Outline when and how disputes will be escalated to the next level
• Once completed, this step will be considered finished and you can move on to the next step of Establishing the criteria for when a dispute will be resolved through mediation or litigation

Establishing the criteria for when a dispute will be resolved through mediation or litigation

• Determine the circumstances in which a dispute will be addressed through mediation or litigation
• Outline the types of disputes that will be addressed through mediation or litigation
• Agree on the timeline for when a dispute must be resolved via mediation or litigation
• Establish the criteria for when a dispute will be addressed through mediation or litigation
• Set the criteria for when a dispute must be addressed through mediation or litigation
• When all parties agree to the criteria and timeline, check off this step and proceed to the next step.

Indemnification

• Determine the types of losses and damages that will be indemnified by each party, such as court costs, attorney fees, and damages.
• Specify whether the indemnifying party will be held liable for any indirect or consequential losses or damages.
• Establish the limits of liability and the respective obligations of each party in the event of a legal dispute.
• Agree on the procedures and timeline for the indemnifying party to fulfill their obligation.

Once you have included the necessary details regarding indemnification in the service agreement, you can move on to the next step.

Describing the obligations of each party in the event of a legal dispute

• Draft a dispute resolution clause that outlines the obligations of each party in the event of a legal dispute.
• The clause should include details such as which state’s laws will apply and whether any mediation or arbitration is required.
• It should also include any specific details related to the services being provided and the relationship between the parties.
• When complete, review the clause with the other party and make sure you both understand and agree to the terms.
• Once both parties have agreed to the clause, the service agreement is ready for signing.

Outlining the process for indemnifying the other party in the event of a legal dispute

• Include a clause that states the party who is seeking indemnification is the “Indemnified Party”
• Specify which actions would be covered by the indemnification clause
• Describe the type of damages and losses that will be indemnified
• Explain the limits of liability of the party providing indemnification
• Make sure to include a provision that limits the indemnification to actions that are legal
• Outline the process that should be followed in the event of a dispute
• Include a clear explanation of which party is responsible for the costs associated with legal action
• Establish a timeline for when the indemnifying party must respond to legal action
• How you’ll know when you can check this off your list: When you have included all the elements mentioned above in the service agreement.

Applicable Law

• Understand which jurisdiction applies to the agreement
• Include an applicable law clause that specifies the governing law of the agreement
• Ensure that the governing law clause is clear and unambiguous
• Include a jurisdiction clause that specifies the jurisdiction in which the parties agree to have the agreement enforced
• This step is completed when the applicable law and jurisdiction clauses are complete and included in the agreement.

Specifying the law that will be used to interpret the agreement

• Determine the governing law of the agreement, which is the law that will be used to interpret the agreement and settle any disputes that may arise.
• If both parties are based in different countries, then the agreement should specify a governing law that is mutually agreeable to both parties.
• Consider including a choice of forum clause in the agreement, which is a clause that stipulates the court of law where any legal disputes will be heard.
• Once the governing law and choice of forum clause have been determined, include them in the agreement.
• Check off this step when you have specified the governing law and choice of forum clause to be used for the agreement.

Outlining the jurisdiction in which any legal disputes will be heard

• Identify the governing state’s law that applies to your agreement
• Include the jurisdiction clause in the contract, specifying the state where any legal disputes will be heard
• Make sure that both parties agree on the jurisdiction clause and sign the contract
• Once you have completed and signed the contract, you can move on to the next step of the guide.

Signatures

• Ensure both parties have read and understood the agreement before signing
• Obtain signatures from both parties on the date the agreement was made
• Each party should keep a copy of the signed agreement for their records
• Once all signatures are obtained and the agreement is signed, the agreement will be legally binding
• You know you can check this off your list and move on to the next step once both parties have signed the agreement.

Describing the process for signing the agreement

• Decide who will be signing the agreement and how many parties will be involved
• Determine the method of signature (e.g. email, physical signature, etc.)
• Specify the requirements for valid signatures (e.g. full name, title, witness, notary, etc.)
• Outline the process for obtaining signatures (e.g. in-person, via mail, etc.)
• Once all parties have signed the agreement, you can move on to the next step.

Specifying the date upon which the agreement will become effective

• Include the date that the agreement will become effective at the top of the document.
• Include a clause in the agreement that states that the agreement will become binding on the date that it is signed by both parties.
• Ensure that both parties are available to sign the agreement on the specified date.
• Once both parties have signed the agreement on the specified date, the agreement will become effective.

FAQ

Q: How do I know if I need a Service Agreement?

Asked by Thomas on April 5th, 2022.
A: Whether you need a Service Agreement depends on the type of work you are doing, and the parties involved. Generally speaking, a Service Agreement is used to protect both parties involved in a transaction, outlining the services to be provided, payment terms, and other important details. If you’re providing services to another party or engaging in any type of business transaction, it’s essential to consider drawing up a Service Agreement.

Q: What type of information does a Service Agreement need?

Asked by Emma on February 13th, 2022.
A: A Service Agreement should include all the pertinent details of your transaction with another party. This includes the scope of work being done, payment details and terms, confidentiality provisions, liability clauses, and any other information that might be necessary for the transaction. It’s important that each party understands their rights and responsibilities under the agreement in order to avoid any potential disputes down the road.

Q: What jurisdiction’s laws will my Service Agreement follow?

Asked by David on May 8th, 2022.
A: The jurisdiction under which your Service Agreement will be governed depends on the jurisdiction in which either party is based. If both parties are based in the same jurisdiction, then that jurisdiction’s laws will apply. If one or both parties are based in different jurisdictions, then it’s best to agree upon which jurisdiction’s laws will apply in advance.

Q: How do I ensure my Service Agreement is enforceable?

Asked by Jessica on June 10th, 2022.
A: The most important factor when it comes to ensuring that your Service Agreement is enforceable is that it must be expressed clearly and concisely. It should also include details such as payment terms, scope of work being done, confidentiality provisions and liability clauses that are necessary for the transaction to be valid. Furthermore, make sure both parties are aware of their rights and responsibilities under the agreement and have signed it before commencing any work together.

Q: Do I need an attorney to create a valid Service Agreement?

Asked by Benjamin on March 3rd, 2022.
A: While having an attorney draft your Service Agreement can provide additional peace of mind when it comes to legal matters, it isn’t always necessary for creating a valid agreement. Many individuals and companies are capable of creating a valid Service Agreement themselves with some research into their particular needs and industry-specific legislation. However, if you want to ensure that your agreement is completely enforceable and up-to-date with the law then consider seeking legal counsel from an experienced attorney who can provide advice tailored to your needs.

Q: Can I use one generic Service Agreement for all clients?

Asked by Matthew on July 11th, 2022.
A: Generally speaking, it’s not recommended to use one generic Service Agreement for all clients due to the potential risk of leaving out important details specific to each client or transaction. It’s best practice to create a custom agreement for each transaction that outlines all the specific details pertaining to that particular client or project in order to ensure that both parties understand their rights and responsibilities under the agreement.

Q: Is there a difference between a US service agreement and one from another country? Asked by Jacob on August 12th, 2022.

A: Yes - there are differences between service agreements from different countries as each nation has its own laws governing contracts and agreements between individuals or companies within its borders. It’s important to research what laws apply in each country before entering into any contracts or agreements with parties from outside of your home country in order to ensure compliance with applicable laws and regulations. Additionally, take into account any international trade laws relevant to your particular industry or sector when creating your service agreement.

Q: How often should I update my service agreement?

Asked by Michael on September 2nd, 2022.
A: The frequency with which you update your service agreement depends on several factors such as changes in applicable regulations or laws and changes in either party’s responsibilities under the terms of the agreement. It’s best practice to review your service agreement regularly (at least once per year) in order to ensure that it remains compliant with applicable laws as well as relevant business practices within your particular industry or sector. Additionally, if either party’s responsibilities change significantly then it may be necessary to update the agreement sooner than once per year.

Q: How detailed should my service agreement be?

Asked by Joshua on October 27th, 2022.
A: The level of detail included in your service agreement depends upon how complex your particular transaction is as well as what industry/sector you are operating within as certain industries may require more detail than others due to regulations or other legal requirements. Generally speaking however, it’s important to include all relevant details such as payment terms and conditions; confidentiality provisions; timelines; scope of work; liability clauses; dispute resolution process; termination provisions; etc., in order for the contract to be legally binding and enforceable between both parties involved in the transaction .

Q: Are there certain clauses I should include or exclude from my service agreement?

Asked by Andrew on November 14th 2022.
A: Yes - depending upon what industry/sector you operate within as well as what type of services you are providing there may be certain clauses which should be included or excluded from your service agreement in order for it to remain legally binding and enforceable between both parties involved in the transaction . For example - If you operate within a regulated industry then there may be clauses which must be included in order for compliance with applicable regulations while at the same time there may also be certain clauses which must be excluded under those same regulations . It’s best practice to consult with an experienced attorney who can provide advice tailored specifically towards your situation when creating a service agreement .

Q: When should I seek legal advice regarding my service agreement?

Asked by Christopher on December 19th 2022.
A: When creating any legal document such as a service agreement , it’s always best practice to seek legal advice from an experienced attorney who can provide advice tailored specifically towards your situation . An attorney can help ensure that all relevant information is included , advise on potential pitfalls , provide guidance regarding any applicable laws/regulations , and help ensure that both parties understand their rights and responsibilities under the contract . Additionally , they can review any existing documents prior to signing them , making sure they are legally binding .

Example dispute

Lawsuit Involving Service Agreement

• Plaintiff must be able to prove that the service agreement was valid and binding, and that the defendant breached the agreement by failing to meet their obligations.
• The plaintiff must also be able to demonstrate that they suffered a tangible harm as a result of the defendant’s breach.
• The plaintiff should provide evidence of the service agreement, such as a contract, invoice, or receipt, as well as any other relevant information or documents.
• The plaintiff should also be able to prove that the defendant was aware of their obligations under the service agreement and that they failed to meet them.
• Settlement could be reached through negotiations between the parties or a court-ordered judgement, depending on the circumstances.
• If damages are awarded, they will be determined based on the terms of the service agreement, the extent of the breach, and the harm caused to the plaintiff.

Templates available (free to use)

Standard Directors Service Agreement

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