A service agreement is one of the most versatile contracts in business, governing relationships between service providers and clients across every industry. Whether you're providing marketing services, IT support, consulting, or any other professional service, a well-drafted service agreement protects both parties and sets the foundation for a successful engagement.
Start by clearly defining the services to be provided. This section should be specific enough to set clear expectations but flexible enough to accommodate the natural evolution of the engagement. Use measurable deliverables where possible—instead of 'provide marketing support,' specify 'create and publish 12 blog posts per month of 1,000-1,500 words each.' Include any assumptions or dependencies that affect service delivery.
Payment terms should cover every aspect of the financial arrangement. Specify the fee structure (hourly, project-based, retainer, or a combination), invoicing procedures and payment deadlines, accepted payment methods, late payment penalties and interest charges, expense reimbursement policies, and any circumstances that trigger additional fees. Clear payment terms prevent the most common source of service agreement disputes.
Service level expectations—often formalized as a Service Level Agreement (SLA)—define the quality and performance standards for the services. This might include response times for support requests, availability or uptime guarantees for technology services, quality benchmarks for deliverables, and reporting frequency and format. SLAs should include remedies when standards aren't met, such as service credits or the right to terminate.
Intellectual property provisions are critical in service agreements, especially for creative, technology, and consulting engagements. Address who owns work product created during the engagement, whether the provider retains any rights for portfolio or similar use, how pre-existing IP is handled, and licensing terms if full ownership transfer isn't appropriate.
Liability and indemnification clauses allocate risk between the parties. Consider including a limitation of liability that caps the maximum amount either party can be liable for, mutual indemnification for each party's negligence or breach, exclusions for consequential, incidental, or punitive damages, and insurance requirements for both parties.
Confidentiality provisions should protect sensitive information shared during the engagement. Both the provider (who may access the client's proprietary data) and the client (who may learn about the provider's methodologies) should be bound by appropriate confidentiality obligations that survive the termination of the agreement.
Termination provisions should address both planned and unplanned endings. Include the notice period required for termination without cause, grounds for immediate termination (material breach, bankruptcy, etc.), transition obligations (knowledge transfer, return of materials), payment for work completed before termination, and survival of obligations that extend beyond termination (confidentiality, IP, indemnification).
