Service Agreements

Service industry forms the tertiary sector among the four economic sectors. The others being (i) Primary sector which includes agriculture, fishing, mining etc; (ii) Secondary sector which includes manufacturing, and (iii) Quaternary sector which includes education, information technology, etc. These four sectors can rightly be called the pillars of any economy. The strength of each pillar determines the stability of the structure in whole. So, it is of vital economic and national interests to focus individually on service sector as it is a productive and high revenue-generating sector.

What Is A Service?

A service is an activity where individuals use time and knowledge to create a saleable service as distinguished from a product. The nature of the resulting services are intangible and they may or may not involve the use of tangible products in order to facilitate the service: for example, food in a restaurant. A service may be directed towards a business or a final consumer. It may be wholesale or retail in nature. Though information related industries such as education and IT are regarded roughly as services, they have been classified as a quaternary sector by many economists.

Examples Of Service Industries

We consume services throughout our daily activities. We shop for groceries online using popular e-commerce platforms. We book tickets for movies and book a cab to go to the cinema. The cab company gives us the service of transport while the cinema hall entertains us with the show. When we make the payment, the bank provides us service. The security services at the cinema ensure our safety. The food counter services ensure that we get our goodies right at our seats. Imagine the worth of all the services put together in just watching a movie!

What Are Service Agreements?

As we observed earlier, there are plenty of service providers who assist us at each step of a transaction. If you examine closely, you will find that most services are provided by third parties.  For example, when you order a book online, it is not the publisher who delivers it to you. The publisher, the agency, the distributor and the delivery agency are all different from one another. The book may be from ABC publishers, the seller may be XY agency, the platform of distribution may be AAA kart and the distribution agency, YYY logistics. When you watch a movie, the valet may be from one agency, the housekeeping from another and the security from a third agency. The catering may be carried out by a specialised agency altogether.

The reason for this separation is to enable specialisation and increase efficiency. It would be commercially unviable for any business to take up all incidental activities up to the delivery of the product or service. Hence, the easiest way out turns out to be the outsourcing of such tasks to third parties who function as independent contractors. In other words, the creation of service agreements with third parties.

Examples Of Service Agreements

1. Housekeeping agreement
2. Security Service agreement
3. Software Development agreement
4. Catering agreement
5. Bank loan agreement
6. Manpower Supply agreement
7. Event Management agreement
8. Transportation agreement
9. Software Maintenance agreement
10. Parking Maintenance agreement
11. Hardware Maintenance agreement
12. Website Development agreement
13. Hire Purchase agreement
14. Maintenance agreement

What Are the Important Points To Be Mentioned In Service Agreements?

Just like humans are social animals, and dependent upon each other for survival, businesses are interdependent upon each other in a symbiotic bond.

A service agreement is a medium through which the relationship between two entities is cemented. The roles of the parties are mentioned in minute detail as well as the transaction value and remedies in case of a breach.

Following are some of the essential contents of a service agreement.

1. Nature of the work
   The exact details of the work to be completed needs mention, along with the scope of the service and what is included and what is not.
2. Details of the parties
   The details of parties entering into the agreement should be mentioned. The nature of their business and the scope of their services can be mentioned as an introduction.
3. Duration of the agreement
   Whether the agreement goes on till completion of the work or for a fixed duration can be written.
4. Independent Contractor
   A service provider’s relationship with his client would be that of an independent contractor and not of other nature like employer-employee or principal-agent
5. Timings and place
   ‘Where’ and ‘When’ are matters of importance in a service agreement. A service would be worth only if it is available in time and at the right location. If a service provider fails to keep up, the service would be worthless
6. Manpower details
   If there is human resource involved, the number required, qualifications and other requirements have to be clarified along with their remuneration details, including amount and duration for calculation of remuneration.
7. Indemnification
   It shall be the responsibility of a contractor to indemnify the client against all losses caused due to the negligence or errors of the manpower provided by him/her. This needs to be made clear.
8. Resources to be provided for the service
   If the service requires support from the client’s side, it needs to be expressly agreed and stated in the agreement.
9. Termination of the agreement
   Usually, an agreement may be ended by completion or by mutual decision to terminate with or without penalty. If there is any breach, the aggrieved party may also be allowed to terminate the agreement after providing notice.
10. Dispute Jurisdiction and applicable laws
    What the parties may choose in order to get remedy under a breach can be detailed to avoid possible breaches of the agreement.

Why LegalDesk.com?

As the nature of services is immensely diverse, the important terms would be specific to the type of service and cannot be mentioned in general terms. Hence, choose LegalDesk.com’s service request option offers you the option of creating your own service agreement- complete and personalised. While others need to be meticulously created after studying your individual requirements. Choose LegalDesk.com and remain carefree about all your legal requirements!