As a business that provides services, you need to ensure that you have properly drafted service agreements. This agreement can clearly outline:

  • the scope of the services that you will provide;
  • how and when your clients must pay you;
  • the limitation of your liability and responsibility when something goes wrong; and
  • the dispute resolution process if anything goes wrong.

This article will discuss some of the clauses that you should include in your service agreements.

What Are Service Agreements?

A service agreement is a legally binding document between you, as the service provider, and your client, who is receiving the services. A service agreement sets out the terms of the engagement and covers each party’s rights and responsibilities. Depending on how the agreements are signed or accepted, it should contain or reference the commercial details of the arrangement. You can set out these details in a schedule attached to the agreement and include the: 

  • party names;
  • scope of the services;
  • important dates and times;
  • price;
  • payment terms, and 
  • any other details that are particular to the arrangement.

Engagement Clause

Under a services agreement, the service provider can be engaged as: 

  • a contractor; or 
  • an employee.

The legal obligations of a service recipient differ depending on whether they engage an employee or a contractor. 

Employees have a legal entitlement to:

  • minimum employment standards;
  • be paid superannuation contributions by their employer; and
  • have their PAYG tax contributions withheld and paid on their behalf.

A contractor, on the other hand, is regarded as being independent and in business for themselves. Accordingly, they have no such employee entitlements

Consider which type of engagement mechanism is right for you.

Indemnities Clause

A contractual indemnity is a form of security or protection against loss or burden. The clause covers a situation where loss or damage occurs during the provision of services. This clause often includes the legal fees sustained by another party -usually the other contracting party or a third party. 

The main objective and effect of a contractual indemnity clause are to alter the otherwise standard legal rights of the parties. When reviewing indemnity provisions, it is essential to:

  • tailor the clause to the particular circumstances of the engagement;
  • ensure that you can meet the obligations imposed upon you under the clause; and 
  • take out insurance to cover you.

Limitation of Liability Clause

Liability clauses limit or exclude the parties’ liability under the contract. Liability clauses can limit or exclude the liability of one, some or all of the parties under the agreement. 

Where such clauses purport to limit rather than exclude liability, they often do so by reference to a maximum dollar amount that can be claimed in compensation. 

Here, consider whether you can meet the obligations imposed upon you under a limitation of liability clause and what you need to do to protect yourself as well.

Insurance Clause

You should be aware of any insurance you may need to obtain under the contract. Further, find out whether the contract requires you to list any parties as interested third parties on the policies, and whether this is possible under your policy. 

Ultimately, it is important to ensure that you are adequately covered by insurance.

Key Takeaways

When engaging someone to perform services, ensure that you have a comprehensive service agreement. Ensure that you are aware of the employee or contractor status of the service provider, and think about including clauses that will limit your liability, and cover you in case of loss or damage. If you need any assistance drafting or reviewing a service agreement, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy