Service agreements and supply contracts cover a wide range of industries and commercial relationships, including:

  • Services from a business to a customer
  • Services between businesses
  • Service contracting and sub-contracting
  • Service management
  • Licensing arrangements
  • Franchising
  • Rental of products and services
  • Equipment provision

What is a service agreement?

A service agreement can involve any of the above situations and is a legally binding contract which outlines the terms, conditions, rights and obligations of each party.

Where to start

The title of the document should read “service contract”.

Below the heading insert the names and details of the parties, including their address, telephone number, fax and email address.  If a party is a company insert their ACN and if a party has an Australian business number (ABN) then that should also be inserted.

Also include details about the services being provided or performed under the contract.

Exclusions provision – An exclusion provision allows you to clearly state what is not covered by the agreement – be specific about what is not part of the agreement.

Timeline provision – If the service is a project which is going to take a certain amount of time then you should put a timeline in the agreement setting out what needs to be done and when, as well as any preliminary steps along the way.

Payment Terms – Determine how and when payments should be made.  You should state what will happen if payment is not made.  In most cases this gives the non-defaulting party a right of termination of the agreement.  In this section you should also state payment terms, including how payment will be calculated with reference to things such as an hourly rate.

Termination provision – Your service agreement should state the conditions of termination for the parties.  This provision might say they can terminate at any time or it may specify a notice period.  It may also provide for termination if a party breaches the agreement or that ‘mutual trust and confidence’ no longer exists between the parties.

Insurance Provision – The service agreement should state who is responsible for insurance, including the scope and extent of the insurance.  It may be appropriate to put a limitation of liability in this section to exclude liability for any actions or omissions which causes damage to the other party.

Intellectual Property (IP) Provision – This section will protect any patents or commercially sensitive information which the other party may gain access to through your transactions with them or to protect IP created by one or more of the parties.

Signatures – End with signatures from both parties and have the signatures witnessed.

Make duplicate copies

Ensure you make multiple copies for both parties.

Get online legal advice

Consider getting online legal advice or getting a contract lawyer to review the agreement.  A contract lawyer will be able to see any potential problems and can help prevent any legal issues before they arise.

You can also get a service agreement written up at LegalVision for a great fixed-fee price.

Lachlan McKnight
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