Service Contract Do's and Don'ts to Consider
Service businesses rely on contracts to ensure their clients clearly understand what is and is not included with a service. When you are setting up a service agreement, you want to be sure that your contract is clear, concise, and understandable. Doing so protects your business and gives you peace of mind. A service contract template is a good starting point, but you will need to customize it for your specific business and service.Download Template
Here are some important dos and dont's when making a service contract agreement.
Below We’ll Cover:
To help you understand how to best use a service contract template, we’ll help you with these important details:
- Important Clauses to Include
- Tips to Make Your Contract Clear
- Mistakes to Avoid
- Related Resources
- Making It Final
Do Remember These Important Clauses for a Service Contract Template
Make sure your service contract template has these clauses which serve as important protections.
- Term/Duration Clause – This clause states how long the contract remains in effect, which will dictate how long the working relationship is valid.
- Responsibilities Clause – Outline what the responsibilities are both for yourself and for your client. This clause is where a lot of your customization needs to happen.
- Payment Clause – Clearly outline how and when you will be paid and what the costs for your service will be.
- Modifications Clause – Will you allow amendments or modifications to the contract’s terms? If so, make it clear how and when that can happen.
- Representations and Warranties Clause – Service contractors often get hired because they have abilities or expertise to claim. A representations and warranties clause outlines what you are warrantying or what abilities or credentials you claim.
- Relationship of Parties – Many service businesses perform their work as independent contractors. This clause will stipulate that position and what it entails, therefore clarifying that the contractor is not an employee of the company.
Do Follow These Tips
When you download a service contract template, it will not be specific to your business. Many pieces of boilerplate language will be in the contract, and those can stay, but some areas will need customizing to your specific business practices. Here are some tips to help:
- Read through the contract and customize it where needed to apply to your business.
- Keep any state-related content that is necessary for legal reasons.
- Make sure the contract has all the clauses you need before sending it to get signed.
- Collect a signature. Remember you can use Nitro Sign to get any of your contracts or important documents signed.
Don’t Make These Mistakes
There are some mistakes that you can make when customizing your contract as a service provider. Don’t fall victim to these problems:
- Not including a liability or indemnity clause. This clause protects your business should something negative happen that leads to damages or losses. It is a vital protection.
- Not outlining how you will be paid. Will you take cash, check, or card? How will you ensure the checks are not fraudulent?
- Not outlining how disputes are resolved. Disputes are common in service-related businesses. Make sure you tell the person in your contract if you will take disputes to mediation, arbitration, or court.
- Not making the service contract specific for your type of service. For example, if you are a consultant, you may need to add an intellectual property clause, but if you are an HVAC service contractor, you may need a workmanship warranty clause.
Don’t Overlook These Resources
Here are some helpful resources to check before writing your service contract:
- Most Important Agreements and Their Clauses for a Service Provider
- Nolo: How to Draft a Service Agreement
- Forbes: Four Clauses Every Business Contract Should Have
Do Make the Contract Final
Always finalize your contract by collecting a signature. Nitro Sign makes it easy to collect signatures digitally and securely, so both you and your client are protected. Sign up for your free trial of Nitro Sign today.