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Generally, the service provider provides a service or services to the principal for a fee and may also be reimbursed for pre-agreed out of pocket expenses. These amounts, and any limits that may apply, should be clearly specified or otherwise a way of calculating the relevant amounts should be included in the service agreement.

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Like any contract, the service agreement should be clear on the fundamental business terms: who is doing what, and when, where and how are they doing it? These terms may be directly addressed in a single-purpose services contract, or may be addressed in a master services agreement with multiple project-specific work orders or statements of work entered into from time to time.

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You should take as much time and effort as needed to make sure that your form service agreement is as favorable to your company as possible and most accurately reflects your company’s objectives. When the form is in the right shape, all you will need to do is fill in certain blanks for each new client, after having negotiated only a limited number of contract terms. The title of the agreement can be anything you see fit, whether it be a “Service Agreement,” “Client Agreement,” “Customer Agreement,” or some other title that incorporates the name of your company.

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Businesses often use MSAs to help make contract negotiations simpler. This agreement lets both companies spend their time discussing the terms of the deal. Then, they can proceed with the work outlined in the agreement. If you don`t have an MSA, the customers and the company can still work through issues, but there are big concerns that might derail the contract. Having an MSA before having a specific contract lets companies focus on what their particular contractual issues are, such as the time frame and the price, for when the contract actually arises.

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The service provider may agree to provide a one-off service for a set fee or continuing services to the principal for a pre-determined length of time or on an ongoing basis for a fee. Generally, a service agreement may be terminated by notice of either party or on the occurrence of a specified event (e.g. death or bankruptcy of one of the parties).

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Probably the most critical component of your service agreement is the description of the services that your company will provide. For a number of reasons, you should define the services as specifically as you can. If you describe your services too broadly, you might inadvertently find yourself in a situation where the client expects their fees to include certain perks or actions that you never contemplated. From a negotiation and clarity standpoint, it’s a much better approach to narrowly define your services and then leave it up to the client to propose anything additional that they might require. Similarly, the contract should also define any extra services as precisely as possible and clearly state the related fees.

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