Service provider contracts are one of the most sought-after products from business attorneys, and with good reason. When drawn up correctly, these contracts have the ability to define the relationship between a provider and client in a way that better protects their rights and safeguards their futures.
While there are available templates online for service provider contracts, these are general and basic documents that will not speak to each contract’s specific terms and circumstances. It is highly recommended for individuals to enlist the help of a quality and experienced business attorney to assist with the drafting and review of service provider contracts. This is a proactive way for a party to protect themselves and their business under the guidance of a legal professional.
What Are Service Provider Contracts?
Service provider contracts are typically written agreements between a service provider and their client. The goal of the contract is to provide certain protections to both the provider and client. It is a legal document that is considered binding to those who sign it.
What Constitutes a Service Provider?
Essentially, a service provider is a contractor that provides either tangible or intangible deliverables. Examples of a service provider could include a general contractor, construction company, management consultant, accountant, freelance writer, editor, photographer, graphic designer, public relations specialist, or web developer to name just a few.
What Is Typically Included in Service Provider Contracts?
These contracts serve as legal documents and are often long and detailed to ensure that the document is as comprehensive as possible.
Some of the terms usually covered in service provider contracts may include but are not limited to:
- Terms of the agreement. It is critical to the integrity of the contract to list what specific type of services will be addressed by the document as well as the scope of those services.
- A specific time frame for the agreement. This necessitates a start and end date for the contract.
- Compensation for the agreement. This part of the contract should provide specific details regarding the amount of money a client is expected to pay a service provider in return for services. In some cases, it may be wise to include a payment schedule for further clarity.
- Rights of the provider and client. The contract should clarify the rights of both parties as well as who owns the rights to data and/or projects created.
- Liabilities to the provider and client. To better protect both parties, the contract should specify limited liabilities.
- Confidentiality parameters. The agreement should address the right to privacy over data and information that is shared and created. This section is commonly utilized when there is a breach of contract.
- Ownership. In situations in which the provider and the client jointly create a new product or service, the contract should address which party should have ownership of it and/or its individual parts.
- Noncompete clause. To prevent competition, many clients prefer to work a clause into the contract that prevents the provider from working with one of the client’s competitors.
- Signatures of both parties. Service provider contracts do not become official until they are signed by both parties.
- Dispute resolution for potential breaches of contract. Should there be a breach of contract, this part of the agreement should speak to the process. This allows both parties to know the previously agreed upon protocol should there be a dispute in the future.
- Termination of contract. Every contract should provide verbiage about how a termination of the contract should be addressed if either party decides to end the agreement. This generally includes how a party should give the other party notice and on what timetable.
- Any additional pertinent details.
Do I Need a Service Provider Contract?
The answer to this question is a resounding yes. Any party entering into a service agreement with another entity should have a legally binding service provider contract.
One of the most common mistakes for service provider contracts can be two parties striking an oral agreement that is not in writing. Without a written agreement that contains specific details of the above components, there is much left up to interpretation, and that could spell big trouble.
Protect yourself and your rights by working with a respected attorney to create a written service provider contract that will be acknowledged by a court of law.
How A Business Attorney Can Help with Service Provider Contracts
For a contract to be valid and legally binding, the proper drafting and review of this agreement is key. Whether a service provider contract is more basic or complex in nature, it is essential to have a reputable and experienced business attorney assist with the formation of the document.
In addition to ensuring that a contract is valid and is in the best interest of their client, there are additional perks to working with a good business attorney, such as:
- Better protection of rights. An attorney’s job is to ensure that a contract that is drafted or reviewed is in the best interest of their client before the document is officially signed. In terms of protecting rights, an attorney can ensure that their client is better protected, even in the event that the unexpected happens.
- Personalization. A more inexperienced business attorney may use a contract template for much of the agreement. While it is okay to use a template as a starting point for a contract, it is not advised to use it verbatim. Most contracts require detailed information and clauses that pertain to their specific agreement. This language is part of what can work in favor of better protecting a party’s rights.
- Negotiation. Once a contract is put together, it may need to go through several drafts before it is acceptable to both parties. Part of the changes that occur after the first draft can be negotiations between either party’s attorney to add or subtract verbiage as necessary to make it more equitable.
If you need help with a service provider contract, be sure to work with a reputable business attorney today to learn more about the process and enlist their assistance in drafting or reviewing a contract that will serve you well.