Just like the name suggests, a service contract is an agreement between one company and another or between one company and a freelance individual to perform a particular task or job over a set period of time for a set amount of money. A service contract can be just as simple as that, or, if the contract is for an extended period of time or for a large amount of money, the contract can balloon up in size so that every conceivable base is covered along the way. Let’s take a look at how service contracts work.
The driving force behind the lengthy service contract is simply protection. The company issuing the service contract simply wants to ensure that their interests are protected, no matter what, and it is those words that can turn a simple 2 to 3 page contract into an encyclopedia. A basic service contract starts with the names of the parties involved, and the dates in which the service contract is valid. The next section of the contract explains what the job in question is, how it is to be done and under what terms. Often times the time frame in which the job can be completed is repeated here for emphasis. The next part of the contract will go over the financial terms of the deal, including the budget for the project and the pay allotted to the company or individual performing the services in question. The final part of the contract is simply where both parties sign. It can be as simple as that, but in most cases, it isn’t.
On more complicated service contracts, there will often be expanded sections that go into great detail about the work that is being done so that there aren’t any second guesses once work gets under way. This section can be as long or as short as both parties agree for it to be. Many contractors prefer to have this part of the contract be quite long as to eliminate any kind of confusion later on.
Some service contracts name investors that are part of the financial terms. This only really happens when the financial terms are huge and one payee can’t cover the total cost. One newly added part of most service contracts is a separate or embedded section on confidentiality and non disclosure. With this part of the contract, the companies agree not to share or disclose what could be any kind of trade secrets or even national security issues. It is almost impossible to find a service contract these days that doesn’t have at least one section on privacy or confidentiality.
Finally, some service contracts contain a section on non-competition. A non competition clause requires that a company or individual can’t work for a competing company for a set amount of time. The idea is that the company being used in the service agreement now has too much vital information that can be passed on to the competition. Service agreements are a common part of today’s business world.
