Josephine Seibert June 10, 2019 Service Agreement
Your service agreement should state the term of the contract and include any renewal provisions. It should also indicate the circumstances under which either party is permitted to terminate the agreement. Because contract termination rights are regularly associated with events of default, the agreement should also outline what constitutes a default by either party under the agreement.
An indemnity is a contractual obligation by one party to be responsible for certain loss, damage or liability incurred by the other party. Indemnities are often heavily negotiated, and as matter of course the service provider should try give as few indemnities as possible (the customer will always be able to try to sue at common law for losses suffered even if there is no indemnity). Try to limit any indemnity that the service provider does give by carving out liability arising from the customer’s own negligence or intentional misconduct.
A service agreement can be prescriptive and specify rights, responsibilities and obligations of the parties or can provide flexibility. In particular, in a service agreement it is particularly important to confirm whether the service provider can subcontract the services to a third party.
Regardless of the contract structure, however, all service agreements should address the ten important issues discussed below. Note that this article is written from the service provider’s point of view – customers reviewing service agreements may be concerned about different issues, and may have different perspectives on the issues.