Creating A Service Agreement For Your
Corporation Or LLC
The most successful Service Agreements are no longer than two pages
in length. The front side is very customer and selling
friendly while the back side contains all the fine print and legal
jargon. Granting of guarantees, warranties and other customer
friendly concepts should be incorporated into the front of the
Service Agreement while the back side covers all the legal terms
such as length of the agreement, compensation, expenses, penalties,
late payments, customers right to cancel, refund, scope of service,
limitation of liability, credit extension, mediation, arbitration,
governing law, assignment, modification, attorneys fees.
Following is a thorough description of
the various sections of a general service agreement:
Warranty Terms
If services or equipment is warranted, the terms of such warranty
should be summarized on the front of the contract and detailed on
the back.
Term
The term of the commitment should reflect the type of transaction
being contemplated. For instance, if the service includes a rental
of equipment, then the term generally requires a return within a
relatively short period of time. However, if the contract is for
services, the term may be substantially longer. This is especially
true if such services are provided in conjunction with the sale or
rental of goods and/or equipment.
Buyer's Right to Cancel
Many states have laws giving consumers a specific right to cancel
certain contracts if the agreement was entered into under
circumstances in which the state believes the consumer may have been
at a bargaining disadvantage. Often, the state mandates that a
written term be included in the contract at or near where the
consumer signs in order to provide the consumer conspicuous notice
of his/her rights under state law.
Scope of Work
The actual services and/or goods provided should be clearly
described in order to prevent the inference by the consumer that
additional work is included in the sale.
Limitation of Liability
A clear description of what the seller is and is not responsible for
following services rendered should be included here. Except for
express warranties specified in the agreement, if any, the service
provider should disclaim all other implied warranties or oral
representations.
Credit
If the service-provider will extend credit to the consumer in order
to pay for services, there should be a separate provision detailing
such terms and conditions. In addition, the provider should confirm
the credit-worthiness of any prospective borrower by conducting a
thorough credit check according to a credit application completed by
the prospective borrower.
Severability
In the event any part, portion or provision or paragraph of this
Agreement is declared void or invalid, the remaining portions of
this Agreement are not affected and remain in full force and effect.
Mediation and Arbitration
Mediation and Arbitration should always specify a location in a
convenient jurisdiction (preferably, in the same county where they
run their business). Mediation is a non-binding way to settle the
dispute quickly and amicably. If unable to settle in mediation,
arbitration is first option available. Arbitration is the preferred
alternative to litigation because of speed, cost, and ability to
maintain low profile (no info is publicly available).
Governing Law
Always stipulate that the contract will be governed under the
law and jurisdiction where business is conducted. Always make sure
that venue and jurisdiction are convenient.
No Modification or Waiver
No modifications except those specifically agreed upon by the
parties in writing. Any waiver of a term or provision will not act
as a waiver of any other provision.
Entire Agreement
This agreement constitutes the entire agreement of the parties and
may be modified only in a writing executed by both parties.
Notices
Notices should always list the current and best addresses where
each party may contact the other for whatever reason.
