Service Agreement
A Service Agreement is a contract that governs the provision of services in lieu of payment or other consideration. It can be used by any person or organization that provides services. Some examples include persons or entities engaged in the business of building and construction, and electrical work, as well as coaching, personal training, consulting, and professional services.
The Service Agreement will set forth the exact scope of work, as well as timeframes for completion of the work, payment terms, and dispute resolution mechanisms.
While Service Agreements simplify the process for resolving disputes, they also prevent many disputes from arising in the first place. They do this by forcing the parties to discuss and record the key elements of the agreement in advance, so a written service agreement is appropriate. If a written agreement for services is not entered into and the parties work through oral arrangements, they may miss crucial terms such as when payment is due, where the materials will be purchased, or who will pay for the materials. If these issues are not addressed up front, they can lead to costly legal disputes when they are finally discovered.
Contractor v Employee
Individuals or businesses using this document may need to consider the difference between a contractor and an employee. This Service Agreement allows you to hire a service provider as a contractor. This is different from an employment contract, which would allow the service provider to be hired as an employee and would require the provision of all kinds of benefits under labor laws.
The difference between an employee and a contractor is based on many factors, such as the degree of control, whether the contractor can work with other clients, whether they choose their own team to deliver the services, and whether the work can be sub-delegated. , and no single factor is determining. Mere use of this Service Agreement is not sufficient to convert an employee into a contractor. Instead, the courts will look at the entire agreement and decide whether the service provider is working within the company, as part of the company (as an employee with very little control), or whether the contractor runs his own business (as a contractor). ).
How to use this document
This Service Agreement can be configured to deal with an ongoing agreement for the provision of services or a single project.
In any case, the more details that can be provided regarding the various details of the agreement, the more likely it is that disputes will be avoided. Some important details to consider include:
- description of the work to be done
- how work will be determined to be complete and if there are any milestones
- when the payment will be released
- how the agreement can be terminated
- what the parties must do in case of disputes
Service providers must provide a new Service Agreement each time they undertake a new project, although a "project" may be ongoing indefinitely (for example, maintenance services). It will also be necessary to provide a separate Service Agreement to each different customer.
The Service Agreement will be legally binding when it has been printed on non-judicial stamp paper or electronic stamp paper and is signed by both the service provider and the client and is dated. The value of the stamped paper would depend on the state in which it is executed. Each state in India has provisions regarding the amount of stamp duty payable in such agreements. Information on stamp duty to be paid can be found on state government websites. For example, the Karnataka state website provides details of the stamp duty payable on deals, as does the Delhi website.
Both the service provider and the customer must retain a signed copy of the Service Agreement. To do this, two different copies can be signed, or if only one copy is signed, it can be photocopied and then distributed among the parties.