Service and supply contracts
Almost every business will have a variety of service contracts and these agreements vary widely between short form, fairly standardised types to very lengthy documents with numerous schedules including service level provisions and other important aspects.
The starting point for our clients tends to be to ask how important and valuable is the contract for services to the business?
High value, high importance or long term contracts generally need to be carefully thought through. An experienced lawyer will save time and money and add value. With critical services for your business which are long term, such as IT contracts, property management, security and many others, specific service level agreement aspects are very important and few generic contract templates will cover this because they commonly need to be negotiated.
As specialist commercial lawyers we deal with service agreements and service level agreements every day. Our experience, approach and flexible business model means we offer assurance and value when compared to much bigger City law firms.
Types of service contracts we regularly draft, review and advise on
- Independent Consultants and Consulting Agreements;
- Hospitality and Events Services Agreements;
- IT Services Agreements;
- Director service contracts;
- Management contracts including property management;
- Web design, marketing and advertising services contracts;
- Agent or distributor services agreements;
- Freight and logistics services contracts;
- Security related contracts
- Supply contracts generally
IT Supply contracts – don’t be afraid to negotiate
Whilst supply contracts are used in almost every sector and industry, among the most business critical and complex are IT contracts. As a customer, you may well be presented with a highly technical and lengthy document offered to you as standard terms.
If you are using a very large IT company, you may find that they resist changes to the agreement. Like all contracts, the starting point is that there is no such thing as a standard contract. Don’t be afraid to clarify or negotiate and we can help if needs be. A supply of services contract prepared by the supplier will usually have clauses favourable to it and not you.
How to write a Service Agreement
Vital clauses in any type of contract for services will include :-
- A clear and generally detailed description of the agreed services to be provided – in some cases it will also be important to specify exactly who will provide the services and where. This is especially relevant with consultants and where services can be provided remotely or at an office.
- Time – most service agreements include detailed clauses about when services will be provided and what happens if there are delays or time periods are not kept to.
- Duration – is the service contract just for a single set of services or is it an ongoing contract with a fixed time period or a rolling contract? Will it automatically renew or what notice periods are required?
- Payment terms – important in every contract!
- Breach of service agreement – this needs careful consideration. With some types of contracts, IT being the obvious one, even if the supplier fails to meet targets or KPI’s it may not be possible or desirable to terminate the contract. Options to keep the relationship on fairly good terms whilst focusing the supplier on keeping to the term agreed are common. These often include a formula involving service credits being given if there are delays or the supplier is not performing strictly as agreed.
- Limitation of liability – often a contentious issue.
- Confidentiality, IP GDPR, data protection and anti-bribery responsibility – these are increasingly vital clauses in almost all service contracts. Suppliers will often have access to data or vital information and know how. Responsibility and consequences of breach should be very clear.
- Ending the agreement – be clear as to what types of breaches of the contract are considered so serious as to give the other party the right to terminate the contract.
- Management of the supplier contract – with many long term contracts especially service level agreement contracts, there is a significant management and reporting aspect. Detailing who in the supplier will be the contract manager, reports that will be provided and other important points from the buyer perspective is important.
Service or Service Level Agreement?
We often find that clients are confused about this issue. The best way to think about it is that service level agreements are often schedules to Service Agreements. Service Level Agreements, also often known as SLA’s, tend to be used for high value/importance, long term contracts where a lot of detail is needed about precise aspects of services, deliverables, consequences of non-compliance.
Get in touch with us if you need a Service agreement or a Service Level Agreement drafted or both together. We also regularly review these Agreements who have been offered a contract drafted by the supplier.