Professional Service Agreement
A contract, or agreement, is a promise to do or not do something that sets the terms and conditions for your business relationship with a client. A service agreement details each party's rights and responsibilities in connection with the service being performed and delivered. Contracts can seem too formal and burdensome, but having a written service agreement is the best way to avoid misunderstandings that can destroy business transactions and relationships.
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Identification
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If you or your company are providing or seeking a service, rather than selling a product, you will need a professional service agreement. Professional service agreements are contracts for specialized intellectual or creative services, rather than manual skills or labor, which typically fall under personal or general services. Professional service contracts are usually project specific. Even if you are in a continuing business relationship, you should have a specific professional service agreement for each project.
Types
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As professional services are intellectual in nature, types of agreements include artistic design, accounting, legal, engineering, medical or software development. While the service must be professional, you need to be or hire a person that is licensed. You can contract with individual or firm for services, but the agreement will usually be for an independent contractor relationship, rather than an employer and employee relationship.
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Function
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Ideally, you want your professional service contract to limit your liability and minimize exposure to risk, legally and financially. If the client does not perform, does not pay or claims to have agreed to different performance or payment terms, you are at risk. A written professional service agreement is the best way to protect and defend yourself. Otherwise, it's just your word against the other party's about the original terms of the agreement, and you have no proof to support your claim.
Features
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Your professional service contract should clearly state the names and addresses of all parties and describe specifically the services to be provided and by whom. Your service contract should detail all payment terms, including cost of service, payment due date or date, reimbursable costs and any additional fees, like late charges or cancellation fees. Your contract should also state the term of the agreement, for example one year. You may also want to include specific language for extending the contract, if necessary.
Warning
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Although misunderstandings can develop with any agreement, having broad, ambiguous language in your professional service contract is more likely to lead to problems and legal disputes. You should know and understand your rights and responsibilities when you sign the contract. You should also make sure that you and all other parties have the same understanding. The more specific and clear your professional service agreement language is, the better your chances at having a successful contractual relationship. Be wary of anyone who does not want a written contract.
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References
Resources
- Photo Credit signing a contract image by William Berry from Fotolia.com
