Service Level Agreement

Service Agreement: Legal Considerations

Service agreements are general agreements between two or more parties discussing the service and related conditions. These agreements can be enforceable by law. There are various elements associated with it, which are discussed below.

Service agreements are mutual agreements between the service provider and client, generally written in a standard form to make them enforceable. This agreement creates a professional relationship between the parties, where both parties bear some specific liabilities.

This individual liability provides specific rights and benefits to the other party. The agreement discusses the service and its nature and specifies the service provider’s liability within a particular time period. It also provides a way of redressal in case of a dispute.

A service agreement is a necessary contract for businesses and service providers. This helps both the associated parties to understand the services and compensation. It helps in settling down the issues related to anything from the contract.

A company may enter into various service agreements. It can create specific guidelines for a specific service or a client that defines a certain deadline with a definite amount of money to be paid. These agreements can be modified in the future only if both the party mutually agree on the changes proposed.

Who are the parties?

Whenever a service is promised to be provided under an agreement, it legally binds the client and the service provider. The parties to a service contract can be two or more.

Service agreements have two ends. Service providers are on the one end of the contract, and the other end, there are clients. Both the client and service providers can be one or more persons.

The parties must be competent to enter into the contract according to the law on this topic.

Laws governing Service Agreement

In India, there is no specific provision for service agreements in any Act. This is because a service agreement may be enforceable or maybe a mere agreement. But the various elements of the legally enforceable service agreement are discussed under different laws.

  • Indian Contract Act, 1872
  •  Information Technology Act, 2002
  •  Copyright Act, 1957
  • Patent Act, 1970
  • Trade Marks Act, 1999
  • Consumer Protection Act, 2019

Why service agreement is necessary

Service agreements are very much necessary when you need a specific service from a service provider. It forms a written agreement that helps to maintain transparency and accountability between the parties.

  • Support to the client

The written service agreement mentions every detail related to the service. It helps to support the client with all the needs he has a right to receive.

  •  Mutual acceptance of terms

The service agreement portrays the guidelines both parties agreed with the same understanding.

  • Strong evidentiary value

The service agreement is proof of the terms of service and the parties linked to it. If any dispute arises on the agreement or the service, in the court of law, this piece of evidence can help the court guide to the right path.

  • Discussed rights and liabilities

The service agreement expressly states the rights and liabilities of the service providers and the client. It can help you recognise your rights and responsibility as a party to the agreement.

  • Prescribed rules for termination

The service agreements also contain the way of termination of service.

  • Mentioned consideration

The amount of money payable on behalf of any party is also mentioned in the agreement. This avoids any further confusion.

Essential elements of a service agreement

A service agreement must be loud and clear on the terms of the service and liabilities of each party. Various statements of work can be attached to the service agreement by the associated parties’ consent whenever necessary. Every service agreement must contain some essential elements.

  • Service duration

The service agreement must contain the time duration of the service. It needs to mention the starting and ending date of the service clearly in writing. This part of the contract helps to determine the time duration when it was effective.

  • Scope of work

This part of the contract contains the specific obligations the parties carry. The agreement shall add the conditions you discussed and agree upon this part of the contract. Every service agreement has its specific obligations according to the various aspects. This helps determine the role of the parties in a contract.

  • Payment rules

Consideration is a basic requirement of an enforceable agreement. This helps to determine the obligation’s value and the amount needed to pay if the obligation is not done in the given way.

The contract must be clear about the amount the client is liable to pay the service provider for the service. It must include when and how the payment needs to be done.

  • Dispute resolution

Dispute resolution is a method of solving disputes outside the court. If some specific method is mentioned in the contract about resolving a dispute, it helps solve it mutually. A dispute resolution must be just and fair.

The aggrieved party must receive a decided compensation. The terms for solving the issue outside the court shall be described in the contract. However, the parties always have an option to take the matter to a court of law.

  • Intellectual property rights

The intellectual property rights can be used as a part of the service agreement or as a separate agreement produced to the party along with the main agreement. This is an important part of the contract, defining intellectual property ownership.

  • Liabilities

A liability defines the duty of the party as per the contract. Both the service providers and clients have different liabilities against each other. If a party doesn’t perform his side of liability, he can get sued.

  • Modifications

Both the parties may decide mutually to modify, i.e. add or remove any clause from the contract. On such a decision, the modification must be done in writing to help in later disputes.

  • Warranties

A service agreement’s warranty against the services. The client relies on the service provider for the service he promised. If the provider fails, he shall compensate the other party for the breach.

How a service agreement forms

Service agreements are made to deal with specific services provided to a client. As a client, you can demand a service agreement whenever you agree to any promise the service provider takes on a certain amount of consideration.

How does a service agreement gets terminated?

If any parties do anything unlawful or breach the agreement, it may constitute termination. The termination can result from grave damage to one party by another. A fee dispute or dissatisfaction with the service can be reasons if a client terminates the agreement.

A service provider can also terminate the service if the client breaches any provisions laid by the agreement or breaches confidentiality. After the termination of the agreement, the party needs to compensate the party who suffered the loss.

Conclusion

The service agreement is an essential contract between the service provider and client that creates various rights and liabilities. The contract makes it easy to determine the obligation of either party and claim compensation if a breach occurs. Follow the article and establish a better service provider and client relationship.

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