Last updated December 29, 2023
What is a Service Agreement?
A Service Agreement is a written contract between a service provider and customer that outlines the exchange of services for payment. The agreement should include the rights and responsibilities of each party, and details such as:
- Services provided and timelines
- Each party’s information
- Billing and payment
- Expenses
- Intellectual property provisions
- Indemnification terms
- Confidentiality
A Service Agreement is also called a/an:
- General Service Contract
- Independent Contractor Agreement
- Consulting Services Agreement
- Contract for Service
Service Contracts should not be used as an agreement between an employer and an employee. For part-time, full-time, or fixed-term employment arrangements, use an Employment Contract instead.
Why do I need a Service Agreement?
A signed Service Agreement is a valuable document for service providers because it protects their interests and ensures they get paid for their work by providing evidence of scope of work agreed between the parties. Employees are regulated under Singapore’s Employment Act, however, self-employed service providers are not. Therefore it’s wise to document the pay rate for each job, invoicing frequencies, and any insurance, liability or intellectual property clauses.
For clients, a Service Agreement ensures there’s no confusion about payment or remuneration, expenses, or the details about the service being provided. Furthermore, the Ministry of Manpower encourages all service-buyers to adopt the Tripartite Standard on Contracting with Self-employed Persons (SEPs), like independent contractors, to foster stronger working relationships in Singapore.
The Service Agreement is also legally binding and provides some protection for each party if the other breaches the agreement. Having a written record of the arrangement can save time and money if a misunderstanding or dispute arises.
Who should use a Service Agreement?
Anyone who provides a service to a client, or wants to hire a contractor, should use a Service Agreement. Some common examples of service providers that use service contracts include:
- Caterers
- Cleaners
- Construction companies and contractors
- Consultants
- Child care providers
- Delivery service providers
- Dog walkers
- Editors
- Fitness coaches
- Freelancers
- Graphic designers
- Hairstylists and makeup artists
- Landscapers
- Legal service providers
- Musicians
- Online marketers
- Photographers
- Public relations specialists
- Social media managers
- Web developers
- Writers and editors
How do I create a Service Agreement?
You can use LawDepot’s questionnaire to create a Service Agreement easily. Our easy-to-follow template will ensure you complete the necessary steps:
1. State how long the services are needed
State how long the contractor will need to provide the service in your agreement.
The Service Agreement can be for:
- A single job: the contract lasts as long as it takes to complete the job
- A fixed-term: the contract comes to an end on a specified date
- Indefinitely: the contract continues until ended by either of the parties
2. Give a description of the service
Accurately describe the services that the contractor is providing. Giving a detailed description in your Service Agreement gives the contractor and client a clear idea of what to expect and lowers the chances of misunderstandings later.
For example, if a client hires a photographer to take pictures for their business, the Service Agreement might outline details like:
- Who provides the equipment
- Who provides any props or wardrobe
- The number of pictures the client will receive
- Whether the photographer will edit the pictures
- When the client gets the pictures
- Who owns the intellectual property in the photographs
A Service Agreement should include the service provider’s and client’s information. Doing so allows the agreement to act as a convenient reference if the parties ever need to contact each other.
The agreement must include each party’s name and address and whether they’re an individual or company.
4. Specify the payment details
Some payment details to consider when creating your Service Agreement include:
- Billing
- Deposit
- Payment schedule
- Interest on late payments
Billing details
State whether the service provider will bill the client with a flat fee, an hourly rate, or some other form of payment (e.g., with a combination of money and stocks). Also, specify if the billing amount will include GST.
Deposit
State if the Service Agreement includes a deposit, and if so, how much it is.
A deposit is a sum of money that the service provider receives from the client in advance as security or collateral for delivery of the service. A deposit is usually 10% to 50% of the total contract amount depending on the industry.
Payment Schedule
Specify whether the client will pay the contractor when the work is complete or at certain stages. It’s common for one time jobs to have a one-time payment. However, longer projects often have a customized payment schedule based on the service provider hitting certain milestones. Service contracts of indefinite duration will feature regular payments.
Late payments
State how long the customer has to pay the service provider after receiving an invoice for the work and whether late payments will result in interest charges.
Fifteen to 30 days is typically sufficient time to pay an invoice. The contractor can also ask for payment upon delivering the receipt within a specific time. A contractual interest rate of 5% or 6% would be considered reasonable. If the rate is set too high it will not be enforced by the courts.
5. Outline the agreement’s terms
A Service Agreement should also outline terms and conditions, such as:
- Ending the contract early
- Expenses
- Ownership of intellectual property
- Confidentiality
Ending a contract early
If your agreement permits it, specify how many days of notice are required to end a contract early. One week’s notice is usually acceptable for shorter projects. If the project is supposed to last more than a few months, 15 to 30 days is more appropriate.
However, the contractor is still entitled to pro rata payment for work already completed.
Reimbursing expenses
There may be additional expenses outside the immediate scope of work required to complete a project, like travel or hotel expenses. Determine whether the client will reimburse the service provider for work-related expenses and outline any guidelines for additional costs in your Service Agreement.
Intellectual property
Specify who between the service provider and customer will own any intellectual property that results from the property.
Intellectual property is any work that is a creation of the mind. For example, music, logos, blueprints, software, etc.
Confidentiality
Clients may want to keep their personal, business, or project details confidential. If this is relevant to the project, decide if the service provider will keep client information confidential indefinitely or until the agreement is fulfilled.
6. Add additional clauses
You can add more clauses to your Service Agreement if the project requires them. For example, many projects require factors like indemnification, liabilities, or the returning of property to be addressed.
7. Sign the agreement
Make the agreement official and legally binding by having the service provider and client sign at the bottom of the contract. Include the date and whether there are any witnesses.