Service agreement provisions are critical for clients such as plumbing, heating, and air cooling customers. As the name suggests, these elements “provide” a guarantee that one party, such as a contractor, will perform a particular service.
Such service agreement provisions apply to many services, including installing WiFi networks, so multiple devices share one internet connection.
The Pew Research Center reported that about three-quarters of American adults have installed broadband internet at home today.
What Is a Service Contract and What Does It Include?
These contracts are between a business and clients for the services enterprises provide. The document includes the terms and conditions of the services the company is providing.
Some examples include contracts for installing a central heating system or kitchen sink pipes. The contracts consist of the work to be completed and how the customer will compensate workers.
Service Contract Provisions
The provisions of a service contract include the details of the agreement related to the services one party offers. A company or contractor exchanges these services for financial compensation, products, or services.
Service Contract Inclusions
While some variation exists, service contracts often contain many of the same features, including:
- Outline of work and service
- Timeline of provided services
- Compensation terms
- Compliance and insurance terms
- Dispute resolution and solutions
- Contact information (both parties)
Service Contract Additional Terms
Besides the general terms of service agreements, service providers can add extra clauses to cater to the interests of the service providers and customers:
Non-Compete Clause: This additional clause prevents service providers from using sensitive information to promote a client’s market or industry.
Non-Solicitation Clause: This particular clause prevents the service providers’ employees from soliciting clients.
Confidentiality Clause: This service contract clause prevents the service provider from sharing private, company, or sensitive information about the client.
When Are Service Contracts Necessary?
When companies or contractors provide any service for a client, it’s highly advisable to ask them to sign a service contract. It can provide several functions:
- Protect the company’s interests
- Ensure that a company receives fair compensation
- Put terms and conditions in writing
- Include the work’s scope and schedule
How to Create a Service Contract
Making a service contract involves some basic steps:
1. Learn about the customer
Regardless of the industry, a company should learn about the wants and needs of potential customers. This process can help produce a better service contract.
It’s also critical to provide elements to establish trust in a company. Examples include company history and licenses, Better Business Bureau (BBB) grades, and local installations.
Another manner to build trust is to provide an informative website that also helps create value. The World Bank reported that, in 2018, 88% of the United States had internet access. A well-maintained website increases a company’s transparency.
2. Discuss Which Services Will Be Provided
You may need to negotiate the terms and compensation of the written agreement with the customer.
It’s vital to offer fair compensation that’s in line with industry standards. Many of today’s consumers seek good service and low prices.
3. Write the Service Contract
This process includes all important terms a company has agreed upon with the customer. They include services, timelines, and payments.
In some situations involving bigger projects and costs, a company may require a service contract lawyer to create the written document.
This process can help ensure the contract’s terms and conditions could hold up in a court of law. A service contract lawyer can also help write and proofread the agreement.
4. Sign the New Service Contract
After both parties have read the contract with a fine-tooth comb, they can take this step. The final step is signing and dating the contract. Companies should provide a copy to the customer so that they can review the agreement.
Benefits of Service Contracts
Benefit #1: Improved Customer Service
Many field service businesses require recurring jobs to stay in business. A service contract saves the time and effort of both the service provider and customers.
For example, customers have fewer issues about the service being provided, such as installing a new water heater.
With service contracts, one document already contains all the essential details of the service. Suppose a company needs to provide services for water heater repair. The service contract eliminates the need to supply the same information each time.
Benefit #2: Provides Leeway for Adjustments
Putting everything in writing within a service contract is a practical step. It also provides some leeway for adjustments. For instance, if a client needs an appliance to be cleaned more often, a company can tweak the contract.
Benefit #3: Ensures Products Are Functional
One example is the regular maintenance of a central air conditioning system. This process helps extend the lifespan of the product, providing greater value for the customer.
If no service agreement existed, installed components would keep working too long without proper maintenance. On the other hand, if products are maintained too frequently, it can cause unnecessary expenses for the customer.
Benefit #4: Determines the Customer’s Needs
As time passes, a company will likely provide customers better services by delivering regular maintenance of household systems like indoor plumbing, for instance.
In another scenario, a contractor can determine how often a heating furnace requires maintenance based on the customers’ specific usage.
The customer then doesn’t have to worry about when the furnace needs checks and repairs for parts like the air filter, fan, and heat exchanger.
Service contracts provide companies and their customers a written document to protect both parties. Service providers should always put all the agreements in writing.
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