A Brief Introduction About the General Contract for Services
A general contract for services is an agreement that is created when one party provides services to another. The terms and conditions under which the services are to be performed are laid down in this agreement. This agreement may also be known as an ‘agreement for services’ or a ‘service contract.’ This agreement is generally used when the transaction is complex, and the parties wish to lay down the details in writing.
Who Takes the General Contract for Services? – People Involved
A general contract for services is entered into between a business or a service provider (generally known as the ‘contractor’) who provides certain services, and the person to whom the services are being provided (known as the ‘client’).
Purpose of the General Contract for Services – Why Do You Need It?
The purpose of this agreement is to define the relationship between the party that is providing the service and the party which is receiving such service. Creating a written agreement that encapsulates the conditions under which the services will be provided goes a long way in preventing disputes between the parties in the future. A clear framework is laid down for the work that is being done, and this is necessary for professional relationships to flourish.
Having such an agreement in place helps clarify the various details that have been decided by the parties, such as the services that will be provided by the contractor and the compensation that shall be paid to him. The purpose of the agreement is to provide solid evidence of all the terms that have been agreed to in case there is any conflict that arises between the parties in the future. It is recommended to enter into this agreement whenever a person hires a contractor to perform certain services, as the agreement will help protect the rights and interests of both parties and will also have a mechanism for dispute resolution in place.
Contents of the General Contract for Services
This agreement must include the names of the parties who are entering into the contract, the date on which the agreement is created, and the territory in which the agreement shall be operative.
The agreement will include all the details that are necessary for the services to be carried out successfully such as a detailed description of the services, the price at which the service shall be provided, the duration within which the services shall be completed, the duties and obligations of both parties and such other details as the parties consider necessary.
How to Draft the General Contract for Services?
Steps to follow while drafting a general contract for services:
- The agreement must firstly, clearly define both parties by mentioning their names and contact information.
- It must then include a description of the services. An accurate definition of the duties of the contractor must be written down.
- The agreement must lay down the time period within which the services must be completed. It must also include a schedule for payment.
- Once all these important details have been mentioned, the agreement should contain clauses such as indemnity, confidentiality clause, termination of the agreement, etc.
- A dispute resolution mechanism must be put in place. This is extremely necessary to protect the interests of both parties.
- Once the service agreement has been drafted, it must be reviewed and signed by the parties.
Negotiation Strategy
- The basic negotiation strategy in this type of agreement is to ensure that the agreement is beneficial to both the contractor and the client.
- It must be negotiated in such a manner that both parties are able to perform their end of the contract successfully.
Benefits and Drawbacks of the General Contract for Services
The following are the benefits and drawbacks of having a general contract for services:
- It clearly lays down the services for which the contractor has been hired. This reduces the scope for any misunderstanding between the parties.
- Having a written agreement in place helps prove the various terms of the agreement, such as the payment terms and acts amounting to a breach of the contract. This is necessary to hold a person responsible for any act or omission of his.
- A dispute resolution mechanism will be available if one of the parties breaches his duties under the contract.
[ Also Read: Professional Services Agreement ]
What Happens in Case of Violation?
A service contract will always have a clause that defines what acts, and omissions of the parties will amount to a violation of the agreement. Generally, when such an act or omission has occurred, the breaching party must cure the breach after he receives a notice from the non-breaching party. If he does not do this, the non-breaching party can terminate the agreement and institute a suit against the breaching party. Penalties may include damages becoming payable or any other adequate remedy. The parties can also choose to have a mediation or arbitration clause(1) in their agreement in case they do not wish to institute a suit in court.
In conclusion, this agreement is very important whenever a person hires a service provider, and it is necessary to create a written agreement that explains the transaction fully. The duties of the contractor are explicitly laid down, and if he does not perform them in the manner specified in the agreement, the client will have the right to take legal action.