A service agreement sets out the terms on which one party provides services to another. It may be used for business-to-business services or to engage an independent consultant, contractor or freelancer. A carefully drafted agreement helps define the parties’ responsibilities, establish payment arrangements, allocate risk and provide appropriate remedies if the services are delayed, defective or incomplete.
Our London office assists companies, consultants, contractors and other commercial clients with preparing service agreements governed by English law.
The legal framework
Service agreements that are governed by English contract law are also beholden to additional applicable legislation concerning the particular services or industry in question. Depending on the circumstances, the law may imply terms concerning reasonable care and skill, performance within a reasonable time and reasonable charges. Contractual provisions that seek to exclude or limit liability may also be subject to statutory controls.
Where an individual is engaged as an independent consultant or contractor, particular attention must be given to employment status. Describing a person as “self-employed” is not conclusive. Their status depends on the contractual terms and the practical reality of the working relationship. Employment and tax status may also be assessed differently. Incorrect classification can create exposure to employment claims, unpaid tax and penalties.
Off-payroll (IR35) working rules may require separate consideration where services are provided through a personal service company or another intermediary.
The drafting process
Our work begins with understanding the services, commercial objectives and intended working relationship. We can then prepare an agreement addressing matters such as:
The agreement should reflect the actual commercial arrangement. Using an employment-contract template for an independent contractor, or relying on a standard form that does not match working practices, may create legal and practical uncertainty and risk.
How we can assist
We can draft service agreements for one-off projects, continuing commercial relationships, professional services, consultancy arrangements and cross-border engagements. We can prepare agreements for either the service provider or the customer, ensuring that the allocation of obligations, liability and commercial risk reflects the client’s position.
We can also review and update existing templates, negotiate terms proposed by the other party and coordinate the service agreement with statements of work, data-processing agreements, intellectual-property licences and other supporting documents.
Our multilingual team provides assistance in English, Hungarian, German, Spanish, Russian and Turkish, thus enabling us to support overseas businesses and service providers entering into arrangements governed by English law.
A properly drafted service agreement can establish clear expectations, protect valuable commercial interests and reduce the likelihood of disputes concerning performance, payment and ownership of work products.
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