Services Agreement

A Service Agreement is a contract that governs the provision of services for payment or other consideration. It can be used by any person or organisation which provides any type of service. Some examples include people or entities engaged in the business of building and construction, and electrical work as well as coaching, personal training, consulting, and professional services.

This is a general service agreement and can be used for entering into any type of service transaction.

While Service Agreements simplify the process for resolving disputes, they also prevent many disputes from arising in the first place. They do this by forcing the parties to discuss and record the key elements of the arrangement upfront, which is why it is pertinent to enter into a written service agreement.

Contractor v Employee

People or businesses using this document may need to consider the difference between a contractor and an employee. This Service Agreement enables a service provider to be hired as a contractor. This is different from an employment agreement, which would enable the service provider to be hired as an employee and would require the provision of all kinds of benefits under labour laws.

The difference between an employee and a contractor is based on many factors such as the extent of control, whether the contractor is permitted to work with other clients, whether it chooses its own equipment to provide the services and whether the work can be sub-delegated, and no single factor is determinative. A detailed blog on "What's is the difference between an Employee and an Independent Contractor" is available on this website for reference.

Simply using this Service Agreement is not enough to convert an employee into a contractor. Instead, the courts will look at the entire arrangement, and decide whether the service provider is working within the business, as part of the business (like an employee with very little control) or whether the contractor is running their own business (like a contractor).

How to Use This Document?

This Service Agreement can be set up to deal with either an ongoing arrangement for the provision of services or a one-off project.

In either case, the more details that can be provided regarding the various details of the arrangement, the more likely it is that disputes will be prevented. Some important details to be considered include:

- description of the work to be performed
- how it will be determined that the work is complete and whether there are any milestones
- when payment will be released
- how the agreement may be terminated. Either party may terminate this agreement using a Services Termination Notice.
- what parties should do in the case of disputes

Service providers should provide a new Service Agreement every time they undertake a new project, although a "project" may be ongoing indefinitely, (e.g. maintenance services). A separate Service Agreement will also need to be provided to every different client.

The Service Agreement will be legally binding when it has been printed on non-judicial stamp paper or e-stamp paper, and signed by both the service provider and the client. The value of the stamp paper would depend on the state in which it is executed. Each state in India has provisions in respect of the amount of stamp duty payable on such agreements. Information regarding the stamp duty payable can be found on the State government websites.

Both the service provider and the client should keep a signed copy of the Service Agreement. To do this, two different copies can be signed, or if only one copy is signed, it can be photocopied and then distributed between the parties.

Applicable Law

The principles of the contract under the Indian Contract Act, 1872 would govern these agreements. Further, the Consumer Protection Act, 2019, also applies to all goods and services, excluding goods for resale or for commercial purposes and services rendered free of charge and under a contract for personal service. It protects the rights of customers such as the right to be informed, the right to safety etc.

Goods and Services Tax (GST) applies to the supply of services at different rates for different categories of services, other than a few exempt services. More information can be found on the GST Portal.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.