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Last revision: 01/09/2024
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Download a basic template (FREE) Create a customized documentA service agreement is used to hire an individual or an organization to provide specific services to the client. This contract is entered to provide some services in return for remuneration. This type of agreement is essential for establishing a clear understanding of the expectations and responsibilities of both parties involved.
A service agreement can be used in situations that involve the provision of services, including the provision of IT services, accounting and auditing, consulting services, etc. The service contract can be for a fixed term or an indefinite duration.
For more information, see our legal guide "What's the Difference Between an Employee and an Independent Contractor?"
No, it is not mandatory to have a service agreement. However, it is advisable for proper documentation and to prevent conflicts. The service agreement can be used as a reference in court in case of any future disputes.
A service agreement should have the following provisions:
It can also include complex clauses, such as:
It is not permitted to include an overly broad or unreasonable non-compete clause. That is, a non-compete that does not have a fixed period of validity or a geographic scope may not be enforceable.
An example of a reasonable non-compete clause is as follows: "The Service Provider agrees not to engage with any business within Lagos State that directly competes with the Client's business for one (1) year following the termination of this agreement."
The parties to a service agreement are the client and the service provider. The client is a party who hires the service provider in exchange for some form of compensation. The service provider, on the other hand, is hired to work on a specific project or provide specific services to the client.
The service provider here can be an individual who has attained the age of majority (at least 18 years of age) or a registered organization.
Individuals who are less than 18 years of age cannot enter into a valid service agreement as a service provider. Hence, Additionally, an unregistered organization cannot validly enter into a service agreement.
The duration of a service agreement can vary depending on the nature of the service agreement and the needs of the client. It could be for a short term (months) or a long term (2 or more years).
It can also be for an indefinite period to terminate upon the completion of the services.
The service agreement should be signed by both parties in two original copies. The service agreement can be signed in person or electronically.
If either of the parties is a company or a registered organization, the service agreement should be signed by a director or officer of the company or organization.
After signing, each party should keep one signed copy for their record.
In some cases, the following documents may be attached to the service agreement:
No, it is not necessary to notarize a service agreement.
No, service agreements are not registered with any authority or agency in Nigeria.
Yes, the service agreement needs to be witnessed to be valid.
After the parties have signed, the document must be witnessed by at least one person. The witness is required to hand fill in their names, addresses, and occupations and also sign the document.
No costs are associated with the finalization of a service agreement.
In a service agreement, the client is responsible for paying the service provider's fees. However, unlike an employment contract, the service provider charges VAT for services provided and is responsible for filing their taxes.
There are different types of fees including hourly, monthly, annual payments, or one-time retainer fees, depending on the nature of the service agreement.
It is important to note that there is no specific law that regulates work-for-hire or service agreements. The agreement is largely regulated by the rules of general contract. The Value Added Tax Act, of 2004, also applies to the service agreement.
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Service Agreement - FREE - sample template
Country: Nigeria