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If your business provides a service, chances are you have used a client services agreement before. A client services agreement dictates the terms and conditions of when a business provides services to consumers. These terms are legally binding, which means they can be upheld in court if there is a dispute. However, this will only happen if the client services agreement meets all the elements of a binding contract. If you win your dispute in court, you may be entitled to damages, or the court can enforce the terms of the agreements. This article will explain what a client services agreement is and what you should include to help your business stay protected.

What Is a Client Services Agreement?

A client services agreement governs the relationship between your business and a consumer. Therefore, there must be an agreement in place to know what each party’s obligations are. Furthermore, it is legally enforceable in court, which means both parties are protected if either one refuses to uphold their responsibilities. 

Why Do I Need a Client Services Agreement?

You should always have an agreement with your consumer so that both parties clearly understand the transaction terms. Client services agreements can also be verbal. However, this can cause issues as there is no recorded evidence of what the two parties agreed. This is why it is important to have your terms written down to avoid any misunderstandings.

Terms to Include in Your Client Services Agreement

This is not a foolproof list of all the terms you should include in your client services agreement. However, they provide an excellent starting point.

Payment Terms

If you provide a service to a customer, your customer needs to know how they can pay and how much it will cost them. A payment term will detail this. It should include how much the service is and whether they can pay in instalments or one payment. It should also state when your consumer should make payment and the form this takes. For example, you could be invoiced, or you may be expected to pay on the spot. 

You should also include terms relating to repeat payments and whether the customer gets any discounts for continuing to buy the service.

Scope of Your Services

Another crucial term to include in your client services agreement explains the scope of your services. You should explain what you are willing to provide and how often you can provide it. You should also outline any circumstances where you may not be able to provide the given services.

This clause may change depending on the customer you are dealing with, so you must change this for different customers. It should also be accurate and unambiguous. 

Termination Clause

Most client services agreements will also include a termination clause that allows either party to break the agreement in certain circumstances. This is an important term as there are some situations where parties need to terminate the agreement. This is usually when either party breaches the agreement. Once the parties have terminated the agreement, both parties are free from any lingering responsibilities.

Importantly, you must meet the conditions set out before you terminate the agreement. Otherwise, the court may find you to have repudiated the agreement. This is a breach of contract, and you could be held liable for any loss incurred. 

Dispute Resolution

You can also include a clause in your client services agreement that relates to dispute resolution. Dispute resolution allows you to solve disputes with your contracting party without having to go to court. Generally, dispute resolution involves either:

  • negotiation;
  • mediation; or
  • a mix of both.

Negotiation is a situation where both parties discuss what they want and try and come to a compromise. Mediation is similar, but a neutral mediator facilitates discussion and tries to bring both parties together. A dispute resolution clause requires both parties to try and solve their dispute using one of the prescribed methods. If they are unable to do this, then they can go to court. Using dispute resolution means that both parties save money and time.

Key Takeaways 

A client services agreement is the contract that facilitates the relationship between a business and its consumer. They outline the rights and obligations of both parties. Parties can form them in different ways, and they should include certain terms so that they are being utilised in the best way. If your agreement does not include certain terms, you may not be protected in the best way possible. 

If you need any legal assistance with contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Do I need a client services agreement?

You are not legally required to have one, but if you do not enter into a contract with your consumer, they are not legally required to uphold their side of the transaction.

What happens if dispute resolution fails?

If dispute resolution fails, then you can go to court to seek a solution.

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