General Services Agreement Help Guide

A good general services agreement will provide strong protection of the interests of both the client and the service provider. This help guide provides additional details and clarification on some of the key aspects in the agreement.


Services to Be Provided

This section itemizes the services to be provided by the service provider. The service description should be as specific as possible in order to avoid any potential misunderstandings down the road.

You also have the option of attaching the services description as an exhibit. This is often done if the client already has the service description completed in a separate document.

Service Benchmarks

The parties may choose to include specific service benchmarks. These may be deadlines by which certain services must be completed or may be other project benchmarks without attached time frames.

Term

There are a few options for the type of term used in this agreement: indefinite, fixed term, and when the job is done. The option selected depends on the needs of the parties. Note that if you choose an indefinite term, the parties will be able to terminate the agreement at any time, with or without cause.

Compensation

The service provider may be paid an hourly, weekly, or monthly rate. In addition, you may choose to enter your own custom compensation structure.

Some service providers also choose to require an upfront deposit. In this case, the client must pay the deposit before the service provider commences work.

The parties may choose to require the client to reimburse the service provider for all necessary business expenses incurred in providing the services. Alternatively, the client may require that the service provider submit such expenses for pre-approval.

Penalties

If service benchmarks are included, you may include a fee for failure to complete a benchmark on time. This may be a one-time fee payable for each occurrence, a daily fee paid for each day the benchmark remains uncompleted, or some other fee structure you devise.

In addition, you may require the client to pay a fee to the service provider for each late payment. This fee may be structured as accrued interest, a one-time fee, a daily fee, or a custom fee structure. You may also add additional penalties as needed.

Service Warranty

If the service warranty is included, the service provider warrants that all services provided under the agreement will be provided by experienced personnel in a diligent manner that meets or exceeds generally acceptable industry standards in the region.

Resources Provided by Client

This section identifies any tools, equipment, office space, or other resources the client will need to provide.

Relationship of the Parties

Here, it is clarified that nothing in this agreement will create an employment, agency, joint venture, or partnership relationship between the parties.

Termination

This section explains how the agreement may be terminated. If the term of the agreement is indefinite, then either party may terminate the agreement at any time, with or without cause, by providing the other party with advance written notice in accordance with the notice subsection that follows. If the term is not indefinite, then the parties may only terminate the agreement in accordance with this section. Again, a notice period may be required. Note that if a party is terminating the agreement due to a violation of the agreement by the other party, then the agreement states that no notice will be required to terminate it.

Obligation of Confidentiality

Confidentiality provisions will prevent unwanted disclosure of the client's confidential information and trade secrets by the service provider. You can also choose to limit the non-disclosure requirement to a fixed period of time after the parties' relationship ends or only while the agreement is in effect. If these options will serve to protect the client's interests, then it may be a good idea to limit the term. However, if the service provider will be learning confidential information and trade secrets that will hurt the client's business if exposed, then it is likely a good idea to prohibit their disclosure indefinitely.

Work Product; Intellectual Property

Depending on the parties' preferences, either party may take ownership of intellectual property developed through the business relationship or some other arrangement may be agreed upon.

Non-Competition

Choosing to include a non-compete clause will prohibit the service provider from engaging in similar work as he or she performed for the client. If the service provider is an independent contractor and works in an occupation that has many clients at once (e.g. financial advisers or attorneys) or holds a relatively narrow expertise, courts may not enforce such a provision if it is seen as an overly burdensome restriction on the service provider's ability to find work.

No matter what the service provider's occupation is, however, it is important that the non-compete clause is tailored to be as narrowly restrictive as possible. If the client operates in a rapidly changing industry, such as in the IT industry, then it will be hard to justify a non-compete term lasting longer than six months or a year. In most cases, if you insert a non-compete term longer than two years, then you will be running a higher risk of a court someday shortening it down or invalidating it altogether.

Note: this option is not available in California, North Dakota, or Oklahoma.

Non-Solicitation

A non-solicitation provision prevents the service provider from adversely interfering with any of the client's business relationships; for instance, by trying to lure away the client's own employees or business contacts. The term of the non-solicitation clause should be limited as much as possible to not be overly burdensome on the service provider while still protecting the client's interests. Courts generally accept anything between one month and two years depending on what is reasonable under the circumstances.

Insurance

This section identifies any insurance the service provider is required to maintain during the term of the agreement. If general liability insurance is required, it must include coverage for property damage and bodily injury at a coverage amount considered reasonable in the service provider's industry given the potential risks associated with providing the services under the agreement.

Dispute Resolution

The parties may choose to resolve disputes through mediation, arbitration, both (recommended), or through a formal court of law. With mediation and arbitration, one or more impartial third-party arbitrators review the circumstances and help the parties come to a fair resolution. However, unlike with mediation, the ruling of the arbitrator in arbitration is binding on the parties. Mediation and arbitration are recommended, as they normally offer a faster and less expensive means for dispute resolution than going to court.

No Conflict

In this clause, the parties confirm that they have no conflicts of interest, contractual or otherwise, by entering into this agreement.

Right to Cure

If this option is included, then a party that is in breach (also called default) of the agreement will be entitled to try to remedy the breach within the given period of time after receiving notice.

Additional Terms

You can add additional terms and conditions as desired. You have complete flexibility to tailor the document to reflect the specific situation and true intent of the parties, but be sure to preview the agreement first so that you know what has already been included for you.

How to Execute Your Agreement

  • Have each party to the agreement sign and date the signature lines where indicated. Electronic signatures are allowed by the terms of the agreement. The parties may also sign copies sent to each other by email, fax, or other electronic means. If you include an arbitration provision, make sure that each party signs the arbitration exhibit as well.
  • Make sure that all parties get a copy after it is executed.

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