Service Contract

Service Contract

A service contract is different from a contract for, say, the purchase of a home or a car. In those types of contracts, an actual tangible good is being exchanged for money. In a service contract, a client may not be receiving an actual good, but rather an act from a provider.

For instance, a carpet cleaning company provides the service of cleaning carpets. They do not leave anything behind for the client, other than carpets, which are a product the client already owned in the first place (though they are now at least clean). Another example is a lawn service. Again, the client is not receiving anything tangible; in fact, if you think about, the client is actually losing something in this case--the extra length off the top of all that grass.

The service industry is important, though, and contracts for that industry are just as vital as they are for companies that provide clients with physical goods. In fact, contracts may be even more important here, since the lack of a tangible good means that managing expectations (of both the client and provider) is crucial, especially in our "sue first, ask questions later" society.

The point to all this is that service contracts need to be incredibly detailed to be successful. One cannot just write a contract for a cleaning company that says, "company will clean client's house," since every client will have a different definition of "clean." Instead, the company will need to sit down and come up with its own idea of what "cleaning a house" means, and write a contract. Then, if the client expects more than what is offered, the two parties can come to an agreement on changes to the contract, and what additional costs those changes might entail.

If you are a consumer, it is up to you to do the research before you sign an agreement with a service provider. You are signing a legally binding document, so you want to be certain that you understand each provision within that document. If you expect that cleaning company to do your windows, don't gloss over the section of the contract that reads, "we don't do windows," and then expect to have any legal recourse when you can't see through the film when you try to look outside.

If you are a service provider, remember that the client will only provide you with payment for the services you actually render. So be sure that the contract you provide includes a breakdown of your services, along with a price list for each of those services. If you do the windows, but you don't have it listed in your contract that the service costs an additional $20, the client will not be obligated to pay you for your time and elbow grease.

As with any contract, both sides need to be completely aware of everything they are signing. And when in doubt, get a lawyer to help you understand the legalese.