Comprehensive agreement for ongoing professional services — consulting, IT services, marketing, maintenance, or any B2B service.
Civil court or Arbitral Tribunal (if arbitration clause) where service was performed.
3 years from breach of service terms — Limitation Act 1963.
This coverage is provided by a practicing advocate. Specific sections cited depend on the facts you provide during drafting.
A Service Agreement is a formal contract between a service provider (individual or company) and a client that details the scope of services, service levels, payment terms, duration, warranties, liability limitations, and termination rights. It is more comprehensive than a simple invoice or purchase order and is used for ongoing or project-based service relationships — IT services, consulting, maintenance, security, housekeeping, and professional services.
Execute a Service Agreement for any significant service engagement — IT development, annual maintenance contracts (AMC), consulting retainers, marketing agency engagements, facility management, or professional service arrangements. It is particularly important when the services extend over time, involve specific performance standards (SLAs), or carry financial consequences for non-performance.
Service Agreements are governed by the Indian Contract Act, 1872. For services by IT companies, the Information Technology Act, 2000 may apply for data handling obligations. Service Agreements involving employment-like arrangements (fixed-term, exclusive) must carefully distinguish contractor vs employee status to avoid labour law implications (Industrial Disputes Act, EPF Act). GDPR/PDPA (Digital Personal Data Protection Act, 2023) obligations apply for data processing service agreements.
Without a service agreement, disputes over scope, quality, payment, and liability have no contractual basis for resolution. The service provider may face payment disputes; the client may have no remedy for poor service beyond general tort law. Both parties benefit from the certainty provided by a written agreement.
A Service Level Agreement (SLA) defines measurable performance standards — uptime (e.g., 99.9%), response times, resolution times, reporting frequency. For IT and operational services, SLAs are essential. They provide an objective basis for measuring performance and determining whether penalties/credits are triggered.
Service providers typically cap their liability at the total fees paid in the preceding 12 months (or a fixed multiplier of monthly fees). They also exclude liability for indirect, consequential, and punitive damages. Clients should ensure the cap is not too low given potential losses from service failure.
Yes, if the agreement includes a 'termination for convenience' clause specifying the notice period (typically 30–90 days) and any termination fee. Without such a clause, termination before the agreed term may constitute breach of contract.
A material breach clause defines what constitutes a significant failure (e.g., consistent SLA breaches, non-payment). A cure period (typically 15–30 days) gives the defaulting party a chance to rectify the breach before the other party can terminate. These clauses prevent termination for minor, remediable issues.
By default, IP created by the service provider belongs to them (not the client). The service agreement must include a clear IP assignment or 'work made for hire' clause granting ownership to the client. For licensed use (not full ownership), specify the scope, duration, and territory of the licence.
An indemnification clause requires one party to compensate the other for specific losses — typically, the service provider indemnifies the client for IP infringement by the services, and the client indemnifies the service provider for misuse of services. Mutual indemnification for third-party claims is common in commercial service agreements.
Yes. Service providers registered under GST must charge GST on their invoices (typically 18% for most services). The service agreement should specify whether the quoted price is inclusive or exclusive of GST. Input tax credit is available to registered businesses.
Include an 'assignment' clause specifying whether the agreement can be assigned to a successor entity. Typically: service provider can assign to a wholly owned subsidiary; assignment to an unrelated party requires client consent. This protects the client from dealing with an entirely different organisation without consent.
Please confirm all of the following before proceeding with your Service Agreement document:
Please confirm all eligibility conditions above to proceed. If you are unsure about any point, you may not be eligible for this type of notice.