Service agreement – what should a service agreement include?

Short answer: A service agreement should clearly describe the service to be performed, results or deliverables, timeline, price, liability, change management, and how the agreement is terminated. Which legal regulations apply depends on, among other things, whether the agreement is between businesses or between a trader and a consumer.

What is a service agreement?

A service agreement is a collective term for agreements where one party is to perform work or provide a service to another. This can involve administration, installation, marketing, consulting, creative services, maintenance, or other assignments.

B2B or consumer?

Between businesses, there is often great freedom of contract, and the agreement therefore carries significant weight. When a trader performs certain services for a consumer, mandatory consumer protection rules may apply, such as the Consumer Services Act. A general service agreement should therefore be adapted to the type of customer and the actual service.

What should the agreement regulate?

• parties and contact persons
• scope of the service and concrete deliverables
• items that are expressly not included
• start date, milestones, and end date
• price, invoicing, and costs
• customer's participation and input materials
• changes and additional work
• approval and error handling
• limitations of liability where permitted
• confidentiality and personal data
• intellectual property rights to the result
• termination, rescission, and completion

Fixed price or hourly rate?

If the price is fixed, the agreement needs to clarify what is included. For hourly billing, the hourly rate, reporting, and any cost caps should be stated. It is particularly important to agree on how change orders are to be approved.

Who owns the result?

For design, text, software, photography, and other creative work, the agreement should specify whether the customer receives ownership, an exclusive license, or a more limited right of use. Payment for a service does not automatically mean that all intellectual property rights are transferred.

Common mistakes

• the assignment is described with vague words without measurable deliverables
• changes are made orally without cost or time implications
• the customer's responsibility for input materials is missing
• rights to materials are not regulated
• termination and ongoing work upon completion are unclear

See the Template Store's template for service agreements.

For more specific consulting assignments, see also our guide on consulting agreements.

FAQ

Are service agreements and consulting agreements the same thing?

The terms can overlap, but consulting agreements are often used for independent professional assignments, while service agreements are a broader concept.

Does the agreement have to be in writing?

Not always, but a written agreement provides significantly better evidence regarding scope, price, and liability.

Can all liability be waived by agreement?

No. Mandatory law, unfair contract terms, and the relationship between the parties can limit the possibility of liability waivers.

The article provides general information and does not replace legal advice.