Free Service Agreement

Service Agreement FAQs

What is a service agreement?

A service agreement is used between the contractor and the client to outline the service relationship the parties.

What is the difference between an employment agreement and a service agreement?

A service agreement is generally used when a client hires an independent contractor to perform specific services and that does not create an employee and employee relationship. A service agreement should not be used between employer and employee, since an independent contractor will have more leeway in controlling how the work is done and is treated differently than an employee on the job and for taxation purposes. Moreover, the employment standards act from the Canadian provinces will not apply to independent contractors.

When should a service agreement be used?

Whenever a client hires an independent contractor to perform specific service work, the service agreement can then be used to outline this working relationship. Below are some work examples where a service agreement can be used:

• Caterer
• Wedding decorator
• Photographer
• Musician
• Janitor and cleaner
• Tax consultant
• Information technology service provider
• Web designer
• Skilled labourer such as electrician, plumber, roofer, landscaper and carpenter
• Educational and instructional providers such as music teacher, yoga and fitness instructor, and math tutor

What should be covered in a service agreement?

The following is a general outline of topics that should be covered in a service agreement:

• The Parties: List the contractor and the client’s full name and address.

• Work Details: List the service the contractor will be providing to the client in detail to ensure both sides know what type of work expectations are there for the agreement.

• Service Duration Details: List the duration of the contract between the parties. The term can be fixed term which has an end date specified or it can be for an indefinite period that will run until it is cancelled by either party.

• Cost and Payment Details: List the cost of the service charged by the contractor and how and when the contractor will be paid.

• Terms Details: List the other terms of the agreement such as initial deposit, late payment, interest payment, work expenses compensation and termination.

• Confidentiality Details: List whether the contractor will need to keep sensitive information from the client confidential.

• Intellectual Property Details: List whether intellectual property rights will be created from this agreement whether the contractor or the client will have ownership of said IP rights.