A services agreement records what one business is to do for another, the timetable, the cost and the consequences if things go wrong. It ought to define the services precisely, settle the price and payment terms, establish ownership of anything created, limit liability and state how either party may bring it to an end.
You should have one wherever a business or freelancer supplies work rather than goods, for example design, IT, marketing, cleaning, maintenance or bookkeeping. Written terms are most important where the work extends across weeks or months, or where an argument over scope, quality or payment would prove expensive.
What it should contain
Services and deliverables
A clear account of the work, normally set out in a schedule, plus milestones and acceptance tests where relevant. Disputes arise more often from a vague scope than from anything else.
Fees and payment
The price, the timing of invoices, the deadline for paying them and interest on overdue sums.
Standard of work
An undertaking to meet any agreed specification and to exercise reasonable skill and care.
Intellectual property
Ownership of whatever the provider produces, and the licence granted to the other party.
Limitation of liability
A limit on what each party may have to pay, with losses that cannot lawfully be excluded left outside the cap.
Term and termination
The duration, the notice needed to end it, and a right of termination where there is a serious breach or insolvency.
Points specific to Scotland
In Scotland, the common law implies a duty to perform services with reasonable care and skill; for consumers, the Consumer Rights Act 2015 applies across the UK.
The Late Payment of Commercial Debts (Interest) Act 1998 applies in Scotland too.
A claim for breach of contract is normally lost after five years under the Prescription and Limitation (Scotland) Act 1973, not six as in England.
Does a services agreement have to be in writing in Scotland?
No. Under Scots law an oral agreement can be binding. In practice, though, a written record is the only realistic means of proving what was agreed on scope, price and liability should a dispute arise.
Who owns the work under a services agreement in Scotland?
Generally the provider. Unless the contract provides otherwise, the provider will normally keep the copyright in material it produces, and the client acquires ownership only where the agreement contains a written assignment.
Can I cap my liability under a services agreement in Scotland?
Yes, in contracts between businesses, as long as the cap is reasonable. Liability for fraud, or for death or personal injury caused by negligence, can never be excluded.
Draft your services agreement now
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