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A service agreement is an agreement between two persons or businesses where one agrees to provide a specified service to the other. It can also be an express undertaking of employment signed by both the employer and the employee detailing therein the explicit terms and conditions of service.
A service agreement is different from a bond. A service agreement binds both the parties to the agreement, whereas bond is one sided and binds the employee to the agreement only.
There are various types of service agreements. For instance, General Service Agreement (an agreement between a contractor and a property or a business owner to provide services like gardening and repair works); Consultant Services Agreement (an agreement between a consultant and a client that identifies the terms and conditions related to the type of consulting services that the consultant will provide); Artist Services Agreement (an agreement between a business owner, or client, and an individual to perform bookkeeping or accounting services); and Child Care Services Agreement (an agreement between a contractor/child care provider and an individual to provide child care services).
Generally, a service agreement should include the following:
a. a description of the services to be provided, and their frequency;
b. identification of the persons or categories of persons who are to provide the services;
c. the schedule or frequency of sessions of supervision or monitoring required, if any;
d. fees for services;
e. a choice-of-law provision; and
f. a plan for contingency action, for example, the action to be taken by the licensee, client, and responsible persons.
The following is an example of a federal statute on service agreement:
According to 18 CFR 35.2, (Title 18 -- Conservation Of Power And Water Resources; Chapter I - Federal Energy Regulatory Commission, Department Of Energy; Subchapter B - Regulations Under The Federal Power Act; Part 35 - Filing Of Rate Schedules And Tariffs; Subpart A – Application), the term service agreement as used herein shall mean “an agreement that authorizes a customer to take electric service under the terms of a tariff. A service agreement shall be in writing. Any oral agreement or understanding forming a part of such statement shall be reduced to writing and made a part thereof. A service agreement is designated with a Service Agreement number.”