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Drafted by lawyers

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Learn more about Service Agreement in Singapore

Engaging a service provider may be cost effective, especially for small and medium-sized businesses that may not have the resources to hire personnel for these specific business needs.
However, it is critical that the service contract outlines both parties’ rights and obligations under the agreement in order to limit the possibility of problems happening during the project.

Table of contents

What terms should a service agreement contain?

➤ Step-by-step instructions for using the template
➤ Definitions and interpretations of terminology
➤ Service provision
➤ Fees, expenses, and liability responsibility
➤ Confidential rights, obligations, and duties of both parties
➤ Obligations of the company
➤ Obligations upon termination of agreement

It is not commonplace for businesses to provide and solicit services from other businesses or industry players. While some may rely on the aspect of confidence between the parties involved and build the agreement simply on the oral agreement between each company’s representatives, this may be a risky decision.
Such an agreement should be reduced to writing in the form of a service contract. To limit the risk of future problems, this agreement will explicitly define both parties’ rights and obligations.

What is the scope and nature of the service(s) provided?

The scope and type of the service(s) that the service provider will give to the client should be clearly stated in this agreement.
In this regard, the agreement may also specify whether the service provider is permitted to have multiple clients at any given time, or if it is confined to serving only one client at a time.

What are the terms of compensation?

The conditions of remuneration and the agreed-upon billing system are also vital in any business contracts. For example, the service contract should specify whether the service provider will be paid on a monthly or lump sum basis upon project completion.
A comprehensive service contract would additionally specify the grace period during which the client might make payment after the due date. The typical procedure is 30 days, but this is subject to agreement between the parties.
Late penalties and/or interest on late payments may also be considered by the service provider. If this is the case, this term should be explicitly specified in the agreement.

Expenses incurred in the course of the work

A clause stating which party will shoulder the cost of out-of-pocket expenses and other overhead expenditure incurred by the service provider during the course of its engagement may be inserted in the agreement between the client and the service provider.
For example, the agreement may include that the service provider will be compensated for all reasonable out-of-pocket expenses incurred in providing the service(s), subject to the submission of appropriate receipts.

Intellectual property rights in terms of the service agreement

This agreement should specify which party will own the intellectual property rights to the service provider’s work, if any.
Service providers often wish to retain ownership of any content created in the course of providing their services. In such cases, the agreement should clearly express this, as well as the client’s (if any) rights to modify or utilize the final product (if any).

Indemnification clause in a service contract

An indemnification clause will specify which party will be compelled to indemnify the other party if that other party is sued in connection with the service provider’s work.

Termination clause in a service agreement

The agreement should indicate unequivocally that either party has the right to terminate the agreement if notice is given to the other party within a defined timeframe.
The agreement may also stipulate that the service provider may cancel the agreement with immediate effect without being obligated to pay any compensation or damages provided specific conditions are met, and vice versa.

What are the alternatives in the event of an unforeseen or sudden termination of a project?

If the service’s performance is disturbed or it becomes impossible to continue working on an ongoing project, the client should be aware of the alternatives open to them.
As a result, the agreement may say that in such an occurrence, the service provider must transfer over to the client all files and assets used and/or created by the service provider. If the project is ended early, the client will be entitled to have the work continued by another service provider.

Conflict of interest in a service agreement

A conflict of interest clause requires the service provider to guarantee that, to the best of its knowledge, no conflict of interest exists or is likely to occur in the fulfillment of the agreement’s responsibilities.
The agreement should also include a paragraph indicating that the service provider shall not engage in any action that might jeopardize its capacity to provide fair and independent services.

How do I protect data in a service contract?

A data protection clause is usually included in the agreement. In the process of providing services to the customer, such a provision requires the service provider to comply with its obligations under Singapore’s data privacy regulations.

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