A service contract outlines the relationship between a customer and a service provider, including services provided, costs, and responsibilities. Legal definitions vary by region and enforceability. Service agreements may be standalone or additions to a contract, such as a service level agreement.
A service contract is a type of contract that falls under the broader scope of contract law. It defines the relationship between a customer and a service provider. In short, a service contract outlines what services are to be provided, when they are to be provided, their costs, and the responsibilities of each party involved in the contract.
Contract law varies from country to country and region to region. Consequently, the exact and legally recognized definition of a service contract also varies. Even within a single country, such as the United States, the precise definition varies slightly, depending on whether service agreements are determined by common law or by a specific statute.
In terms of legal definitions and their differences in relation to a service agreement, the most common difference is whether the agreement is considered enforceable by a court. Under common law, parties are free to agree to their own terms regarding a service contract or other agreement. The only requirements are compensation and mutual assent, which is achieved through offer and acceptance. According to precise contract law, legally binding agreements must comply with standards and include mutual obligations, include remedies for infringement and adhere to judicial law.
In general conversation, the terms service agreement and contract are often thought of as interchangeable, although a service agreement actually refers to more than one type of mutual obligation. Depending on the situation, a service contract may include a formal contract in its entirety. For example, a cable television company enters into a service level agreement with its customers to provide cable television service for a specified period. Such agreements represent the entire relationship between both parties, including the services the cable company agrees to provide, the rate the customer will pay, and any penalties or warnings related to a breach of contract by either party.
On the other hand, service level agreements can also serve as additions to an agreement, as is the case with a service level agreement or SLA. For business-to-business relationships, a commercial agreement such as an SLA provides specifics as they relate to the general contractual terms. For example, a software developer may contract with another business entity to provide proprietary software. As part of the SLA, details such as when the software will be operational, how much ongoing technical support will be available, deadlines for beta testing, and other terms appear in the SLA. These terms often vary, depending on project details and customer needs, making it difficult to include in a standardized template-style SLA.
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