Supply of Services Agreement Solicitors
A supply of services agreement is a contract between a service provider and a business customer that sets out what services will be delivered, to what standard, when, at what price, who owns the output and how liability is limited.
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Adam Bernard Solicitors drafts supply of services agreements and terms of business for consultants, agencies, contractors and professional service firms, and reviews service contracts for customers.
Services are harder to define than goods. Without a precise scope, disputes over what was included in the price are almost inevitable.
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Who Needs a Supply of Services Agreement?
- Consultants and professional advisers.
- Marketing, design and digital agencies.
- Facilities management, cleaning and security companies.
- Training providers.
- Maintenance and repair businesses.
- Businesses procuring any of these services.
For technology-specific services, see our IT services agreement and SaaS agreement pages.
Implied Terms Under the Supply of Goods and Services Act 1982
In business-to-business service contracts, the law implies that services will be carried out with reasonable care and skill, within a reasonable time and, if no price is agreed, for a reasonable charge. These terms are implied by sections 13, 14 and 15 of the Supply of Goods and Services Act 1982. Your agreement should define the standards more precisely, and any exclusion must satisfy the reasonableness test in the Unfair Contract Terms Act 1977.
For consumer customers, equivalent rights are set out in Part 1, Chapter 4 of the Consumer Rights Act 2015, and cannot be excluded.
Key Clauses in a Supply of Services Agreement
The essential terms are scope, service standards, customer obligations, fees, change control, intellectual property, liability, confidentiality, data protection and termination.
• Scope of services – a detailed statement of work or specification.
• Service standards – performance levels, often in a service level agreement.
• Customer obligations – information, access and approvals the provider depends on.
• Fees and expenses – fixed, time-and-materials or retainer, with invoicing and late payment terms.
• Change control – how changes to scope are requested, priced and approved.
• Intellectual property – who owns deliverables and pre-existing materials.
• Liability – caps, exclusions of indirect loss and insurance requirements.
• Confidentiality and data protection – including a data processing agreement if personal data is processed.
• Non-solicitation of staff.
• Term, termination and exit assistance.
Getting Paid on Time
Service providers can claim statutory interest and compensation on late commercial payments unless the contract provides a substantial alternative remedy. See the Late Payment of Commercial Debts (Interest) Act 1998 and GOV.UK guidance on late payment.
Contractors, Employment Status and IR35
Where services are delivered by an individual contractor, the agreement should reflect genuine self-employment and address off-payroll working rules. See GOV.UK guidance on off-payroll working (IR35) and employment status.
Master Services Agreement and Statements of Work
For repeat work, a master services agreement with separate statements of work is often more efficient than negotiating a new contract each time. The master agreement contains the legal terms; each statement of work covers scope, timetable and fees for a specific project.
Supply of Services Agreement Checklist
Before signing a services contract, providers and customers should check eight points.
Is the scope defined in enough detail to tell whether the services have been delivered?
- Are customer dependencies stated, with relief for the provider if they are not met?
- Is there a change control procedure?
- Are fees, expenses and invoicing clear?
- Who owns the deliverables, and what licence does each party receive?
- Is liability capped at a reasonable level and supported by insurance?
- Is personal data processed, and is a data processing agreement in place?
- How can either party terminate, and what exit assistance is provided?
Liability Caps in Services Contracts
Most service providers cap liability at a multiple of the fees paid or payable in a year. Courts consider factors such as the parties’ bargaining strength, the availability of insurance and whether the customer could have obtained the services elsewhere without the limitation. A carefully explained cap is more likely to be found reasonable than a blanket exclusion.
How Adam Bernard Solicitors Can Help
We draft supply of services agreements, master services agreements and terms of business, and review supplier contracts through our contract review service. If your current terms are outdated, our contract redrafting service can bring them up to date. See all our commercial contract services.
Call 0207 100 2525 (24/7) or book a free consultation to discuss your contract.
This page is for information only and does not constitute legal advice.
Frequently Asked Questions
What is a supply of services agreement?
What terms are implied into a contract for services?
Can a service provider limit its liability?
Who owns the work produced under a services agreement?
What is a master services agreement?
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