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A Supply of Service Agreement is a contract between a customer and a supplier, that sets out the terms by which services will be provided by the supplier to the customer.
What is a Supply of Service Agreement?
The Supply of Service Agreement is a legal document that defines the obligations and the rights of the customer and the supplier, in order to provide a specified service by the supplier to the customer.
This specific legal document is an essential tool that set out the detailed provisions of the specified services that are acquired by the customer, for the supplier to comply with the provisions stated in the supply of service agreement, including the responsibilities of both parties, the pricing, and the laws that will be applied on further disputes regarding the supply of service agreement.
The purpose of having a supply of service agreement is to give a clear understanding of the responsibilities, legal rights, and obligations of both parties, to ensure that the specified services, provided by the supplier, is delivered to the customer accordingly.
A part of the supply of service agreement deals with the legal circumstances of any further dispute between the supplier and the customer that may arise regarding the supply of service, which states the laws or the courts that are authorized to settle any disputes related to the agreement. It also set out provisions related to the renegotiation or renewal of the agreement, and the termination of the agreement.
It should be noted that agreements for the supply of services are usually regulated by laws or regulations in terms of its provisions, since it is a tool that contributes to the economy.
However, all supply of service agreements should have the key elements:
Every legal document should have a headline or a title to differentiate it from any other similar legal documents that can possibly be subject to regulations. In this case, the title of the supply of service agreement should be “Agreement for Supply of Services”, or any other similar title that leads to indicate that this legal document is a supply of service agreement.
2. The parties
This agreement is an exclusive agreement between the supplier and the customer, so both parties should provide their name, any important personal information regarding this agreement such as their addresses, and identifying them as “Supplier” or “Customer”, which will be their references throughout the agreement.
This section of the supply of services agreement deals with interpreting the frequently used words or items in the agreement, in order clear and avoid any confusion or misunderstanding of any term in the agreement. This section is an essential part of the agreement for both parties, so the drafter of this document should take into consideration how the terms are interpreted in a way that is understandable for both parties, and avoiding any interpretation that creates further confusion or misunderstanding for any party of this agreement.
4. The service, its description, and its purpose
This part of the supply of services agreement is where the services, that are provided by the supplier, are fully explained. This part can be written as a project plan, or as simple provisions that specify the service(s) that are agreed upon by the supplier and the customer, including a detailed description of the service, and the purpose of supplying the customers with the specified services. This part may include dates, duration, and territory or geographical coverage
Including the dates of supplying the services to the customer and the duration of supplying the specified services is an important piece of information that should be included within the agreement. It can be included in the project plan within the agreement, or within the provisions
6. Pricing, charges, and payment
This section sets out the charging, invoicing and payment, and its mechanism or process. This section should include any VAT, taxes, additional expenses that should be paid, and rate of interest if possible. all can be done in a schedule and referenced. If there are any pricing adjustments in the future, such as annual increases for example, it should be stated in this section.
7. Responsibilities of provider
This section sets out the key responsibilities of the supplier that are particularly relevant to the performance or supply of the services. it includes obligations that the services meet certain standards or specifications, delivery times, and a requirement that the services comply with all applicable laws.
8. Customer’s Obligations
This section of the agreement sets out the customer’s key obligations in relation to the services, since in some cases the supplier may be dependent on the customer’s performance of certain tasks that enable the supplier to carry out its own obligations. These dependencies may be set out here, in addition to any specific remedy of the supplier in the event of the customer’s failure to perform them.
Since the supply of service agreement is a commercial contract or document, it should contain confidentiality provisions to ensure that any sensitive information passed between the parties in connection with providing or receiving the services will not be disclosed to anyone else.
10. Dispute process
This section deals with how both parties should deal with any further conflicts, disagreements, or disputes, by stating procedures to be followed where a disagreement arises between the parties in connection with the agreement.
11. Termination and force majeure
This section sets out the parties’ respective rights to terminate the agreement, which can be done when the other party commits a material breach of the agreement, repeatedly breaches the agreement, or is subject to one of a number of listed events associated with financial instability. Depending on the circumstances, various other rights of termination may also be agreed. Regarding the case of force majeure, which is any event outside the parties’ reasonable control, provisions that protect a party who is prevented from performing its obligations by force majeure.
Other elements that should be Taken into consideration are usually related to the usage of any intellectual property, third party rights, notices, and remedies for any violation of the agreement terms or termination.
- information of the parties
- Description of the service(s) provided
- Pricing, charges, and payment
- Responsibilities and obligations
- Confidentiality provisions
- Dispute process
- Termination and force majeure