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As an eCommerce store owner with an eCommerce site, you will likely need another business’ services to run your eCommerce business. You could also be a service provider yourself. If either of these applies to you, you will enter into a service contract with the other party as one of your commercial contracts, which will contain conditions such as legal requirements. You may also hear people refer to a contract for services as a service agreement. This is the legal agreement that defines what each online business agrees to provide the other. It is crucial that you get this correct and include the right key terms, such as the payment methods and follow them to avoid legal action or legal disputes. This article will explain key terms to include in a contract for services for your eCommerce business.
Contract for Services
A contract for services or service agreement is a legal agreement between a business providing services to another business. For example, to provide the design of an eCommerce brand’s website. The service provider may be a legal business such as a limited company or a self-employed contractor. The contract for services details the business relationship between the two parties to the agreement. A contract for services must be clear to:
- make sure both parties know what to expect of each other;
- ensure clarity on the rights and responsibilities of each party;
- reduce the chance of a conflict or dispute; and
- achieve professionalism.
Contract for Services Key Terms
If you need to use a contract for services or a service agreement for your eCommerce brand, you need to know the key terms you should include in it. Below we explain four key terms to include in a contract for services for your online brand.
1. Parties to the Contract
A key term to include in a contract for services for your eCommerce services agreement is the details of who the parties are to the agreement. This will be you as either the service provider or business customer and the other party as the other role. Details of the parties in a service agreement should include:
- full names;
- addresses; and
- contact details.
In addition to providing the details of the parties in the contract for services, it is crucial to include the obligations of each and their overall role in the agreement. If you have this at the outset, both parties should be clear on what each expects of them and how they provide the service to the other. The details of the service can then follow.
2. Service Information
A key term to include in a contract for services for your eCommerce business is the service information, so what services one party promises the other. This is the scope of work. You must be specific about this so you and the other party know what one needs to provide the other and what the other pays for. Service information should also include, for example:
- the timeframe of the services, which could have an end date or be indefinite;
- where the work takes place; and
- dates specific parts of the service should be completed by.
When providing the timeframe for the service provision, you should think about where to insert a term that allows the service contract to be renewed. For example, if the parties are content and the work is regular work that needs completing, this saves for a new contract for services or looking for a new service provider.
3. Payment Terms
Any contract for service or service agreement must be completely clear on the payment terms. This will include not only what the amount of the services is but also what the service provider bases this on. For example, some service contract fees may be hourly, and others may be a flat rate. Payment terms should also detail if there will be a VAT charge, as this can vary in a contract for services depending on the contractor’s VAT status. Payment terms should also include, for example:
- the timeframe to pay the contract, such as at the end of the service provision or regularly throughout the contract;
- any upfront deposit and what percentage of the total cost due this is; and
- If there are any work-related expenses, the business must pay for the supplier.
4. Duty of Confidentiality
When you ask another business to provide your eCommerce business with service, or you provide services to another, you are both likely to require a duty of confidentiality of each other. Therefore, this is a crucial term to insert into your service contract. If you share sensitive information, you want to be confident it does not go further. Confidential information can include:
- trade secrets;
- customer data;
- personal information; and
- anything else that is not widely available to the public.
This checklist will help you identify areas in your business that may need further protection or assistance to ensure you are legally compliant.
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Key Takeaways
A contract for services or service agreement is a legally binding contract between two businesses. One business provides a service to the other, and this agreement regulates their business relationship. If you need a contract for a service or service agreement, you should know the items to include in it. This article has explained four of these. The first is the details of the parties and the roles they play in the contract for services. The article also details the importance of a term that describes the services one will provide. Payment terms are also crucial to identify in a contract for services and so is a term that details the duty of confidentiality between both parties.
If you need help determining what terms to include in a contract for services for your eCommerce business, contact our experienced eCommerce lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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