May 19 2025 |
What are Service Agreements?
A service agreement is a company contract between a service provider and your company, outlining the terms and conditions and covering various aspects such as quality, availability and responsibility of services.
A Service Agreement typically includes:
- The description and frequency of the service covered under the contract
- Terms of payment and compensation details
- Responsibilities and obligations of both parties
- Confidentiality and privacy obligations to be followed by your company
Why are Service Agreements important for business today?
Having a comprehensive and up-to-date collection of service agreements enables your company to:
- Ensure compliance with the terms and conditions defined in the contracts
- Prevent and resolve potential disputes that may arise between you and your service provider
Why is it important for an event tomorrow?
Having a comprehensive and up-to-date collection of service agreements is important for an event tomorrow, as it helps potential investors to:
- Assess information on the services procured to accurately value your company
- Identify agreements that prohibit change of control and require replication or replacement
- Understand where terms in the agreement will mitigate the impact of service failures
- Plan for smooth functioning of your company post transactions, without delaying the use of existing services
Pros of addressing Service Agreements
- Provides clarity and transparency on the terms and conditions put in place
- Enables the management of the company’s obligations under those agreements
- Ensures third parties are complying with their obligations
- Faster and more efficient due diligence process
Cons of not addressing this topic
- Ambiguity in terms and conditions may increase the potential for legal disputes
- Difficulty in implementing risk management if the terms of service agreements are not readily available
- Potential disruption of operations if the rights and responsibility of service providers are not considered in transaction planning.
LEARN MORE ABOUT COMPANY CONTRACTS
- Software License Agreements
- Supplier Agreements
- Asset Use Agreements
- NDAs
- Customer Agreements
- Asset Ownership Agreements
