Use this sample service agreement letter as a template for your formal letter. Last updated on February 9th, 2019
A service agreement letter is used by a professional service provider or other trading business partner to clearly define the agreed terms and conditions for the service. If they are not clear, misunderstandings can develop and the expectations of the supplier and customer do not match. This can cause all sorts of serious problems.
A verbal agreement based on shaking hands may be enough for the expectations between friends, but significant supply arrangements need to be agreed and documented on paper with signatures of the representatives of both parties. It is especially important in a business when the agreement is on behalf of the company. The person who made the verbal agreement may leave the business for any reason. If the conditions for transactions are not in writing, the next person may have no idea about the terms of the agreement.
For those who are self-employed or work for a small business, a formal, detailed business agreement may cause more trouble than it’s worth. They may need more flexibility and freedom with their service providers. The business owner needs to decide what the best solution for their requirements is as well as determine the provider’s capability.
If either party breaks the verbal agreement, there will be no recourse for the other party. The agreement will not reinstate trust, but it will be useful if one or the other party needs to go to court to settle the problem.
In the first sentence, the letter should clearly state its purpose including the names of the organizations or individuals of the two parties who are joining in the agreement. It should give the date when the service should be completed or the product should be delivered.
The letter should also state the exact fee to be paid and when it will be paid. If there are contingencies for pricing, these should be stated. For example, the fee may be different for a lawn-care company if they clear way winter debris or simply mow the lawn.
The agreement may also contain:
A confidentiality agreement
A recommended arbitration or dispute process
A recommended force majeure process
A renegotiation and renewal process
Some of the trading and commercial arrangements for which a service agreement letter is required are:
Between two organizations
Between an organization and a private consumer
Direct contracting of services
Sub-contracting of services
Licensing arrangements between to organizations or people
Supply agreements and commercial trading arrangements for any type of product or service
The service agreement letter should clearly state all matters relating to the agreement and not leave any potentially contentious areas vague and open to dispute. A good service agreement will provide a reference point for both the business and supplier if either the customer’s or client’s requirements change.
Negotiate Effective Outcomes Based on the agreement, they can negotiate effective outcomes when unexpected situation arise. If the agreement is very complicated and the terms extend over a long period of time, it is recommended to contact a lawyer for legal wording. The lawyer is not normally responsible for the operational aspects of the agreement unless it is specifically required.
Here is a sample service agreement letter. It should be sent by certified mail so that the sender has a record of the time and date it was received. It should be written in formal business-letter style and may be written on business letterhead. If the person doesn’t have letterhead, they can put their name at the top of the page as letterhead.
Sample Service Agreement Letter Name of Business Name of Person Writing the Letter Position of Person Address of Business City, State, Zip Code
Name of Web Design Company Name of Person in Charge Address of Company City, State, Zip Code
Dear Name of Web Design Company Person in Charge,
This is a letter of agreement to outline the website services that your company will perform for Name of Business.
Name of Web Design Company agrees to design a new website for Name of Business that includes all the features that are on the existing website, but with new graphics and updated links.
This work will take up to two weeks beginning on DATE and ending on DATE, and the agreed upon fee is AMOUNT. We reserve the right to suggest changes after the final site is presented and before the fee is paid. However, the full fee will be paid in full within five days after the new site has been posted online.
If you have any suggestions or questions, I can be reached at 555-123-4567 or at [email protected] If you agree with the terms of our agreement, kindly sign one copy of this letter and return it to me.
Signature of Business Person Printed name of Business Person Enclosed one signed copy