Question 1

How is a service agreement different from an employment agreement?

Accepted Answer

A service agreement is for independent contractors and vendors, the provider controls how the work is done, typically works for multiple clients, and is not entitled to employee benefits. An employment agreement creates an employer-employee relationship with associated legal obligations.

Question 2

What is a liability cap and why does it matter?

Accepted Answer

A liability cap limits the maximum amount a service provider can be held responsible for if something goes wrong. Without one, a single client dispute could theoretically expose you to unlimited damages. Most professional service agreements cap liability at the total fees paid in the prior 3-12 months.

Question 3

How do I protect against scope creep in a service agreement?

Accepted Answer

Define your scope precisely, what you will do, what you won't do, and how changes are handled. Include a change order process that requires written approval and additional compensation for out-of-scope requests.

Question 4

Should I include a non-solicitation clause?

Accepted Answer

Non-solicitation clauses prevent clients from poaching your employees or subcontractors and vice versa. They're common in professional services agreements and generally enforceable when limited to a reasonable period (1-2 years) and scope.

Question 5

What's the difference between a retainer and a project-based agreement?

Accepted Answer

A retainer agreement covers ongoing availability and services over a recurring period, typically billed monthly. A project-based agreement covers a specific deliverable with a defined end date. Service agreements can cover either structure, or a hybrid.

Question 6

What should I check before signing a service agreement?

Accepted Answer

Review the scope definition (is it specific enough?), liability caps (are they reasonable?), termination clauses (can you exit if things go wrong?), payment terms (when and how you get paid), and IP ownership provisions. Our [service agreement checklist](/blog/service-agreement-checklist) covers every item to verify before signing.

Question 7

How is a service agreement different from a freelance contract?

Accepted Answer

A service agreement typically governs ongoing or recurring business relationships, consulting retainers, managed services, SaaS implementations. A freelance contract is designed for project-based work with a defined deliverable and end date. If the engagement is ongoing, use a service agreement. If it's a one-off project, a [freelance contract](/contracts/freelance) may be more appropriate.

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What is a Service Agreement?

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