Terms of Service – A Breakdown

Terms of Service – A Breakdown

terms of serviceWhen you decide to outsource work to a freelancer or company, be sure to consult with a commercial lawyer and get advice in relation to terms of service.  You can discuss with your lawyer what flexibility you would like to offer your supplier.  Some terms of service can be very divisive if you haven’t discussed them with your supplier or service provider.  It is important that you have that discussion with your supplier.

Once you have a plan, you can speak to a commercial lawyer.  A lawyer will help you see things clearer, such as payment terms and termination of services.  You will also get help with looking ahead and thus avoid any pitfalls.  If you’ve got a plan but are not clear on what to do, get a commercial lawyer to help you.  Strategic planning is key to a good business relationship.  We often overlook important aspects of an agreement that will inevitably create conflicts.  However, if you consult with a legal expert who is also business savvy, you are on the right track.

Terms of Service and Their Interpretation

This is a list which shows what will potentially be included in the agreement – the interpretation of the terms of service:

  • The agreement is between supplier and customer
  • Who’s the customer (person or company who purchases services)
  • Who’s the supplier – (person or company who supplies services)
  • Commencement date
  • Conditions of the agreement
  • What is the customer data and how it should be governed or protected
  • Intellectual property rights
  • Services detailed
  • Information relating to fees and payment terms

Supplier and Customer

You need to stipulate names of both supplier and customer for legal purposes.  Who really are the supplier and customer?  For instance, if the supplier is a company, whose name will be used in the agreement?  The name of the company director or the company name?  Remember that both supplier and customer are accountable, so you need to be precise with names.

Start Date

Have a start date – the commencement of services rendered by the supplier.  If you agree that services should begin on a certain date, the supplier should carry out services beginning on that date.  You will then have an obligation to pay for services which began on the agreed date.  The date stipulated in the terms of service is the date your supplier should honour.

Conditions of Agreement

The conditions of the agreement between you and your supplier may vary greatly.  Conditions need to be disclosed and explained – clarity is essential in relation to what the services are and how they should be supplied.  You must explain in detail what you require from the supplier so that it is clear to both you and the supplier.

Data and Intellectual Property

The supplier will likely have access to data, including sensitive data and intellectual property.  Terms of service must include any accessibility to data and any expectations in terms of management and protection.  You need a confidentiality agreement clause in your terms of service and your supplier needs to be very clear about what can and cannot be disclosed.  Also, be sure to make it clear what is your intellectual property and how it should be handled by the supplier.

Supplier’s Fees, Expenses and Payment Terms

The terms of service should state how much the supplier’s fees will be for remuneration of services.  Clearly state in the agreement how the supplier will be remunerated.  Does the supplier charge per hour?  What is the hourly rate and does it include VAT?  There’s also the matter of expenses which you need to understand and decide if you agree to pay and which expenses you will agree to pay.

You should discuss expenses with the supplier.  Expenses will arise during the course of work so you need to agree with the supplier which expenses will be refunded.  If the supplier incurs costs outside their normal daily expenses in order to meet your requirements, you need to decide if you’ll be willing to pay.  Transport or telephone costs may arise and you need to agree if and on which circumstances you will refund the supplier. The terms of service will also give you and the supplier guidance in relation to payment terms – when the customer will be invoiced and when payment is due, as well as what to expect if payment is overdue.

If you are considering to outsource work to a freelancer or company, please give us a call for an informal discussion.  We’ll help you and your supplier get on the right track. SG

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