When seeking help as a small business owner, you are presented with various options for types of service contracts. But even before you can reach the conclusion that you need to sign a third party to a professional service contract, you need to rule out other possibilities.
First, do you need to hire an employee, whether full or part-time?
Having an employee gives you the most control over the work you need to be accomplished. The downside to employees is that they come with legal strings attached.
Instead, you may seek a relationship on a contractual basis. Whether looking for consultants or other types of services, these types of contracts allow you to avoid the complexities of employment law. Instead, the relationship between you and the contractor will be a matterof contract law.
Hiring a contractor may be precisely what you need, but you’ll need to figure out which contract is best for your business.
In this article will we’ll go over your different options while also explaining some basic terms so you know how to best protect yourself and your company.
Service Contract Definition
A service contract is a binding legal contract between two parties, the provider of services and the recipient, and it can be either nonpersonal or personal (§37.101). Typically, as a business owner, you will receive the contractor’s service in exchange for monetary compensation.
The terms of the contract usually cover:
- Extent
- Work required
- Payment schedule
- Roles and responsibilities
Because it is a binding contract, if either party does not do what is required, the other side can sue for breach of contract. Depending on the type of arrangement you have created, the contractor may think of you as a client, boss, or even customer.
However, it is essential to remember that the contract is not your employee. The legality of any professional service contract that imposes employment duties on the contract is questionable.
In addition to the work you want to be done, how much you will pay, and other rights and requirements, you should consider adding some security provisions to any service contracts from your company.
These contractual provisions can include:
- Non-compete clause - prevents the contractor from working for or starting a competitor to your business for a certain time.
- Non-solicitation clause - prevents the contractor from attempting to hire or use your employees or other contractors after the end of the contract.
- Confidentiality clause - prevents the contractor from disclosing certain private information they may learn while working for your business.
All of these provisions offer protection for your company from some downsides of using professional service contracts.
Table of Contents:
Table of Contents:
When seeking help as a small business owner, you are presented with various options for types of service contracts. But even before you can reach the conclusion that you need to sign a third party to a professional service contract, you need to rule out other possibilities.
First, do you need to hire an employee, whether full or part-time?
Having an employee gives you the most control over the work you need to be accomplished. The downside to employees is that they come with legal strings attached.
Instead, you may seek a relationship on a contractual basis. Whether looking for consultants or other types of services, these types of contracts allow you to avoid the complexities of employment law. Instead, the relationship between you and the contractor will be a matterof contract law.
Hiring a contractor may be precisely what you need, but you’ll need to figure out which contract is best for your business.
In this article will we’ll go over your different options while also explaining some basic terms so you know how to best protect yourself and your company.
Service Contract Definition
A service contract is a binding legal contract between two parties, the provider of services and the recipient, and it can be either nonpersonal or personal (§37.101). Typically, as a business owner, you will receive the contractor’s service in exchange for monetary compensation.
The terms of the contract usually cover:
- Extent
- Work required
- Payment schedule
- Roles and responsibilities
Because it is a binding contract, if either party does not do what is required, the other side can sue for breach of contract. Depending on the type of arrangement you have created, the contractor may think of you as a client, boss, or even customer.
However, it is essential to remember that the contract is not your employee. The legality of any professional service contract that imposes employment duties on the contract is questionable.
In addition to the work you want to be done, how much you will pay, and other rights and requirements, you should consider adding some security provisions to any service contracts from your company.
These contractual provisions can include:
- Non-compete clause - prevents the contractor from working for or starting a competitor to your business for a certain time.
- Non-solicitation clause - prevents the contractor from attempting to hire or use your employees or other contractors after the end of the contract.
- Confidentiality clause - prevents the contractor from disclosing certain private information they may learn while working for your business.
All of these provisions offer protection for your company from some downsides of using professional service contracts.
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