A service contract is a contract by which a person, the service provider, agrees to provide a specific service to a customer in exchange for payment.
The service provider must meet several general obligations in the performance of a service contract. Thus, he must:
– Be careful in the way he works.
– Act in the best interest of the client.
– Ensure that the service is performed on time and according to what is provided for in the contract.
– Follow the rules, standards, and directives in force in his field, what is commonly called “rules of the art”.
Control and direction of the works
The service provider can always choose how they perform the service. The customer cannot therefore impose on him the way in which he must render this service. The client can, however, inform him of what he wants, monitor the progress of the work, and express his preferences as to the result. This autonomy of the service provider is the main difference between a service contract and an employment contract.
For example, in a service contract where a marketing agency agrees to find sponsors for a company, the company may require the agency to hire competent individuals and require the use of certain advertising materials. However, the marketing agency retains, always, control and direction over the research methods used and the individuals it has hired. She also decides who are the potential sponsors she wants to meet and not.
Inform the client
Before concluding the contract
Before the service contract is concluded, the service provider should, to the extent possible, provide the customer with all relevant information about the service to be rendered, including the resources and time required to complete it. The customer can therefore get an idea of the cost of the service and decide whether he wants to contract or not.
For example, an accountant must give his client a fairly accurate estimate of his fees. He must also inform him of the possibility that his fees will be modified and that other professionals are working on the file, which would have the consequence of increasing the total price of the requested service.
During the execution of the contract
If the service provider is paid according to the value of the services rendered (if he is paid by the hour for example), he must inform the client, if requested by the latter and to the extent possible, of the progress of services and expenditure already incurred. The customer can therefore, before receiving a final account, assess how much the service is likely to cost them and agree with the supplier about any concerns.
The service provider should also inform the customer when it realizes that the price of the service will be higher than what has been discussed that the nature of the service has changed or that the lead times will be longer than expected. The customer can then decide what to do considering this new information. The service provider who estimated the costs cannot therefore be satisfied with sending a higher invoice at the end of the contract than that provided for in the estimate or the estimate.
Provide tools and materials
In a service contract, it is the service provider who is generally responsible for providing the tools, materials, and other goods necessary to perform the contract. He may, however, come to an agreement with the customer that it is the latter who provides them. When it is the service provider who supplies the tools, materials, and other goods, they must ensure that they are of good quality and that they are suitable for the service to be performed.
When it is the customer who provides the tools, materials or other goods, the service provider must use them with care. It must inform the customer of its use. He must also advise him if the goods supplied are inappropriate or contain apparent defects or hidden defects that a reasonable service provider should notice.
Outsource the contract
A supplier may perform the service contract by asking another person (the “subcontractor”) to perform the service or part of the service for them. However, the service provider cannot subcontract a contract if its services have been retained because of its expertise or personal characteristics, or if the nature of the contract makes subcontracting impossible.
For example, a town planner who speaks on behalf of a municipality to make a request to the government may ask different people to help him prepare the documents. The contract with the client will then be respected even if the town planner has not done everything himself.
The situation is, however, very different. if a lawyer has been specially hired to represent a client because of her experience, skills, and reputation. In this case, she cannot ask someone else to represent her client at the trial without first obtaining her consent. For greater certainty, the customer can always provide directly in the contract that the service provider cannot subcontract the contract.
Finally, even when the contract is awarded to a subcontractor, the service provider remains responsible to the client. So, if the subcontractor does not do the job requested or does it poorly, the service provider cannot just blame it on them: they must do everything possible to correct the situation.
Achieve the results set out in the contract
The service provider must, of course, respect the service contract that he has concluded with the customer. But does he have a particular result to achieve in performing the requested service? It all depends on the nature of this service. In certain situations, the service provider has an obligation to provide a specific result (“obligation of result”):
For example, a lawyer must initiate a lawsuit before the statute of limitations (the legal time limit to sue) has expired, and an IT professional must install software properly.
In these types of situations, the service provider will always be liable to the customer if they do not provide the expected result, unless major force has prevented it from doing so. In other situations, a service provider is required to use all reasonable means to provide the service, but it is not obliged to achieve a specific result (“obligation of means”):
For example, a lawyer who represents a client in a controversial case must take all reasonable steps to try to win the case, but he does not have to guarantee that he will win it.
Likewise, a surgeon who performs a delicate operation on a patient must take all reasonable means at his disposal to make the operation a success, but he is not automatically to blame if the operation is unsuccessful. In these types of situations, the service provider will only be liable if it has not taken all reasonable means to achieve the result provided for in the contract. It is possible that the service provider has two types of obligations to fulfill under the same contract, depending on the circumstances.
Stop the service and end the contract
The service provider can end the service contract under certain conditions, just as the customer can end the contract in certain situations. The service provider can therefore terminate the service contract by stopping providing the service. He can do this without the customer’s permission, even if the service is not yet complete. However, the supplier must meet certain conditions to terminate the contract:
He must have a serious motive
Examples of reasons that allowed a service provider to terminate a contract:
– The customer interfered with the performance of the service on several occasions.
– The customer refused to cooperate with the service provider.
– The client wanted to change the terms of the contract without the agreement of the service provider.
– The customer has been rude, obnoxious, and rude many times.
Examples of reasons that did not allow a service provider to terminate a contract:
– The fact of not having asked for a high enough price in the contract, unless the price was fixed based on false information given by the customer.
– The fact that the customer is very demanding in the performance of the service.
– The fact that the customer is late and has not yet paid some low fees.
Every situation is unique, and a reason that is considered serious in one context may not be so in another.
He must not terminate the contract at a time that is harmful to the customer
The service provider must do what is necessary to ensure that the customer does not suffer any immediate loss due to the interruption of the service. For example, a lawyer who stops representing his client the day before a major lawsuit terminates the contract at a time that is prejudicial to the client. The lawyer must then ensure that his client’s rights are protected, such as by postponing the trial to another date. If the service provider has received an advance from the customer.