Service Contract

Scope of Services: Detailed descriptions of the services to be provided, including specific tasks, deliverables, and any limitations, are outlined.

Service Timeline: The agreed-upon start date, completion date, and any milestones or deadlines related to the services.

Service Fees and Payment Terms: The compensation or fees for the services, payment schedule, accepted payment methods, and any penalties for late payments are clearly stated.

Intellectual Property: If applicable, ownership and usage rights for any intellectual property created during the provision of services are defined.

Confidentiality: Provisions regarding the protection of sensitive information and client data are included to ensure confidentiality.

Quality and Performance Standards: Includes provisions on quality expectations, performance standards, and metrics that the service provider must meet.

Responsibilities: The roles and responsibilities of both the service provider and the client are outlined in a balanced manner, to avoid misunderstandings and ensure smooth collaboration.

Termination Clause: Conditions under which either party can terminate the agreement, including notice periods and reasons for termination, are detailed.

Liabilities and Indemnification: The extent of liability of each party for any damages, losses, or liabilities arising from the services is addressed, along with provisions for indemnification. Use it for any type of business and in any industries.

Similar contract templates are: 

• consulting agreement
• partnership contract
• memorandum of understanding
• agency agreement
• framework service contract
• framework supply agreement
• graphic design agreement

Read on our legal blog about:

• contractual liability
• graphic design services supply
• electronic signature

What is the difference between a contract for the provision of services and a contract for works?

The Romanian Civil Code establishes the contract for works as a broad legal framework encompassing both physical works (such as construction) and the provision of services. In practice, a service contract can be regarded as a specialized form of the contract for works, wherein the contract’s objective centers on delivering services rather than producing a tangible result. The key distinction lies in the nature of the contract’s purpose: a traditional works contract entails the completion of a specific project (e.g., building a structure), whereas a service contract is focused on delivering intellectual or professional services (such as consulting or IT support). Nonetheless, both contract types require the service provider to independently manage their activities to fulfill the agreed objectives with the client.

Is it mandatory for a service provision contract to be executed in written form?

While it is not legally required to formalize a service provision contract in writing, it is highly advisable to do so in order to mitigate potential disputes in the future. The primary benefits of a written contract include the ability to present clear evidence in court, access efficient debt recovery procedures, and ensure a consistent interpretation of the agreement between the parties.

What is the difference between a contract for the provision of services and an employment contract?

A service provision contract is used when a legal entity or individual provides services to a client without being employed by them. In contrast, an individual employment contract establishes a relationship of subordination, requiring the employer to fulfill legal obligations related to salaries, leave entitlements, social security contributions, and other employment benefits.

How does a service provision contract terminate?

A service provision contract can terminate in the following ways:

• by the expiration of the contract term. This method of termination applies especially to master service contracts, where the parties' obligations extend over time.

• by mutual agreement. You can use a termination agreement template for this.

• by unilateral termination by one of the parties (i.e., the unilateral decision of a party to end the contractual relationship) if this right is provided for in the contract.

• in cases of force majeure or other external causes that prevent the performance of the service provision contract.

• in other cases agreed upon by the parties or provided by law.

What happens if one of the parties does not fulfill its contractual obligations?

Failure to meet the obligations stipulated in a service provision contract triggers the contractual liability of the defaulting party and may result in several remedies, such as:

• termination of the contract through cancellation/resolution.
• the obligation of the defaulting party to compensate for the damages caused.
• enforcement procedures.
• performance of the obligation at the debtor's expense.
• a reduction in the services provided by the creditor, such as a proportional decrease in the agreed price.
• stay of performance of the service provision contract.

The enforcement of remedies for non-performance of contractual obligations depends on the specific clauses agreed upon by the parties and the particular circumstances. The service provision contract template we offer includes detailed provisions designed to protect both parties against breaches of contract.

Is it necessary to register a service provision contract with state authorities?

In general, it is not necessary to register a service provision contract with public authorities. Most service provision contracts are concluded between private companies or freelancers and do not require approval from any public institution. However, if the service provision contract involves regulated activities or is concluded as part of a public procurement procedure, specific authorizations or licenses may be required.

What happens if the services provided do not comply with the agreement?

If the services provided fail to meet the contractual terms, the remedies outlined in the agreement between the parties will be applied. This underscores the importance of using a service provision contract prepared by a lawyer to safeguard your rights. 

The Docs & Deeds service provision contract template enables the beneficiary to request correction of non-compliant services, demand contract termination, or seek compensation for any resulting damages.

How is the price established in a service provision contract?

The price in a service provision contract is mutually agreed upon by the parties. It can be established as a fixed sum, based on hourly rates, or according to other criteria outlined in the contract. Payment may be structured as an advance with a balance due later, in installments, or as a one-time payment. If not explicitly specified, the price may be determined based on standard rates for similar services or established industry practices.

How are revenues from service provision contracts taxed?

For individuals, the income obtained from service provision contracts is considered income from independent activities and is subject to: income tax, social security contributions (CAS) (if the income exceeds a certain annual threshold), and health insurance contributions (CASS) (if the income exceeds the threshold provided by law).