AI Review for Service Agreements with Deliverables

What is a Service Agreement with Deliverables?

A Service Agreement with Deliverables (SAD) is a contract where a party, typically a service provider, agrees to provide a specified and tangible outcome to another party, often the client. These types of agreements are commonly found in industries where the outcome of the service is measurable and can be defined before the service is performed.

In a Service Agreement with Deliverables, it's essential to define the scope of work, deadlines, payment terms, and what constitutes a satisfactory deliverable. This helps to ensure that both parties have a clear understanding of what is expected and can help to avoid misunderstandings or disputes down the line.

Industry Applications of Service Agreements with Deliverables

Service Agreements with Deliverables are essential across various industries, each with its unique offerings. Some common industry applications include:

1. IT Services and Software Development: In this industry, SADs help to ensure clear expectations for solutions like software products or website designs. The deliverables could include specific software modules, a complete application, or a fully functional website.
2. Consulting: In the consulting space, these agreements provide clients with insights such as detailed reports or organizational strategies. The deliverables could be a market research report, a strategic plan, or a set of recommendations for organizational improvement.
3. Engineering and Architecture: These industries may require detailed blueprints or feasibility studies for infrastructural projects. The deliverables could include a set of detailed design drawings, a scale model, or a comprehensive feasibility report.
4. Construction: In the construction industry, the service agreement with deliverables may guide projects to completion with certain milestones. The deliverables could be the completion of specific phases of the project, such as the foundation, framing, or interior finishing.
5. Marketing and Advertising: Marketing and advertising agencies often use SADs to outline the specific campaigns, materials, or strategies they will deliver to their clients. Deliverables could include a complete branding package, a series of advertisements, or a detailed marketing strategy.

Top Provisions to Consider in a Service Agreement with Deliverables

1. Description of Deliverables: A comprehensive description of the deliverables, including specifications, quality standards, and quantities, to ensure alignment with client expectations. This is crucial for ensuring that both parties have a clear understanding of what will be provided.
2. Timelines and Milestones: Provisions addressing timelines for deliverable completion, milestone achievements, and any associated penalties for delays are crucial to maintaining accountability and project management efficiency. This helps to keep the project on track and ensures that the client receives the deliverables in a timely manner.
3. Warranties and Guarantees: Clauses pertaining to warranties or guarantees on the delivered outcomes, as well as procedures for addressing discrepancies or non-conformance with agreed-upon specifications, serve to mitigate risks and ensure client satisfaction. This provides the client with assurance about the quality of the deliverables.
4. Dispute Resolution and Governing Law: Dispute resolution mechanisms and governing law clauses are commonly integrated to establish protocols for addressing potential conflicts and determining the legal framework governing the agreement. This is important for providing a clear path forward in case of any disagreements or disputes.
   

In addition to these key provisions, a comprehensive Service Agreement with Deliverables should also consider including:

5. Payment Terms: Clear terms about how and when the service provider will be paid, including any upfront payments, milestone payments, or payment upon completion. This helps to avoid confusion or disputes about payment.
6. Acceptance Criteria: Specific criteria that the deliverables must meet in order to be considered acceptable by the client. This could include things like functionality requirements, design specifications, or content requirements.
7. Change Orders: A process for how changes to the scope of work or the deliverables will be handled, including how change requests are submitted, approved, and priced. This is important because changes are often inevitable in complex projects.
8. Intellectual Property Rights: Clauses that address who will own the intellectual property rights to the deliverables, and what rights, if any, the other party will have to use or modify the deliverables. This is particularly important if the deliverables involve custom software, designs, or other creative works.
9. Confidentiality: Provisions that require the service provider to keep any confidential information they learn about the client's business in the course of the project confidential. This helps to protect the client's proprietary information.
10. Termination: Conditions under which either party can terminate the agreement before the deliverables are complete, and what happens in that case (e.g., what payments are due, what happens to work in progress, etc.). This provides a way out if the project isn't going as planned.

Checklist for a Good Service Agreement with Deliverables

To ensure that your Service Agreement with Deliverables is effective, comprehensive, and legally sound, use this checklist:

•  Clearly define the deliverables, including specifications and quantities
•  Include timelines for deliverable completion and any milestones
•  Specify warranties or guarantees on the deliverables
•  Include procedures for addressing non-conforming deliverables
•  Specify dispute resolution mechanisms and governing law
•  Clearly define payment terms, including any milestone payments
•  Include acceptance criteria for the deliverables
•  Specify a process for change orders
•  Clarify intellectual property ownership and usage rights
•  Include confidentiality provisions to protect proprietary information
•  Specify termination conditions and the consequences of termination
•  Ensure the agreement complies with applicable laws and regulations
•  Have the agreement reviewed by legal counsel
•  Ensure the agreement is signed by authorized representatives of both parties

AI Contract Review for Service Agreements with Deliverables

To give you a sense for the benefits of leveraging contract review software trained by lawyers, we’ve selected some sample language our software presents to customers during a review. Keep in mind that these are static in this overview, but dynamic in our software - meaning our AI identifies the key issues and proactively surfaces alerts based on importance level and position (company, 3rd party, or neutral) and provides suggested revisions that mimic the style of the contract and align with party names and defined terms.

These samples represent less than 5% of the pre-built, pre-trained Legal AI Contract Review solution for Service Agreements with Deliverables. If you’d like to see more, we invite you to book a demo.

DELIVERY

For: Provider

Alert: May be missing a provision relating to the delivery of deliverables.

Guidance: In a Service Agreement, it is crucial for both parties to have a clear understanding of the terms and conditions related to the delivery of deliverables. This clarity helps prevent potential disputes and misunderstandings, ensuring a successful business relationship.

In practical terms, a well-defined provision outlining the delivery schedule, milestones, and acceptance criteria for deliverables can help manage expectations and avoid disputes. For example, in a scenario where a software development company is contracted to develop a custom software application, a clear provision can ensure timely and satisfactory completion of the agreed-upon services.

While there may not be specific statutes or laws directly addressing the delivery of deliverables in a Service Agreement, general contract law principles and relevant industry-specific regulations should be considered. This ensures that the Service Agreement is legally enforceable and compliant with all applicable laws and regulations.

One significant exception that applies to the primary legal principle of performance of contractual obligations is the doctrine of impossibility or impracticability. This doctrine allows a party to be excused from performing their contractual obligations if an unforeseen event occurs that makes the performance impossible or unreasonably burdensome. In the context of a Service Agreement, if the delivery of deliverables becomes impossible or impracticable due to unforeseen circumstances, the doctrine of impossibility or impracticability may be invoked to excuse the service provider from their obligation to deliver the deliverables. However, this exception is subject to the specific terms of the agreement and the applicable law, which may vary depending on the jurisdiction.

Sample Language:

DELIVERY

1. PROVIDER complete the Services and deliver the Deliverables to CUSTOMER by [●●].

2. No response by CUSTOMER within [●●] business days of the Deliverables being delivered by PROVIDER will be deemed acceptance of the Deliverables.

REPORTS

For: Provider

Alert: May include a provision stipulating that provider has an obligation to update reports after the completion of the services.

Guidance: It is generally advised for the Provider to specify their obligations concerning update reports after completing the services in a Service Agreement. This clarification helps define the scope of the Provider's responsibilities and prevents potential misunderstandings or disputes.

In practical terms, this stipulation serves to limit the Provider's liability and potential workload after completing the services. It also enables the Provider to concentrate on new projects and clients without being burdened by ongoing reporting obligations for completed services. This is particularly relevant in the context of services related to software development, where ongoing update reports on the performance and usage of the software may be requested by the Client.

Additionally, it is critically important to consider general contract law principles, such as the duty to perform in good faith and the duty to mitigate damages. The implied covenant of good faith and fair dealing, recognized in both Federal and state laws, requires both parties to act in good faith and deal fairly with one another in the performance and enforcement of the contract. This means that even if a provision explicitly states that the Provider has no obligation to provide update reports after completing the services, the Provider may still be required to act in good faith and provide necessary information or assistance if it is deemed essential for the proper execution of the contract or to prevent undue hardship on the other party.

Sample Language:

REPORTS

1. At the request of CUSTOMER and on the last business day of each month, PROVIDER shall deliver a written report to CUSTOMER on the status of the performance of the Services.

2. PROVIDER shall report the completion of the Services to CUSTOMER. 

3. PROVIDER shall have no responsibility to update the report for events and circumstances occurring after the completion of the Service.

INSPECTION

For: Provider

Alert: May be missing an article regarding inspection of deliverables.

Guidance: In a Service Agreement, it is essential to define the right to inspect deliverables to guarantee they adhere to the agreed-upon quality and standards. This right safeguards the interests of the receiving party and helps avert disputes.

The UCC is the primary legal principle governing the inspection of deliverables in the U.S., particularly when the agreement involves a combination of goods and services. Under the UCC, the receiving party has the right to inspect the deliverables and, if they do not conform to the contract terms, may reject them and demand correction or replacement.

However, the "predominant factor" test is a significant exception to the application of the UCC to Service Agreements. This test determines whether a contract is primarily for the sale of goods or the provision of services. If the predominant factor is the provision of services, the UCC will not apply, and the inspection of deliverables will be governed by common law principles.

In such cases, it is recommended that the parties negotiate and include specific inspection provisions in their Service Agreement to ensure that the deliverables meet the agreed-upon standards. These provisions should clearly outline the inspection process, the standards for acceptance or rejection, and the remedies available to the parties in case of non-conformity.

Sample Language:

INSPECTION

1. CUSTOMER shall promptly perform the inspection for the Deliverables upon the receipt to check (a) whether the Deliverables conform with this Agreement and (b) whether there is any damage or defect in the Deliverables.

2. In the event that CUSTOMER has determined that the Deliverables, or any portion thereof, do not comply with any requirements stipulated in this Agreement (the “Non-Conforming Deliverables”), CUSTOMER may, within [●●] days after the receipt of such Non-Conforming Deliverables, notify PROVIDER (the “Notice of Non-Conformity”) and CUSTOMER shall be entitled to exercise one of the following options at PROVIDER’s sole risk and expense:

(a) receive a full refund of the Service Fee paid and withhold any outstanding portion of  the Service Fee; 

(b) have PROVIDER repair or replace the Non-Conforming Deliverables; or

(c) repair or replace the Non-Conforming Deliverables by itself and recover all expenses reasonably incurred for such repair or replacement from PROVIDER.

3. If CUSTOMER does not provide PROVIDER with the Notice of Non-Conformity within [●●] days after the receipt of the Deliverables, such Deliverables shall be deemed to be accepted by CUSTOMER and will not be considered Non-Conforming Deliverables for the purposes of this Article.

4. Acceptance for the Deliverables shall not affect any rights or remedies available to CUSTOMER as a result of PROVIDER’s failure to perform its obligations hereunder.

Best Practices for Using Service Agreements with Deliverables

To make the most of your Service Agreements with Deliverables and ensure their effectiveness, follow these best practices:

1. Be Specific and Detailed: The more specific and detailed you can be about the deliverables, the better. This includes not just what will be delivered, but also how it will be delivered, in what format, and by when. The more clarity there is, the less room there is for misunderstandings.
2. Set Realistic Deadlines: When setting deadlines for deliverables, be realistic. Consider the amount of work involved, any dependencies on other parties or deliverables, and potential risks or challenges. Setting unrealistic deadlines can put undue pressure on the service provider and may lead to subpar deliverables.
3. Build in Flexibility: While it's important to be specific, it's also important to build in some flexibility. Consider including provisions for how to handle changes to the scope of work or the deliverables, in case unforeseen circumstances arise or the client's needs change.
4. Communicate Regularly: Regular communication between the service provider and the client is essential. Set up regular check-ins or progress reports to ensure that the project is on track and that any issues are identified and addressed early on.
5. Have a Clear Acceptance Process: Have a clear process for how the client will review and accept the deliverables. This could include a set period for review, a process for providing feedback or requesting changes, and clear criteria for what constitutes acceptance.
6. Use Milestones and Phased Payments: For larger projects, consider breaking the work up into milestones and tying payments to the completion of each milestone. This can help to keep the project on track and ensure that the service provider is paid for work as it's completed.
7. Keep Detailed Records: Keep detailed records of all work done, communications, and decisions made throughout the project. This can be invaluable if there are any disputes or misunderstandings later on.

Conclusion

Service Agreements with Deliverables are a crucial tool for businesses that engage service providers to produce specific, tangible outcomes. By clearly defining the deliverables, timelines, acceptance criteria, and other key terms, these agreements help to align the expectations of both parties and provide a framework for a successful engagement.

To ensure the effectiveness of your Service Agreements with Deliverables, it's important to include comprehensive provisions that address the unique needs and risks of your specific industry and project. The agreement should be tailored to your particular circumstances, thoroughly reviewed by legal counsel, and actively managed throughout the service delivery process.

By following best practices for negotiating, drafting, and executing your Service Agreements with Deliverables, you can establish a strong foundation for successful service engagements that deliver the results your business needs while minimizing risks and misunderstandings.