Drafting Your Own Professional Services Contract

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

It is essential for any individual or organization providing services to another that they have a professional services contract in place. Put simply, these are legally binding agreements between two parties that outline the services to be provided, payment terms and other relevant information. Without such a document in place, both parties may be unaware of their respective rights and obligations and this can lead to misunderstandings or disagreements over the course of providing services.

A professional services contract also provides a framework for how the provided services should be executed – detailing the scope of work, timeline for delivery and any expectations. Furthermore, it can help protect both parties from legal issues that might arise due to negligence or non-performance; without one there is no guarantee that either side will get paid as well.

Understandably then, having a professional services contract in place is crucial when working with others. If you’re looking to provide such services but don’t know where to start drafting one up, then never fear – The Genie AI team has got you covered! Our free open source template library is an excellent resource for anyone looking to create high quality legal documents without needing an experienced lawyer (or even having Genie AI account). With millions of datapoints on what constitutes market-standard contracts, our team can provide step-by-step guidance on crafting your own agreement as well as access our library today. So why not find out more now?

Definitions (feel free to skip)

Breach of contract: A breach of contract is when one party fails to fulfill their obligations as outlined in the agreement.
Waiver of liability: A waiver of liability is an agreement between two parties in which one party agrees to release the other from any potential legal responsibility or damages.
Arbitration: Arbitration is a process by which two parties resolve a dispute with the help of a neutral third party.
Mediation: Mediation is a process by which two parties resolve a dispute with the help of a neutral third party who helps facilitate communication between the two parties.

Contents

• Introduction
• Definition of key terms and understanding the scope of services
• Research
• Familiarizing yourself with relevant laws and regulations that may affect the services and payment terms
• Negotiating and setting expectations
• Discussing the services to be provided and the payment terms
• Drafting the contract
• Establishing the legal language, including provisions for conflicts and liability
• Obligations of the parties
• Defining the roles, responsibilities, and expectations of both parties
• Payment terms
• Outlining the payment schedule, including any late payment fees or interest
• Dispute resolution
• Establishing procedures for addressing disagreements and resolving conflicts
• Amendments
• Establishing a process for amending the contract if needed
• Signing and enforcing the contract
• Finalizing the contract and enforcing its terms
• Conclusion
• Summarizing the main points of the guide and offering resources for further research.

Get started

Introduction

• Understand the project’s scope and create a document that outlines the terms and conditions of the contract
• Research and investigate the legal and regulatory requirements of the project
• Gather information about the client and the services they need
• Consider the different roles, responsibilities, and liabilities of both parties
• Determine if any additional documents need to be included in the contract
• When you have considered all of the above, you can move on to the next step: defining the key terms and understanding the scope of services for the contract.

Definition of key terms and understanding the scope of services

• Carefully read through the contract to gain an understanding of the scope of services
• Make note of any undefined terms and ask any questions that you may have
• Define the key terms in the contract to ensure that everyone has the same understanding of the terms used
• Clarify any ambiguities in the contract and make sure that all parties are in agreement with the scope of services outlined
• After you have read, understood, and clarified all the terms, you can move on to the next step: Research.

Research

• Review applicable laws and regulations that govern the services and payment terms
• Check with a lawyer and/or trusted advisor to ensure you are compliant with all relevant laws and regulations
• Check with your local Chamber of Commerce or relevant industry organization to get advice on best practices for drafting your professional services contract
• Research what other businesses in the same industry are doing and compare to your own situation
• Research any industry-specific terms and definitions that may be relevant to the services and payment terms
• Use the information you have collected to inform the drafting of your professional services contract

How you’ll know when you can check this off your list and move on to the next step: After completing the research and gathering all the necessary information, you should have a comprehensive understanding of the applicable laws and regulations, as well as best practices for drafting a professional services contract. Once you have this understanding, you will be ready to move on to the next step.

Familiarizing yourself with relevant laws and regulations that may affect the services and payment terms

• Identify the applicable local, state, and federal laws that may affect the services and payment terms in the contract
• Research any industry-specific regulations or standards that may apply
• Check the American Bar Association’s Model Procurement Code to ensure that the contract complies with all applicable laws
• Once you have familiarized yourself with the applicable laws and regulations, you can move on to the next step of negotiating and setting expectations.

Negotiating and setting expectations

• Set expectations and negotiate terms with the other party
• Outline the services to be provided, payment terms and any other relevant information
• Make sure both parties understand what is expected of them
• Make sure both parties agree with the terms of the contract
• Document the agreed upon terms and have both parties sign the contract
• Once the contract is signed, you can move on to the next step of discussing the services to be provided and the payment terms.

Discussing the services to be provided and the payment terms

• Have a conversation with the other party to discuss the services you will provide and the payment terms
• Make sure to cover the scope of the project, the timeline for completion, any milestones, and the payment terms
• Be as clear and as detailed as possible when discussing the services to be provided and the payment terms
• Once both parties have agreed on the services to be provided and the payment terms, you can check this off your list and move on to the next step of drafting the contract.

Drafting the contract

• Outline all of the services that will be provided, as discussed in the previous step
• Create any additional clauses that may be necessary based on the specifics of the agreement
• Make sure to include provisions for resolution of disputes, termination of the contract, and liabilities
• Draft the language of the contract in clear and concise terms
• Have both parties review and approve the contract
• Once both parties have agreed on the terms of the contract and signed the document, you can move on to the next step

Establishing the legal language, including provisions for conflicts and liability

• Research governing laws for the state in which the contract will be enforced
• Draft a choice-of-law provision that designates which state’s laws will govern the contract
• Draft a provisions stating the parties’ agreement to resolve any disputes through mediation, arbitration, or other forms of Alternative Dispute Resolution (ADR)
• Draft a provision limiting the parties’ liability to one another
• Draft a section that provides for indemnification of the parties to the contract
• Review the contract to ensure all legal language is accurate and legally binding

When you have completed all of the above, you can move on to the next step of the guide.

Obligations of the parties

• Identify the obligations of each party and detail them in the contract.
• Include a clause for each party’s contractual obligations and any applicable terms and conditions.
• Make sure all parties understand the obligations and responsibilities of each party at the time of signing the contract.
• Be sure to include a clause for any indemnities and liabilities that may arise from the performance of the contract.
• Review the contract with legal counsel to ensure the obligations of each party are adequately represented.

Once all the obligations of each party have been identified and included in the contract, you can check this off your list and move on to the next step.

Defining the roles, responsibilities, and expectations of both parties

• Establish who will provide the services (the service provider) and who will receive the services (the client).
• Set out the scope of services, outlining the specific tasks/activities that the service provider will be responsible for.
• Include a timeline for when the services will be completed.
• Identify any other parties that may be involved in the project and their respective roles.
• Outline the performance standards that will be used to measure the quality of the services provided.
• Define the communication methods and protocols that will be used by both parties.
• Address any additional requirements needed for the services such as insurance or licensing.

You can check this step off your list when you have written down all the roles, responsibilities, and expectations of both parties in the contract.

Payment terms

• Outline payment schedule, including total amount and payment due dates
• Specify any late payment fees and/or interest
• Identify acceptable methods of payment
• Describe conditions for partial payments
• Include a provision that allows for arbitration or other dispute resolution services in the event of a payment dispute
• Add a clause that allows you to send the client a notice of default if payments aren’t received on time

You can check off this step and move on to the next step of outlining the payment schedule, including any late payment fees or interest when you have outlined the payment terms and specified all details.

Outlining the payment schedule, including any late payment fees or interest

• Determine the payment schedule and frequency
• Establish any late payment fees or interest that may apply
• Specify the due date of the payment and the method of payment
• Outline any discounts or bonuses that may apply
• Include a clause that explains that the total amount due will change if the scope of services changes
• When complete, move on to the next step: ## Dispute resolution

Dispute resolution

• Determine what type of dispute resolution you will use in your contract (e.g., arbitration, litigation, negotiations, mediation).
• Outline the process for dispute resolution and the procedures for addressing disagreements and resolving conflicts.
• Specify the jurisdiction for resolution of disputes and the governing law of your contract.
• Make sure that the dispute resolution process is fair, impartial, and takes into account all relevant facts.
• When you are satisfied with the dispute resolution process, you can check this step off your list and move on to the next step.

Establishing procedures for addressing disagreements and resolving conflicts

• Draft a dispute resolution clause, which outlines the procedures for handling disagreements and resolving conflicts. This clause should include a detailed process for resolving disputes that may occur, such as mediation or arbitration.
• Include clear language that outlines who will bear the costs associated with resolving differences or conflicts.
• Specify the time frame that each step of the dispute resolution process should take.
• Once you have drafted the dispute resolution clause, review it with all parties involved in the contract and make any necessary amendments or revisions.

You can check this step off your list once you have drafted the dispute resolution clause and discussed it with all parties involved in the contract.

Amendments

• Review the terms of the contract and consider any changes that may need to be made
• Discuss any amendments with the other party and negotiate until an agreement is reached
• Draft the amendments and have both parties review and approve the changes
• Once all parties have agreed to all amendments, have the contract amended, signed and dated
• Check off this step and move on to the next step, which is Establishing a process for amending the contract if needed

Establishing a process for amending the contract if needed

• Determine who must be involved in the agreement amendment process, such as the customer, contractor, third parties, or other stakeholders
• Decide how the customer and contractor will communicate about and agree to amendments, such as in writing or verbally
• Set the conditions in which either party can initiate an amendment request and how the other party will respond to it
• Clarify how any changes to the agreement will be documented, such as through an addendum
• Outline any fees or other costs associated with amending the agreement

Once you have established a process for amending the contract and included it in the agreement, you can check this step off your list and move on to the next step.

Signing and enforcing the contract

• Make sure both parties are ready to sign the contract
• Ensure both parties have the same copy of the document, signed and dated in the same format
• Establish any additional documents or acknowledgements needed to support the agreement
• Finalize any details that may have been left out of the document, such as payment terms
• Make sure both parties understand the terms of the agreement and have read and accepted them
• Exchange the signed contracts between parties to make them legally binding
• Create a plan for enforcing the contract in case of breaches or disputes
• Keep copies of the signed contract for both parties

You can check this off your list once all parties have signed the contract, exchanged it, and agreed to the terms, and any additional documentation and acknowledgements have been included.

Finalizing the contract and enforcing its terms

• Negotiate and finalize the language in the contract, ensuring that all parties are in agreement
• Secure signatures from all parties, ensuring that the contract is legally binding
• Make a copy of the signed contract and keep it as a record
• Establish a timeline for the implementation of the contract, and make sure that all parties are aware of any deadlines
• Establish a method of enforcing the contract. This could include legal action or the withholding of payments
• Make sure that all parties are aware of the consequences for not following the contract
• Check that all parties are in agreement before the contract is officially finalized
• Once you have finalized the contract, you can move on to the next step.

Conclusion

• Carefully read through the contract one last time to ensure that all the details are correct.
• Make sure that both parties have signed the contract, and that all pages are numbered and attached.
• Keep a copy of the signed contract for your own records.
• Make sure that both parties are aware of the contract’s terms, and are in agreement with them.
• Make sure that the contract is enforceable and that the terms are clear and precise.
• Check off this step when you have completed all of the above steps.

Summarizing the main points of the guide and offering resources for further research.

• Review the professional services contract you have drafted, and make sure that it covers all of the points covered in the guide.
• Make sure the contract states the scope of the services and the payment terms, as well as any other details that you and the other party have agreed upon.
• Check for any potential legal loopholes and ambiguities, and make the necessary changes to the contract.
• Research and read up on relevant laws and regulations to ensure that the contract is in compliance with any applicable laws.
• Verify that the contract is not discriminatory or in violation of any other laws, and that all parties are in agreement.
• Once you are satisfied with the contract, sign and date it, and have the other party sign and date it as well.
• Check off this step on your list, and move on to the next step!

FAQ:

Q: What is the difference between a professional services contract and a service agreement?

Asked by Brandon on June 21, 2022.
A: A professional services contract is a legally binding agreement between two parties which outlines the terms of a specific service. It is typically created for services such as consulting, accounting, engineering, or other professional services. A service agreement is an agreement between two parties for a specific service, such as an IT service agreement or software development agreement. The key difference is that a service agreement typically outlines the obligations of both parties and the terms of the service being provided, while a professional services contract is specific to the professional services being provided and outlines the duties, rights, and responsibilities of both parties.

Q: How can I protect my business when drafting a professional services contract?

Asked by Sarah on August 4, 2022.
A: When drafting a professional services contract, it is important to ensure that you are protecting your business by including certain clauses which will provide you with legal recourse should something go wrong. It is important to include clauses that outline the scope of the project and any expectations of deliverables, payment terms, and confidentiality clauses. Additionally, it is important to include an indemnity clause which will protect your business from any legal claims arising from the performance of the services provided. Finally, it is also important to consider any dispute resolution provisions in order to avoid any lengthy legal proceedings should something go wrong.

Q: How do I include jurisdiction clauses in my professional services contract?

Asked by Steven on October 12, 2022.
A: When drafting your professional services contract, it is important to include jurisdiction clauses so that you can determine which laws will be applicable to your contract in the event of a dispute or disagreement between parties. Depending on where you are located and where the contracting parties are located, different laws may apply. For example, if you are located in the United Kingdom (UK), you will need to include UK jurisdiction clauses in your contract in order to ensure that UK laws are applicable in the event of any disputes or disagreements between parties. Similarly, if you are located in the United States (US) or the European Union (EU), you will need to include US or EU jurisdiction clauses respectively in order to ensure that their respective laws apply in any disputes or disagreements between parties.

Q: What should I consider when drafting a professional services contract for a technology company?

Asked by Emily on November 25, 2022.
A: When drafting a professional services contract for a technology company, it is important to consider any specific requirements related to technology such as software licenses, intellectual property rights (IPR), data protection rights and obligations, as well as any specific requirements related to data storage or use of cloud computing infrastructure. Additionally, it is important to consider what type of payment terms are suitable for each party involved - such as hourly rates versus fixed price contracts - and whether there are any provisions for termination of the contract should either party wish to do so. Finally, it is also important to consider how disputes between parties can be resolved without having to resort to lengthy court proceedings and thus include dispute resolution provisions within your contract.

Q: How can I ensure my professional services contract is enforceable?

Asked by Michael on January 8, 2022.
A: In order for your professional services contract to be enforceable, there must be certain elements included within it that make it legally binding such as an offer and acceptance clause which outlines both parties’ agreement on the terms; consideration - meaning each party must give something up in exchange for what they receive; intention - meaning both parties must demonstrate their intention to enter into a legally binding agreement; capacity - meaning both parties must have capacity (legal ability) enter into such an agreement; legal purpose - meaning both parties cannot enter into an agreement for illegal purposes; and finally certainty - meaning all terms must be clearly stated with no room for ambiguity or misunderstanding by either party. All these elements must be present in order for your contract to be enforceable.

Q: How can I tailor my professional services contract for different industries?

Asked by Joshua on March 17, 2022.
A: Tailoring your professional services contract for different industries can help ensure that all relevant legal issues pertaining to each industry are addressed within your document accordingly. For example if you are providing IT consulting services within the healthcare industry then there may be certain privacy regulations and policies pertaining to patient data that you need to address within your document whereas if you are providing consulting services within finance then there may certain financial regulations or securities laws which need to be considered when drafting your document. Additionally it may also be beneficial to tailor your document based on client requirements or industry standards so as not only comply with legal requirements but also provide additional protection or value-added benefits where possible.

Example dispute

Suing for Breach of Professional Services Contract

• Review the contract for any clauses that have been violated by the opposing party.
• Research relevant state and federal regulations and civil laws that pertain to the contractual agreement.
• Determine what damages, if any, have been incurred due to the breach.
• Determine if the breach is material and if it entitles the plaintiff to terminate the contract.
• Calculate any economic damages that have been caused by the breach.
• Determine if there are any non-economic damages that the plaintiff is entitled to, such as loss of reputation or goodwill.
• Consider settlement options and the possibility of reaching a mutually acceptable agreement outside of court.
• If damages are awarded, determine how they should be calculated.
• File the lawsuit in the appropriate court and serve the opposing party.

Templates available (free to use)

Health Care Provider Professional Services Contract Facility Friendly
Professional Services Contract
Professional Services Contract Ohio
Professional Services Contract Simple
Professional Services Contract Texas

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