In order to support readers have more useful information regarding drafting service contract, TNTP will analyze several terms that the parties should pay attention to when drafting service contract, including the time limit for service completion, rights and obligations of the parties, continue to perform the contract and unilaterally termination of the contract performance.

1. The time limit for service completion

The parties shall specify the time limit for completion of the work since this will be the basis for determining whether the service provider has breached the contract or not. If there is no specific agreement, the service provider must complete the service within a reasonable timeframe. This timeframe is determined based on the conditions and circumstances known to the service provider at the time of contract formation, including any relevant time requirements from the client regarding service completion.

In case the work can only be completed when certain conditions are met by the client or another service provider, that service provider has no obligation to complete its service until such conditions are met. Therefore, the parties should agree on the conditions that the client or another service provider needs to meet.

2. Rights and obligations of the parties

A service contract is a bilateral contract. Therefore, the parties have rights and obligations towards each other. Based on the actual situation, the parties themselves agree on their rights and obligations. The parties can refer to some basic contents regarding the rights and obligations as follows:

2.1. Rights and obligations of the client

● Rights: i) Require the service provider to perform the act strictly in accordance with the agreement on quality, quantity, time, and location as agreed; ii) Unilaterally terminate contract performance and demand compensation for damage if the service provider seriously breaches obligations agreed upon in the contract. The client should agree on specific cases where it is considered that the service provider seriously breaches obligations as a basis for requesting the breaching party to pay a penalty for the violation.

● Obligations: i) Pay the service fee to the service provider as agreed; ii) Provide sufficient information and documentation related to the service for the service contract that requires for the performance of the work.

2.2. Rights and obligations of the service provider

● Rights: i) Require the client to pay the fee; ii) Require the client to provide information, documents, and facilities; iii) Amend the terms of service in the interests of the client without necessarily asking for the opinion of the client where waiting for such opinion would cause damage to the client provided that the service provider promptly informs the client thereof; iv) Require the client to provide licenses for performing service; v) Be alerted to unusual events from the client.

● Obligations: i) Perform the work strictly in accordance with the agreement on quality, quantity, time and location and other matters; ii) Do not assign the work to another person for performance on its behalf without the consent of the client; iii) Take care of, and to return to the client after completion of the work, the documents and facilities provided to it; iv) Notify the client promptly of any inadequacy in the information or documents and any failure of the facilities to satisfy the quality required for the completion of the work; v) Keep confidential any information of which it has known during the period of providing the service as agreed or as provided by law; vi) Compensate the client for damage where the service provider causes any loss of or damage to the documents or facilities supplied or discloses confidential information; vii) Warn possible risks in the process of performing work for the client; viii) Develop service implementation plans; ix) Adjust the negotiated content in case the contract has any changes; x) Gather information before doing the work.

3. Continuation of the service contract

Article 521 of the Civil Code 2015 provides that, “If, after the expiry of the agreed period for the provision of services, the work has not been completed and the service provider continues its performance and the client is aware of this but does not object, the performance of the service contract shall automatically be deemed to continue in accordance with the agreed terms until the act is completed”. Therefore, the client shall consider whether there is a provision in the contract that the service provider is obligated to continue performing the work if the work is not completed and the period for the performance of the work is over. In case the client does not agree to let the service provider continue to perform the contract, the client shall specify this in the contract.

4. Unilateral termination of performance of the service contract

The parties shall consider and agree on specific cases of unilateral termination of contract performance. The parties can refer to the provisions of Article 520 of the Civil Code 2015, “Where the continued provision of services does not benefit the client, the client has the right to terminate unilaterally the contract performance but must provide reasonable prior notice to the service provider, in which case the client must pay a fee according to the portion of services already provided and must compensate for damage. Where the client seriously breaches obligations, the service provider has the right to terminate unilaterally the contract performance and demand compensation for damage.”

In addition to the terms above, the parties may further agree in the contract on the terms of force majeure; dispute settlement; terms of penalties for violations and compensation for damages; etc.

Above is the content of the article “The fundamental terms in the service contract” that TNTP sent to readers. If you have any questions, please contact TNTP for the best support.