Contracts for Supply of Services

22 Mar 12

So you’ve decided to outsource a service and you’ve chosen a preferred provider. Just need to sign on the dotted line, right? Not quite yet.

No matter what kind of service it is, the content of that contract is critically important to help ensure you get what you expect and know where you stand if you don’t.

So don’t just accept the terms offered.  Read the contract carefully and ask yourself these questions:

  1. What provisions are there to set the standards of quality of service I expect, including timeliness?
  2. What are my options if those standards are not met?
  3. What do I get for the agreed price and what are the chances of having to pay for extras?
  4. To what extent do they guarantee what they do or avoid liability?
  5. Who carries the risk of disruption in service provision?
  6. How secure will my commercially sensitive information be?
  7. Are there arrangements for handover if/when I change providers?

This is of course not a comprehensive list of all the things that a good contract should address but I hope it’s a useful starting point.

We are available to advise you on proposed contracts, negotiate changes and draft wording as required.  Let us know if we can help.

What about shared services?

As well as the above requirements additional consideration needs to be given to the structure of any shared service arrangement, for example whether one organisation provides services to others or whether a joint venture entity is formed to provide services to the joint venture parties.

Prepared by Lesley Brook