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Agency Service Agreement

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Agency Service Agreement

Doing business with an agency with a previous client is pretty easy and fast to reach an agreement. But when it comes to first-time business relationships, most agencies often find it challenging to set the pace for work. It is exciting to land new deals or get new business connections. Your team is eager to start hands-on activities in delivering a quality service.

But before you get started, your agency needs to take a pause and ensure that a solid agency service agreement is written and signed. The question that comes to mind is, "how do you protect your agency in the business relationship" while you keep the momentum alive with your newly found client?

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There are a few other questions to answer before drafting a binding agreement. You need to know what the document should include to offer you full protection and what it must say to avoid landing your agency into trouble mid-way.

Before we discuss the elements of a binding agency service agreement, let’s talk about when such an agency agreement is needed in a business relationship. 

When should you use an agency service agreement?

You need an agency service agreement when you are newly engaging with a client in a business relationship. The agreement serves as the contract between your agency and a client, and it provides the road map for a successful relationship.

We recommend that your agreement should be flexible enough to incorporate your statement of work, agency proposal, and scope of work. An agency service agreement should also state with the following:

  • The responsibilities of each party and what happened if a part default in carrying out a responsibility.
  • The work to be done and compensations involved.
  • Liability, insurance, and financial obligation of the parties involved.

What sections should an agency service agreement include? An agency service agreement should have summary information on each of the following:

1. Scope of work

This section talks about the scope of the project or statement of work (SOW). Your agency should list the deliverables and what the client should expect upon project completion. 

2. Compensation & billing method

Give clear information about your pricing models and policies. To break down your fees into sub-tasks that you have listed and include your billing model if you charge a flat fee or uses an hourly billing plan.

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3. Terms

Include your agency terms and condition for the engagement. Also, Remember your agency can’t enforce late payment charges and interest if you have not added the necessary clauses. Every agency needs to come up with its sets of terms and conditions of a successful consulting career

4. Intellectual property ownership

It is wise to include a clause in your agency service agreement that states that your agency retails the right to the intellectual property you create until your client pays for them. Also, you may state that unaccepted intellectual property right reverts to your agency, and the reserves the right to add the work to the portfolio of projects for personal promotional activity. 

5. Confidentiality information

Both your agency and client need to make confidentiality commitment if applicable and must appear in the agency service agreement. You may also want to know if your agency can service other clients or organization while still working with the current client and purposely addressed. 

6. Limitation of liabilities & indemnity 

Ensure there is a clause that talks about your agency's legal liabilities to the client when performing your services to meet the goal of the project. 

7. Insurance 

Ask questions about insurance and know if clients want some level of insurance coverage from your end. State the type of insurance and the level/limit of coverage of your agency in the agency service agreement.

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