Service Agreements

Every legal contract or agreement is different. But the general structure of most contracts is the same. I’ve come up with a General Contract Drafting Questionnaire to help people think about what to specify in their contracts. The general questionnaire structure is below. If you want to provide me with your questionnaire response for me to assist you in drafting a contract, the Google form is accessible here.

Parties

1. Identify the parties in detail. Specify full names, registration numbers (NRIC/passport/UEN no.), registered/postal addresses, contact details.

2. Practical tip: do due diligence on the person or entity to ensure that the person exists. Ask for corporate registration or personal identification documents.

Bargain

What are the parties buying and selling, or exchanging? Goods, services, property?

1. Describe the subject matter: goods, services, property, etc.

   1. State the quantity, type of subject matter. E.g. “sale of 100 Apple iPhone 6”; “provision of website development services”; “the flat located at 123 Serangoon Road #12-03 Singapore 999111”.

2. Any specifications for the subject matter?

   1. E.g. “10 notebooks; size: 10cm x 20cm; paper thickness 80gsm”; “website: WordPress-based; minimum 10 pages; mobile-friendly”.

3. Specifications of service standards are often industry-specific. E.g. in outsourced technology service provision, service level agreements will specify measurable metrics of service availability, recovery time, defect rates, security, technical quality, etc.

Value or Payment

What is the value exchanged between parties? A purchase price? A rental fee? A fee for service? A promise for a promise? How is value exchanged? Payment in cash, cheque, bank transfer?

1. What is the value exchanged between parties?

   1. E.g. “SGD 5,000 service fee per month”; “SGD 1,000 per unit of the goods”; “SGD 2,000 rental per month”.

2. How is the value transferred?

   1. E.g. Payment in cash, cheque, cashier’s order, bank transfer? If bank transfer, specify the bank name, account number, account type, bank number, SWIFT code, etc.

Term

1. What is the time period (term) for the agreement?

   1. E.g. 1 year; perpetual; until completion of service.

2. When does the agreement commence?

3. Can the term of the agreement be extended?

Representations, Warranties, Acknowledgements

What statements or facts or assumptions are material to parties entering this agreement?

E.g. “1. The supplier has the capacity to manufacture 1,000 notebooks per month”; “2. The software developer has completed at least 10 software development projects using Python”; “3. Party A has good title to the property”.

Conditions

What are important conditions for the agreement or deal to proceed?

E.g. “Party A shall provide to Party B documentary proof of its building licence by 1 April 2018”.

Obligations or Policies

1. What are ongoing obligations parties must continue to perform during this agreement?

   1. E.g. “Party A shall provide a monthly written report of the revenue it received from the sale of Item A”.

2. What are the policies governing the performance of obligations?

   1. E.g. “Party A shall store soft copies of its monthly written reports in a cloud storage system specified by Party B by the last calendar day of each month”.

Rights

1. In what scenarios can a party terminate the agreement?

   1. E.g. “If Party A fails to deliver the goods within 30 days from the date of Party B issuing the purchase order.”

2. What other rights do parties have?

   1. E.g. “If Party A requires Party B to do additional work outside of the Scope of Work, Party B shall be entitled to charge Party A for such additional work on an hourly rate basis.”

Remedies

What can parties do when any obligation is not performed or any representation or warranty is false?

E.g. “If Party A fails to rectify the defects within 30 days, Party B may hire its own contractor to perform the rectification works, and Party A shall bear all the costs of such rectification works.”

Miscellaneous

Which other clauses apply?

• Confidentiality

• Intellectual property rights

• Data protection

• Indemnity

• Limitation / disclaimer of liability

• Variation of agreement

• Entire agreement

• Non-assignment

• No rights to third parties

• Notices

Governing law

• Singapore law

• Other jurisdiction

Dispute resolution

• Singapore courts

• Singapore Institute of Arbitration Centre (SIAC) arbitration

• Singapore Mediation Centre (SMC) mediation first, then Singapore courts

• SMC mediation first, then SIAC arbitration

Lack of clarity / ambiguous terms

When a term or clause is not drafted clearly, there may be ambiguity about its meaning or the subject it refers to. A lot of litigation has arisen because of such problems. E.g. in Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa Corinna [2016] SGCA 19, a case was fought all the way to the apex court over whether a certain term meant that a certain sale was counted as a 'new business' which entitled certain substantial incentive payments. If a contract is so uncertain, it may be unenforceable altogether.

Uncertainty as to the time of payment may render an agreement unenforceable when it is determined to be vital to the agreement (Siemens Industry Software Pte Ltd v Lion Global Offshore Pte Ltd [2014] SGHC 251 at [31]).

Lewison’s The Interpretation of Contracts (Sweet & Maxwell, 3rd Ed, 2004) states at para 8.09: "A contract, or a provision in a contract, may be uncertain if it is unintelligible; if it is meaningless; if the court is unable to select between a variety of meanings fairly attributable to it, and the circumstances are not such that one or other party to the contract may elect between meanings; where the court is unable to discern the concept which the parties had in mind; or where the terms of the contract require further agreement between the parties in order to implement them."

Warranties

If a warranty is not carefully drafted, it may become open-ended when it was not intended. E.g. in Anti-Corrosion Pte Ltd v Berger Paints Singapore Pte Ltd and another appeal [2011] SGCA 57, one party argued that a letter providing a warranty was meant to apply only to a particular project, but the other party argued it was not so limited. The Court of Appeal held for the latter.

In the same case, the court also held at [46] that the liability exemption clauses in the tax invoices and delivery orders were not effective in the light of the express warranty. It is well established law that an exemption clause contained in a written contract can be overridden by an express warranty given at or before the time the contract was concluded. A party who would otherwise be entitled to rely on an exempting provision will not be permitted to do so if he gives an express oral warranty which runs counter to the tenor of the written exemption. A warranty given before the agreement is entered into may also be enforced as a collateral contract the consideration of which is the entering into of the written agreement: Chitty on Contracts (Sweet & Maxwell, 30th Ed, 2008) vol 1 at para 14-134.

Here are some templates and resources found online:

1. Corporate services agreement reported to US SEC

2. Terms and Conditions of supply of products or services

3. Cloud Services Master Service Agreement and Service Level Agreement