This provision describes who owns the intellectual property (IP) created from the service. As a general rule, the parties retain all the IP addresses they contribute. For example, the service provider keeps the IP address during its process and the customer keeps his IP address, which he uses to complete the service (i.e. the company logo used to make T-shirts). In addition, the customer generally obtains an exclusive revocable license for the use/sale of the IP for the duration of the relationship. It is important to ensure that your company does not transfer an IP address to the service provider by mistake. As a customer, in every service contract you enter, you need to pay close attention to the following provisions: In most cases, the service provider will likely require the customer to make a deposit to obtain their services. It may also require that a certain number of payments be made during the services rendered, i.e. a “balloon payment”.
It is important to pay attention to the payment schedule described in the contract. Otherwise, either late fees may be due or violate the contract. In the event of a dispute, this provision specifies how the dispute is resolved and what right applies. As a general rule, parties keep it close to home (i.e. in service provider status). This creates an advantage for transactions with local service providers! The most common types of dispute resolution include: arbitration, mediation and the use of ordinary courts. This provision generally requires that both parties purchase a minimum amount of liability insurance. It is important to balance the cost of insurance to the minimum requirement versus receipt of services.
If the cost is too high, you can choose to buy for another service provider or try to negotiate the minimum until something more reasonable. The “Amendment” section explains how the parties can change the agreement if the circumstances (i.e. the extent of benefits) change over the course of the relationship. As a general rule, written agreement between both parties is necessary to amend the agreement. We hope this will improve your understanding of some of the most important provisions of a service contract! The section defining the terms of payment is important and must indicate how much, when and how the supplier receives compensation. Typically, the provider needs a down payment to secure the services and includes a balloon payment or a series of payments during the service. Write down the payment plan, otherwise you may be owed a late fee or violate the agreement.