What is a Service Contract?

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What is a Service Contract?

A service contract is basically like an extension of a basic warranty plan on a product.  Most warranties cover general matters like refunds or the quality of the product.  However, an additional service contract can state promises regarding repairs on the product and other services provided in connection with the sale.  Service contracts may be attached as part of the warranty, or they can form a separate agreement. 

What do Service Contracts Cover?

Service contracts usually cover repairs of the product being purchase.  This can include repair from normal wear and tear, as well as replacement of vital working parts.  The service contract can also sometimes cover other issues such as upgrading to newer versions, or an overall replacement of the entire item.

Service contracts can sometimes provide broad, umbrella coverage for every customer that purchases the product.  On the other hand, a service contract can also provide specific coverage that is specific to the individual buyer.  In that case, the parties may need to participate in extensive negotiations to determine the scope of the service contract coverage.  This can actually be advantageous for both parties, as the costs of service contracts are included in the overall sales price. 

For instance, in a car sale, the customer might not need a service contract that involves mechanic work, especially if they have their own repair mechanic.  In that case, the seller can still complete the sale, and the buyer doesn’t have to purchase coverage that they don’t really need. 

What if I Have a Legal Issue Involving a Service Contract?

A common dispute occurs when the seller doesn’t actually follow through on the terms listed in the service contract.  For instance, if the seller agreed to provide repairs on a car in the future, then fails to deliver on their promise, this might be considered a breach of contract. 

If you believe that you have a legal dispute over a service contract, you should begin compiling any documents that you might need during trial.  These can include the service contract itself; any other sales documents; receipts from previous interactions with the dealer; and any statements from witnesses or other employees.  These documents will be helpful when it comes to proving liability in a court of law.

Do I Need a Lawyer for Help With a Service Contract?

Service contracts are excellent mechanisms for providing additional coverage for consumers.  You may wish to contact a qualified lawyer if you need help drafting or going over a service contract.  Your lawyer can help explain how the contract might affect you in the future, and can help represent you in court if you need to file a lawsuit.  

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Last Modified: 02-14-2013 04:21 PM PST

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