A service agreement is a special type of contract. It usually promises a consumer or business repair and/or maintenance service for a product or system. For example, a service agreement may promise routine maintenance and/or repair services for major home appliances such as HVAC systems or vehicles.
Car dealers often sell service agreements in connection with the sale of new and used vehicles. A service contract may offer consulting services to a business or support for an IT system.
A lawyer consultation with a Georgia lawyer would help a person understand what a service agreement is. If they are considering purchasing one, it would help them to have a lawyer review it so they understand the terms they are being offered and whether the agreement is a fair one for the consumer.
A business may want a lawyer to draft a service agreement for them. It might be an agreement that they offer to consumers or an agreement that would be offered to other businesses.
Businesses may be familiar with master service agreements. This is a large contract that sets forth the general terms for multiple future service agreements, i.e., a sort of template. The purpose of a master service agreement is to facilitate and simplify negotiations for specific agreements for certain limited types of service.
A master service agreement eliminates the need to repeat the same terms and conditions in each of what may be several service engagements between 2 businesses.
A contract for services is still another type of contract. It is a contract in which one party agrees to pay for a specific service, usually on a one-time basis, for a service as opposed to a product. For example, a person might need auto body repairs to their vehicle or landscaping of their yard. Sales contracts, on the other hand, usually involve a single transaction.
A contract for services might also involve one transaction, whereas a consumer might receive several different occasions of service under a service agreement. A service agreement might promise annual maintenance for a vehicle or an HVAC unit, for example.
What Do Service Agreements Cover?
Service contracts usually cover repairs, maintenance, timed check-ups and sometimes offer replacement of a product if necessary. A standard service agreement usually lasts for a set period of time, often from 1 to 3 years. A consumer or business can pay the entire cost upfront or in monthly installments.
In Georgia, service contracts sold to consumers are regulated to ensure that consumers are protected. Georgia law requires clear terms and conditions in consumer service contracts.
Deceptive practices in consumer transactions are prohibited by the Georgia Business Fair Practices Act (GFBPA). Signing a contract without a consumer’s consent is referred to as “identity fraud.” It is a felony under Georgia law and can be punished by a term of imprisonment of up to 10 years and payment of a fine of up to $100,000. Victims may have the right to cancel fraudulent agreements and seek restitution of any money they paid for it.
Businesses should understand that they must not mislead consumers into entering into contracts, including service agreements. An agreement can be rescinded if a consumer was induced to purchase it by misrepresenting terms or failing to disclose material information. In one case, a Georgia court allowed rescission of a contract, the sale of which had involved fraudulent misrepresentation.
The GFBPA also provides that certain cancellation rights must be explicitly offered by law or in a contract. For example, sales made through high-pressure tactics, e.g., door-to-door sales, can be cancelled under Georgia law.
In addition, the Federal Trade Commission has a “Cooling-Off Rule” which applies in Georgia as in all states. Consumers have 3 business days to cancel purchases with a value of $25 or more if they are made outside the seller’s permanent business location, e.g., in a consumer’s residence.
Consumers faced with a service provider who does not deliver what they promised in a service agreement can file complaints with the Georgia State Attorney General’s Consumer Protection Division.
What Is the Difference Between a Contract Agreement and a Service Agreement?
The term “contract agreement” can designate any kind of contract, whereas a service agreement is a specific type of contract.
Under Georgia contract law, a valid contract is an agreement between two or more parties that a court will enforce if one of the parties fails to perform as represented in the contract. In a contract, the parties exchange promises of performance, e.g., payment of a certain amount for delivery of a product. Contracts are a basic tool of our economic and legal system.
Entities in business and private individuals, as well, use contracts all the time in order to do business. They can be oral or written; courts do enforce oral contracts if they meet the requirements of the law for validity. The requirements for oral contracts are the same as for written contracts.
A contract may be something quite simple or they may be designed to handle transactions that are complex. However, to be valid, they should all have the same essential elements, formation through an offer, acceptance of the author, exchange of consideration, i.e., something of value.
The parties should have the legal capacity to enter into a contract, e.g., they should be over the age of 18, and the contract should address a subject that is legal, e.g., a contract for the sale of illegal controlled substances is not one that a court would enforce.
How Are Service Agreements Created?
Service agreements that are intended for individual consumers are usually created by the service provider and presented to the party who is the recipient of the services. In other words, it is usually not negotiated by the parties, so standard legal contract drafting and review are not involved. Usually, the recipient of the services needs to read the fine print. They need to read an agreement that they may purchase and ask questions to make sure they understand it.
A consumer service agreement is somewhat similar to an insurance policy, and a consumer wants to clearly know what it covers and what it may exclude from coverage. There are at least several providers of service agreements and they may offer different levels of service with different price points. Again, a consumer wants to ask questions and consider different providers and different agreements.
One important point is the term regarding cancellation, refunds and renewals. A consumer wants to know if cancellation is an option, under what circumstances, and whether refunds would be offered. If an individual pays with a credit card, they want to know if they have signed up for automatic renewal. If they have, they want to keep track of the date of renewal and know what they have to do if they want not to renew.
What if I Have a Legal Dispute Over a Service Agreement?
One thing a person should look into before purchasing a service agreement is whether it has a provision about dispute resolution. Many businesses today include terms in their contracts that require the parties to resolve disputes through arbitration, mediation or other alternative methods of dispute resolution. This may require a consumer to use one of these alternatives and not go to court.
If the service agreement does not contain such a provision, then a party to a service contract would be able to file a lawsuit for breach of contract or for a violation of Georgia consumer protection law.
First, of course, a person would try to resolve any dispute directly with the service provider. If they cannot resolve the dispute through negotiation and discussion, then they could file a lawsuit in a civil court of law. Georgia small claims courts, called “Magistrate Court” in Georgia, handle claims with a value of up to $15,000. They function more informally than other courts, and an individual consumer could represent themselves.
If a consumer of a service agreement has a dispute that involves more than $15,000, they would want to consult a Georgia lawyer about filing a complaint in a Georgia court of general jurisdiction.
A business that has a major service agreement with another business would probably want to involve their lawyer in working to resolve the dispute, going to court only if a resolution cannot be negotiated.
Do I Need a Georgia Lawyer for Help With Service Agreements?
If you sell service agreements and are not sure about whether your contract complies with all state and federal laws or whether your sales practices are completely legal, you want to consult a Georgia business lawyer. Your lawyer will be able to review your agreement and your sales practices to ensure that they comply with Georgia and federal law.
If you are a consumer who is not getting the service you were promised in a service agreement, you also want to talk to a Georgia business lawyer. Your lawyer can review your agreement and advise you as to whether you are getting what you have been promised and, if not, what you can do to assert your rights.
