A service agreement is a feature found in some warranties and sales contracts. A basic warranty usually provides general assurances of quality or craftsmanship. Service agreements or “service contracts” can go beyond this by stating which exact services the consumer is entitled to in case the product breaks or fails.
Service contracts may be optional, or they are sometimes included as a standard feature of the warranty. They are common for consumer products such as cars, appliances, electronics, and other items that need regular repair or updating. The cost of the service agreements benefits is usually included in the overall sales price, on top of any costs associated with the basic warranty.
This will depend on each individual product and the terms of the agreement itself. Service agreements can cover matters such as:
- Replacement of worn parts
- Diagnosis and troubleshooting
- Upgrading of parts or software
- Dispatching of a company service representative to conduct in-home or on-site repairs
- Access to streamlined customer service
- Refunds and returns
As mentioned, many companies include a service agreement as a standard aspect of the sale of their product. That is, every customer may be entitled to the services when they make their purchase.
In some cases, the service agreement can become main point of contention when the parties are negotiating the sales contract. For instance, a sales person may actually spend a significant amount of time negotiating which services the customer is entitled to. After negotiations, the agreed-upon terms of the negotiation are finalized in the service agreement.
Like any other provision in a contract, service agreements can lead to legal disputes. This can happen for various reasons, such as errors in the wording of the terms, or if the seller fails to provide the services.
A lawsuit over a service agreement will typically result in an economic damages award to reimburse the non-breaching party for monetary losses. For instance, if the seller failed to provide repairs as promised in the service agreement, they may be required to reimburse the customer for any losses that were directly cause by their breach.
Service agreements are an important aspect of many business and consumer transactions. You may wish to contact a business lawyer for advice if you need help creating, reviewing, or editing a service agreement. Your attorney can also provide you with expert legal representation in the even that you need to file a lawsuit due to a dispute.