# Service contract

Source: https://contracko.com/glossary/service-contract

# Service contract

A contract under which one party provides defined services to another for an agreed fee.

## Definition

A service contract sets out the services to be performed, the standard expected, pricing and the term, and is the backbone of most B2B service relationships. Dutch law classifies most such arrangements as an assignment (overeenkomst van opdracht), imposing a duty of care on the service provider. Well-drafted service contracts define deliverables, service levels, acceptance and liability allocation.

## Example

> A managed service provider signs a three-year service contract to monitor and support a client's IT infrastructure against fixed monthly fees and an SLA.

## Why this is a business risk

Vaguely defined service scope is the single most common cause of disputes in service contracts: if deliverables and acceptance criteria are not precise, the provider and client will disagree on whether the obligation has been met. Long-running service contracts with no price adjustment mechanism expose the provider to margin erosion and the client to arbitrary unilateral increases. An overlooked automatic renewal can commit either side to a multi-year extension neither wants.

## How to manage it

- Define the services in a separate, detailed scope-of-work schedule rather than in the body of the agreement, and include acceptance criteria for each deliverable.
- Include a change-control procedure so any scope change is documented, priced and agreed in writing before the work starts.
- Track renewal dates and any notice periods in a central system; three-year agreements are easy to forget.
- Agree on key performance indicators and reporting intervals so both sides have objective evidence of whether service levels are being met.

### How Contracko helps

Contracko's AI review extracts service obligations, SLA thresholds and renewal terms from uploaded contracts and tracks them as structured obligations. Expiration reminders surface before notice windows close, and the reporting dashboard gives a portfolio view of every active service contract, its current status and the next key date.

## Legal references

- [BW 7:400 Dutch Civil Code: contract for services Dutch law](https://wetten.overheid.nl/BWBR0005290)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[IT Services](https://contracko.com/industries/it-services)[Managed Service Providers](https://contracko.com/industries/managed-service-providers)[Consulting](https://contracko.com/industries/consulting)[Telecommunications](https://contracko.com/industries/telecommunications)

## Related clauses

- [Service Level Agreement (SLA)](https://contracko.com/clause-library/service-level-agreement)
- [Limitation of Liability Clause](https://contracko.com/clause-library/limitation-of-liability)
- [Payment Terms Clause](https://contracko.com/clause-library/payment-terms)

## Related terms

- [Maintenance contract](https://contracko.com/glossary/maintenance-contract)
- [Service level agreement (SLA)](https://contracko.com/glossary/sla)
- [Duty of care](https://contracko.com/glossary/duty-of-care)
- [Framework agreement](https://contracko.com/glossary/framework-agreement)

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- Risks and obligations are surfaced automatically
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## Frequently asked questions

Common questions about this term.

- **Q:** What is the duty of care (zorgplicht) a service provider owes under Dutch law?
  **A:** Under BW 7:401, the service provider must act as a competent professional in performing the assignment. This is a best-efforts obligation, not a result obligation, unless the contract expressly promises a specific outcome.

- **Q:** What is the difference between a best-efforts and a result obligation in a service contract?
  **A:** Under a best-efforts obligation (inspanningsverbintenis) the provider promises to work competently towards a goal but does not guarantee the outcome. Under a result obligation (resultaatsverplichting) the provider commits to achieving a specific result and failure to do so is a breach regardless of the effort made.

- **Q:** Can a client terminate a service contract at any time?
  **A:** Under BW 7:408 the client can always terminate a contract for services, but must compensate the provider for work done and, unless there is a reasonable ground, for the loss resulting from termination. A fixed-term contract with a termination-for-convenience clause may narrow the compensation obligation.

- **Q:** How is a service contract different from an employment contract?
  **A:** The key tests are authority (is the provider subject to instructions and supervision?), personal obligation (must the same individual perform?) and payment structure (fixed salary vs. project fee?). Misclassification as a service contract when the relationship is really employment creates significant tax and labour-law exposure.

- **Q:** What happens if services are delivered but not formally accepted?
  **A:** If the client uses the deliverables without objection for a reasonable period, a court may deem them tacitly accepted. To avoid this, the contract should include an explicit acceptance procedure with a defined response period, after which silence counts as acceptance or rejection.

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