Posted on November 11, 2015
How Not to Get Scammed by Service Agreements
A services agreement is just what it sounds like: an agreement to provide services. The type of services involved could be anything that a freelancer, startup, or small business might need or provide. For example:
- Software/app development
- Marketing/SEO services
- Janitorial services
- Catering for a launch party
- Computer and/or office equipment maintenance
- Development of a website
- Content creation services
Two problem areas where people often get into trouble are:
- Technical services people don’t understand
- Long-term agreements they can’t get out of
Scope of Work
The “scope of work” is at the heart of a services agreement. It defines the nature of the services to be provided.
The services are sometimes specified in the body of the main agreement, but very often they’re listed in an exhibit or attachment. The parties can also just attach the proposal that lead to the creation of the contract.
Another option is a “Master Services Agreement,” used when a variety of different services will be provided over time. The “Master” part of the agreement has all the legalese, and a series of attachments or exhibits detail the specific services.
Sometimes the scope of the services is easy to understand. If you’re hiring a caterer, you’re clear about how many bagels and cheese platters you’re getting for your money. If you’ve got a photocopier maintenance agreement, you know whether the damn machine keeps jamming.
However, people may sign up for things they don’t really understand.
For example, many businesspeople have a vague sense that “search engine optimization” is a good thing. So they might sign an agreement with an SEO service provider to “optimize” a website – without having any idea what it MEANS to optimize a site or being able to tell whether the provider has optimized anything at all.
Protecting Yourself from “Geek Speak”
The use of “geek speak” in services agreements can be for innocent and not-so-innocent reasons. Like legalese, sometimes it’s just shorthand for complex concepts that the techies can’t be bothered to explain to non-techies. However, it can also hide the fact that you don’t really need the services or that they’re worth less than you’re paying for them.
Here are some ways to protect yourself:
- Ask for a plain English explanation of any technical services. Have that explanation written up and included in the contract.
- Ask for references from others using the service. Ask to talk to former customers and find out why they no longer use the service.
- Talk to people who run comparable businesses and ask whether they use similar services and if they’re happy with the service they’re getting. Ask if they were unhappy with any service provider they used in the past.
- Check out the service provider on sites like Yelp. (But be aware that glowing Yelp reviews can be faked.)
- Define services in terms of measurable results – preferably results that you can see for yourself.
- Compare contracts from different providers. Ask each of them to explain how their services differ from those offered by others.
- Hire a neutral consultant who understands the technical language. You might be able to find a starving grad student at a local university, or someone on UpWork or another freelancer site, who could help you out for a reasonable rate.
- Don’t get locked into a long-term agreement! Sometimes there are good reasons for a service provider to require a long-term commitment. But sometimes the reason is to hook people who don’t bother to read the fine print. If you can’t cancel “at will,” or with short-term (e.g., one month) notice, ask why. You can also try to negotiate a shorter term or at-will termination.
- If the services are offered via a bulk email, a telemarketing call, or a door-to-door salesperson, don’t sign up on the spot no matter how appealing the “limited time offer” sounds. (Hard-sell tactics rarely benefit the buyer.)
- Read and understand the contract – paying careful attention to scope of work and the term and termination clauses — before signing anything or handing over your credit card number. You can also use the LawGeex tool to help you understand a services contract before you sign it. It’s fast and easily done online. The LawGeex tool can tell you what’s common, uncommon, and missing in your document and explain confusing legal language.
If you want to understand a contract before you sign it, simply upload it at www.lawgeex.com.
The information and materials in this blog are provided for general informational purposes only and are not intended to be legal advice.