You are about to sign a service agreement, or you have just sent one of your own. Either way, the document in front of you will run the job: what work you must deliver, what you will be paid, and what happens when one side is unhappy. For a consultant, designer, agency, or any business that sells its time and skill, the service agreement is the contract you will use more often than any other, and small drafting gaps in it are expensive to fix later.
A service agreement is a contract for the supply of services. It records the work to be done, the price for it, and the rules both sides agree to operate under for the life of the engagement. A well-drafted one replaces informal emails and verbal understandings, so that when a dispute arises there is a single document both sides can point to. Australian law does not generally require a services contract to be in writing, and a verbal agreement can be enforceable, but without a written record you rely on memory and correspondence to prove what was agreed. The clauses below are the ones that decide whether a service agreement works.
The clauses that carry the deal
The work you will actually do
The scope clause is the engine room of the agreement. It sets out the deliverables you have promised, what sits outside those deliverables, and the assumptions the price is based on. The drafting choice that matters most is specificity: "design a website" creates a different obligation from "design and build a five-page website with the features listed in Attachment A, excluding copywriting and photography".
- Deliverables: name each item you will produce and what it contains.
- Exclusions: list what you are not doing, so the client cannot later claim it was included.
- Assumptions: record facts the price depends on, such as the client providing content or access to systems by set dates.
- Approvals: state who approves the work and how long approval takes, because your deadlines usually depend on theirs.
The trap is an open-ended scope. Phrases like "and any other services the client may reasonably request" mean the fixed fee covers work you never priced. If the client asks for more, the change-control process discussed below is how you get paid for it.
What you will be paid and when
The payment clause fixes the fee, how it is calculated, and when it falls due. The main drafting choice is the fee structure: a fixed price for the whole job, an hourly or daily rate, or a retainer. Whatever the structure, the clause should say when each amount is payable, what triggers it, and what happens if the client does not pay.
- Deposits and milestones: a deposit on signing and staged payments against defined milestones protect you if the client's priorities change mid-job.
- GST: state whether each price is inclusive or exclusive of GST so your invoices match the contract.
- Late payment: an agreed interest rate and the right to suspend work while an invoice is overdue give you leverage without ending the relationship.
Fixed-fee jobs are where payment clauses most often fail. If the price is fixed, the scope clause and the payment clause need to match, because a payment schedule tied to milestones is meaningless if the milestones themselves are vague.
When the work gets done
Delivery dates belong in the agreement, not in an email after it is signed. The clause should set the start date, the key milestones, and the final delivery date, and it should tie each one to the client's obligations. If you cannot deliver on time because the client was late providing content or approvals, the agreement should say the deadline moves. "Reasonable time" sounds flexible but is a common source of argument later, because each side's idea of reasonable is different. Where a deadline really matters to the client, the clause can make time of the essence, which turns the date into a strict obligation rather than an aspiration.
Who owns the work you create
This is the clause that surprises more service providers than any other, because the default position under Australian law is the opposite of what most clients assume. Under s 35(2) of the Copyright Act 1968 (Cth), the author of a work owns the copyright in it. That means the designer who creates a logo, the copywriter who writes the ad, and the developer who builds the website each own the copyright in what they produce, even though the client paid for it. Copyright does not automatically pass to the client on payment, and under s 196(3) of the same Act an assignment of copyright has no effect unless it is in writing signed by the assignor. A signed agreement that assigns the intellectual property to the client is therefore essential if the client is to own the work.
- Assignment or licence: assign full ownership to the client, or grant a licence to use the work for the client's stated purposes while you keep ownership.
- Employee work: if your employees create the work, s 35(6) of the Copyright Act gives ownership to you as the employer. The same does not apply to contractors you engage, whose work you need to acquire by contract.
- Commissioned work: the old rule that commissioning a work gave the commissioner ownership now applies only to photographs taken for a private or domestic purpose, portraits, and engravings, under s 35(5). For everything else, ownership stays with the creator unless assigned.
- Moral rights: even after assignment, the creator keeps moral rights of attribution and integrity, which cannot be assigned. The creator can consent in writing to acts that would otherwise infringe them under s 195AWA, and the agreement is the natural place for that consent.
Clients routinely assume that paying for a deliverable means they own it. If the agreement is silent, a client who has paid for a logo discovers they only have a licence to use it, and a designer who has handed over files discovers the client can have the work adapted by someone else. Whoever you are in the transaction, the ownership clause needs to be explicit.
Keeping the client's information confidential
Most service engagements involve the client's sensitive information: financial records for an accountant, business plans for a consultant, customer data for a marketing agency. A confidentiality clause defines what counts as confidential information, what the recipient may do with it, and what it must do to protect it. Its practical value is that it converts an unspoken expectation into obligations the parties can point to, and it gives the client a contractual remedy if the information is misused. Equity also protects confidential information, but a clause removes doubt about what was confidential and who owed the duty.
- Carve-outs: information that is already public, independently developed, or required to be disclosed by law should fall outside the clause.
- Advisers: allow disclosure to professional advisers who need to see the information.
- Duration: the obligation should survive the end of the agreement for information that stays confidential.
- Return of materials: a right to require return or destruction of confidential materials when the engagement ends gives the clause teeth.
The clause should also be mutual if both sides share information. One-sided confidentiality that protects only the client's information is common in client-supplied templates, and it is worth pushing back on.
What happens if something goes wrong
Every service agreement should deal with quality and liability: what the client is entitled to expect, what you are liable for if the work falls short, and how far that liability extends. This is also where Australian consumer law imposes limits that drafting cannot override. The consumer guarantees in the Australian Consumer Law (the ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), require services to be provided with due care and skill and to be fit for the purpose the client told you about, and s 64 of the ACL voids any term that tries to exclude them. If your client is a consumer, defined in s 3 of the ACL as someone acquiring services of a kind ordinarily bought for personal, domestic or household use, or services priced at $100,000 or less, those guarantees apply no matter what the agreement says.
- Cap on liability: for business clients, s 64A of the ACL allows a term limiting liability to re-supplying the services or paying the cost of re-supply, but only where the services are not of a kind ordinarily acquired for personal, domestic or household use.
- Exclusions: excluding consequential loss, such as the client's lost profits, is common and can work between businesses, but a blanket "no liability" clause will not survive contact with the ACL.
- Unfair terms: if the agreement is a standard form contract with a consumer or a small business (fewer than 100 employees or turnover under $10 million under s 23 of the ACL), an unfair term is void, and penalties now apply to proposing one.
The drafting choice that matters most is where the cap sits. A cap expressed as a multiple of the fee is easier for a client to accept than a cap below the fee, and indemnities are often carved out of the cap entirely, so check what the cap actually covers.
How disputes get resolved
A dispute resolution clause sets out the steps the parties must take before either can sue: a written notice of the dispute, a meeting of senior representatives to try to settle it, and often mediation before litigation. Its purpose is to give a working relationship a chance to repair itself, because litigation is slow, expensive, and usually ends the relationship. Australian courts give effect to a carefully drafted clause of this kind. In United Group Rail Services Ltd v Rail Corporation NSW [2008] NSWSC 1364, the Supreme Court of New South Wales held that a clause requiring the parties to negotiate a building dispute in good faith before arbitration was not void for uncertainty and bound the parties. A clause that merely says the parties will attempt to resolve disputes amicably is weaker than one that names the steps, the timeframes, and the consequences of not complying.
- Notice of dispute: the dispute is not on foot until one party serves a written notice describing it.
- Senior representatives: the clause can require executives with authority to settle to meet within a set period.
- Mediation: naming a mediation provider or a process for choosing a mediator avoids argument about how to start.
- Timeframes: fixing deadlines at each step prevents the process from being used to delay.
If you would rather arbitrate than litigate, the clause needs to say so, because courts do not assume an agreement to arbitrate from silence.
How the agreement ends
A termination clause answers three questions: who can end the agreement, when, and what happens to work done and money owed at that point. The usual structure is termination for cause, where a party can end the agreement if the other commits a serious breach or does not fix a breach within a set period, and termination for convenience, where a party can end it with notice and without needing a reason.
- Notice period: 30 or 60 days is common for termination for convenience.
- Payment on termination: the clause should require payment for work completed and expenses incurred up to the termination date, including any minimum commitment in a retainer.
- What survives: confidentiality, the intellectual property assignment, and indemnities should continue after the agreement ends, and the clause should say so.
- Insolvency: a right to terminate if the other party becomes insolvent or goes into external administration protects you from continuing to work for a client who cannot pay.
The trap in a client-supplied template is a termination for convenience that lets the client walk away at any time without compensating you for work already done, or a termination for cause that only protects one side.
Clauses that only some service agreements need
These clauses earn their place in specific situations, and their absence is not usually a problem:
- Change control: include this when you quote a fixed price, so that any variation to scope is priced and approved in writing before the extra work starts.
- Exclusivity: include it when the client expects you not to work for competitors during the engagement, and make sure it is limited to the engagement period.
- Non-solicitation: include it when your people will work closely with the client's staff, to stop the client hiring them away for a set period after the engagement.
- Third-party IP indemnity: include it when your deliverables incorporate licensed software, fonts, images or content, and clarify who bears the cost if a third party claims infringement.
- Survival: include a clause listing which obligations, such as confidentiality and the intellectual property assignment, continue after termination, so they are not read as expiring with the agreement.
When to get an Artificer Legal lawyer to review your service agreement
A template service agreement can be reused, but it should be reviewed before it is used, and a bespoke engagement deserves bespoke drafting. An Artificer Legal lawyer would start by asking which side you are on, because a clause that protects a client-supplied template is often the clause you need to change. We would then work through the agreement in a set order: scope and price first, because every other clause hangs off them; then liability, indemnities and the cap, checking the ACL position for consumers and small businesses; then the intellectual property clause, making sure any assignment is signed and any moral rights consent is in place; and finally dispute resolution and termination. The clauses we push back on most often are blanket liability exclusions, one-sided termination for convenience, open-ended scope wording, and confidentiality clauses that run only one way. The variants we would insist on for a service provider are a defined scope with exclusions, a liability cap that survives the ACL, and an intellectual property clause that reflects who actually needs to own what. If the engagement involves consumer clients, software, or the client's confidential information, this is not a document to draft from memory.
The ownership clause that decides who keeps the work
The clause that most often decides whether a service agreement works is the intellectual property clause, because it is the one most commonly left blank. Both sides usually assume that paying for a deliverable transfers ownership of it. Australian law assumes the opposite: the creator owns the work unless the agreement assigns it in writing. An engagement that ends with the client discovering it does not own the logo it paid for, or the provider discovering the client has had the work adapted without its consent, is a dispute that no other clause could have prevented. Before you sign, check what your intellectual property clause says, and if the agreement is silent, that silence is the risk.
A service agreement works when it records the deal in terms both sides can verify: the work to be done, the price and payment timing, the delivery dates, the ownership of intellectual property, the handling of confidential information, the limits of liability, the path for resolving disputes, and the way the agreement ends. None of those clauses is difficult to draft, but each one is harder to negotiate once the work has started. That is why the agreement is worth reviewing before it is signed, rather than after a dispute starts.