What is a Continuing Services Agreement?
Under a continuing services agreement, one party agrees to continue providing specified services to another party for a period of time set forth in the agreement. For example, consider a commercial construction scenario in which a purchaser has hired a large construction company to build a large commercial structure, such as a hospital, courthouse, or factory. Such a construction project takes an immense level of planning and engineering, followed by complicated construction. Moreover, when the buyer’s business moves in, there is a learning curve for using the new facility, and making sure that it truly meets the buyer’s needs. Thus, even after the project is completed, the purchaser of the building might seek to maintain a contractual relationship with the construction company, engineers, or other parties involved in the project, due to their specialized knowledge of the facility and the purchaser’s needs. This can be accomplished with a continuing services agreement.
While continuing service agreements can be quite simple, in other instances they are very detailed, extensive agreements themselves. This is understandable, given that the contracting parties might each be a large company. Just like any other business contract, the following are just a few examples of the types of provisions that could be included in a continuing services agreement:
- Remedies for breach
- Damages clause
- Indemnity provision
- Attorney’s fees provision
Continuing service agreements are sometimes negotiated at the same time as the underlying contract, and are sometimes negotiated separately at a later time.