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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:
- Warranties
- 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.
Frequently Asked Questions
How is a continuing services agreement different from an SOW?
A continuing services agreement sets an ongoing relationship for services over a defined period, covering things like scope, pricing, warranties, and remedies. A statement of work usually describes one specific project or deliverable set, often sitting underneath a master agreement. In practice, a continuing services agreement can serve as the umbrella that individual work orders hang from.
What should a continuing services agreement include?
At minimum, define the services, the term, fees and how they change, and how either side can end the arrangement. Beyond that, most agreements address service levels, warranties, remedies for breach, confidentiality, insurance, limits on liability, and who owns any work product. The more specialized the services, the more detail is worth writing down.
How do you handle renewals on ongoing service contracts?
Decide up front whether the agreement renews automatically or requires a signed extension, and set the notice window for opting out. Auto-renewal is convenient, but it quietly locks you in when nobody’s watching the calendar. Tracking renewal and notice dates in one place, with reminders well before the deadline, gives you time to renegotiate or exit.
