Contracts for services


At its broadest, the legal category of "services" covers the provision of anything by a legal person to another legal person under a contract, but excluding the provision of goods/products and the licensing of rights. In other words, if you are buying something from someone, and that something is not a good or product or right or licence, it is most likely a service.

What might be considered "typical" services (eg cleaning, accountancy or legal services) involve the performance of work by a supplier on behalf of the customer. However, today many services are supplied in part by computer systems. Some services may be supplied entirely by computers, for example software-as-a-service.

Some services are subject to special regulation, either to protect customers of the service or because services (or the relevant industry more generally) create particular risks. Examples of regulated service industries include medical services, financial services, accountancy services, legal services, estate agency services and recruitment services. Legal documents for a regulated services should always be drafted by someone with expertise in the relevant regulatory environment.

Section 13 of the Supply of Goods and Services Act 1982 implies into English law contracts for services a requirement that reasonable skill and care be exercised in the provision of the services:

"In a contract for the supply of a service where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill."

The parties may agree that the services have to meet some higher standard (eg "good industry practice"); however in many cases the parties to the contract are not able to agree a lower standard.

Section 1 the Unfair Contract Terms Act 1977 defines "negligence" to include the breach of any contractual obligation to take reasonable care or exercise reasonable skill in the performance of the contract. Section 2 then provides that a person may not by reference to any contract term exclude or restrict his liability for death or personal injury resulting from negligence; nor, in the case of any other loss or damage, may a person exclude or restrict his liability for negligence unless the exclusion or restriction is reasonable.