DRAFTING A SERVICE CONTRACT

DRAFTING A SERVICE CONTRACT 

In every business relationship, clarity is key. A well-drafted service contract provides legal certainty about what is to be delivered, when, and under what conditions. It helps both parties align expectations and avoid disputes about scope, liability, or payment. Whether you are a service provider or a customer, a clear and balanced contract sets the foundation for a sustainable collaboration.

A. Different types of service contracts

• Business-to-Business (B2B): Agreements between two professional parties, often governed by the Belgian Code of Economic Law (Book XIV) and subject to stricter transparency and fairness rules.
• Business-to-Consumer (B2C): Where one party is a consumer, Belgian consumer protection law applies, imposing stricter obligations on the service provider.

• Framework agreements (MSA) – These serve as a legal “umbrella” under which specific projects or services can be ordered, with SOWs describing the concrete services to be performed, deliverables, timelines, and pricing for each assignment or project.
• SaaS and other IT service agreements – These contracts govern the provision of digital or cloud-based services. They typically address key aspects such as service levels (SLAs), data protection and cybersecurity, intellectual property rights, and continuity or exit provisions in case of termination and are often subscription-based. 

B. Legal Framework in Belgium

Service contracts are generally governed by the Belgian Civil Code and the Belgian Code of Economic Law. Belgian law emphasises good faith performance, transparency, and balance between the parties. Unclear or overly one-sided clauses may be deemed unfair and unenforceable.

C. Key Elements of a Service Contract (focus B2B context)

• Parties' Due diligence – It is advisable to perform a basic background check on the counterparty before signing. Review its website and online presence (including reviews or references), consult the KBO / BCE register based on the company/VAT number to verify its legal and financial standing, and ensure it is not subject to insolvency or liquidation proceedings. This initial check helps you identify potential risks early and address them in the contract. For example, payment terms can be adapted to the counterparty’s financial situation, such as requiring advance payments, linking performance to milestone payments, or providing services only after payment.
• Scope of service - Describe the services precisely, including deliverables, performance criteria, and milestones. 
• Term and termination - Define the start date, duration, and termination rights. For fixed-term agreements, early termination is only possible if the contract explicitly provides for it; or there is serious cause. For non-defined term agreements, either party may terminate by giving reasonable prior notice, but even in such case it might be advisable to include both ordinary termination rights (with notice) and extraordinary termination rights (for cause), to ensure flexibility and legal certainty.
• Fees and payments terms – Specify the fee structure and timing of invoices and payments. Clarify whether VAT applies and how expenses are handled. If the agreement does not specify payment terms, the Belgian Law of 2 August 2002 on combating late payment in commercial transactions automatically applies.
• Indexation - In Belgium, automatic indexation of service fees is not mandatory but may be agreed upon by the parties. When included, the indexation formula must be clearly defined, linked to a reliable official index, indexation may only apply to the relevant cost component — for instance, the labour-related portion of the fee — and cannot exceed 80% of the total price. Unless explicitly excluded, the Belgian principle of unforeseen circumstances (imprévision / imprivieleer) will also allow a party to request renegotiation if exceptional and unforeseeable events occur after contract conclusion that make performance excessively onerous.
• Service Levels (SLAs) – Where appropriate, include measurable performance indicators such as uptime, response time, or quality standards.
• Liability – As service provider, you are going to try to limit liability, for instance to direct damages and an appropriate cap (e.g. contract value). 
• Intellectual Property – If applicable, define ownership of deliverables, background IP, and usage rights. 
• Confidentiality and data protection – Include confidentiality obligations and ensure compliance with the GDPR where personal data is processed.
• ESG and sustainability obligations - Customers more and more expect their service providers to meet environmental, social, and governance (ESG) standards. This can include compliance with sustainability policies, ethical sourcing, diversity commitments, or environmental performance metrics. From the service provider’s perspective, it is important to ensure that these clauses are clear, proportionate, and achievable, and that they align with the company’s actual practices and capabilities.
• Representations and Warranties (R&W) – Service providers are often asked to give certain assurances about their expertise, capacity, and the quality of their services. Typical warranties may cover that the provider will perform the services with due skill and in accordance with industry standards, and that the deliverables will conform to agreed specifications. 
• MSA / SOW conflicts - When services are structured under an MSA and one or more SOWs, it is essential to define which document prevails in case of inconsistency. Typically, the SOW governs the specific project or deliverables, while the MSA governs the general terms (such as liability, confidentiality, or termination). However, this hierarchy should be expressly stated to avoid interpretation disputes. For example: “In case of conflict between the MSA and any SOW, the terms of the SOW shall prevail with respect to the specific project.” 
• Force Majeure – It could be useful to define what constitutes force majeure and its effects (suspension or termination).
• Governing Law and Jurisdiction – Include Belgian law and designate the competent Belgian courts or arbitration.

A solid service contract provides structure; consistent management ensures success. act legal Belgium combines legal precision with business insight to help you draft, negotiate, and maintain agreements that stand the test of time.