Introduction
The services agreement (Section 7:400 DCC) governs the situation in which one party performs work for another that does not consist of producing a work of a material nature, storing goods, or transporting persons or goods. Examples include advice, project supervision, design, coaching or interim management. Alongside the fee, the agreement is chiefly concerned with the allocation of risk: how far the engagement extends, what standard of care may be expected of the service provider, and who bears the consequences if the outcome disappoints or the collaboration ends prematurely. The agreement records these questions in advance, with a view to the dispute that will hopefully never arise.
The structure of the agreement
The structure of a services agreement follows the logic of the collaboration itself. First it records who the parties are and what the engagement entails; then what fee is payable in return and how additional work is handled; next what standard of care the service provider must observe; then how long the agreement lasts, how it ends and how liability is limited; and finally the clauses that protect the parties' interests after it ends, together with the general provisions. In that order, each element builds on the previous one. The full structure may look as follows:
- Heading: title, parties and recitals
- Definitions
- The engagement and the work
- Fee
- Additional work
- The care of a diligent service provider
- Term and termination
- Liability and exoneration
- Intellectual property in the results
- Confidentiality
- Penalty clause
- Rescission and early termination
- Governing law and jurisdiction
- Schedules
Heading: title, parties and recitals
The agreement opens with the title, the parties and the recitals. The parties are identified in full by their statutory name, Chamber of Commerce (KvK) number, registered office address and their duly authorised representative. The recitals briefly outline the background: what the client needs, what expertise the service provider offers, and the purpose for which the agreement is entered into. These recitals create no independent obligations, but when unclear provisions fall to be interpreted the court will have regard to the intention that the parties expressed in the recitals.
Example recitals +
The undersigned: (1) [Client] ("Client");
and (2) [Service Provider] ("Service Provider");
whereas the Client requires [description] and the Service Provider possesses the expertise to perform that work, have agreed as follows:
For the client it is important that the recitals state the intended purpose and the desired outcome concretely, because this colours the interpretation of the engagement. The service provider prefers to keep the recitals factual and to avoid wording that might later be read as a guarantee of a particular result.
Definitions
A list of definitions fixes the key terms unambiguously: the Engagement, the Work, the Result, the Fee, Additional Work, Confidential Information and any Schedules. Consistent use of defined terms with an initial capital prevents later dispute over whether, for example, an advisory report falls within "the Result". A short interpretation provision closes this section: references to schedules form part of the agreement and headings have no independent meaning.
Example definitions +
"Work" means the work described in Schedule 1;
"Result" means the data and documents arising from the Work;
"Additional Work" means work outside the Work that has been instructed in writing.
A broad definition of the Result favours the client, who thereby also acquires interim deliverables and underlying data. The service provider prefers to define the terms tightly, so that background material, methods and know-how remain outside the results to be transferred.
The engagement and the work
The core of the agreement is the description of what the service provider must do. The more sharply the work, interim deliverables and products to be delivered are defined, the less scope there is for dispute over the extent of the engagement. It is advisable to set out the scope in a schedule, for example as an engagement description or Statement of Work. State also whether it concerns a best-efforts obligation or an obligation to achieve a result: for advisory and supervisory work it is almost always a best-efforts obligation.
Example clause +
The Service Provider performs the Work described in Schedule 1. The parties acknowledge that the Service Provider is under a best-efforts obligation;
no particular result is guaranteed. Work outside the Work constitutes Additional Work.
The client has an interest in a concrete description of interim deliverables and delivery dates, so that it can be tested whether the engagement has been performed. The service provider prefers to record that it concerns a best-efforts obligation and that assumptions, dependencies and the client's cooperation co-determine performance.
Fee
The fee records what the client pays: a fixed amount, an hourly rate with a budget, or a periodic fee. Regulate what the rate covers, how invoicing takes place, what payment term applies and whether expenses and VAT are charged separately. Where no agreement on the amount has been made, Section 7:405 DCC provides that the fee calculated in the customary manner or, failing that, a reasonable fee is due. An express arrangement prevents that standard from having to be determined after the event.
Example clause +
The Fee amounts to EUR [amount] per hour, exclusive of VAT and expenses. The Service Provider invoices monthly;
invoices are paid within [30] days. On exceeding that period the Client is in default by operation of law.
For an hourly rate the client preferably stipulates a budget cap or an estimate above which consultation is required, so that costs remain predictable. The service provider wants certainty of timely payment and therefore expressly records the payment term, default and the right to suspend performance in the event of non-payment.
Additional work
The additional-work provision determines how work outside the agreed scope is handled. It is customary for additional work to be carried out only after a written instruction, at a rate agreed in advance or the regular rate. Without such an agreement, a claim for additional work soon founders on the question whether the extra work was actually instructed and at what price. A requirement of written instruction and approval makes it testable after the event what was agreed.
Example clause +
Additional Work is carried out solely after written instruction from the Client, stating the nature, extent and rate of the Additional Work. Without a written instruction there is no entitlement to payment for Additional Work.
The client wants to prevent unrequested additional work being charged after the event and therefore insists on prior, written approval. The service provider has an interest in a workable procedure that also leads to timely approval and a clear rate when the scope changes during performance.
The care of a diligent service provider
Under Section 7:401 DCC the service provider must observe the care of a diligent service provider in carrying out its work. That standard applies by operation of law and can be given concrete form contractually, for example by aligning it with the professional standard, applicable guidelines or an agreed quality level. For professionals such as lawyers, accountants and advisers this is the standard against which their conduct is assessed. The agreement can sharpen how the duty is fulfilled, but cannot contract out the duty of care itself.
Example clause +
The Service Provider performs the Work with the care of a diligent service provider (Section 7:401 DCC) and in accordance with the professional standard and guidelines applicable to its profession.
The client has an interest in an express link to an ascertainable standard, because this gives concrete form to the norm against which conduct is assessed. The service provider prefers to confine the duty of care to what fell within the described engagement, so that expectations outside the scope do not count as a shortcoming.
Term and termination
Determine whether the agreement applies for a fixed or an indefinite term and when it ends. Section 7:408 DCC gives the client the power to terminate the agreement at any time; for a natural-person service provider who does not accept the engagement in the exercise of a profession or business, this right is mandatory law. The service provider may in principle terminate a long-term agreement only for compelling reasons. Record the notice period, the form and the financial settlement on early termination, in particular the fee for work already performed.
Example clause +
This agreement applies for a [fixed/indefinite] term. The Client may terminate at any time in writing, observing a notice period of [one month]. On early termination the Fee for the Work already performed is due.
The client may terminate at any time under Section 7:408(1) DCC; this right cannot be excluded as against a non-professional service provider. Do, however, expressly regulate whether and how work not yet performed is settled. The service provider may in principle terminate an agreement for a fixed term or for a specific engagement only for compelling reasons (Section 7:408(2) DCC), and therefore records the wind-down, handover and the consequences for the fee.
Liability and exoneration
The liability paragraph limits the consequences of a shortcoming. It is customary to cap liability at the amount of the engagement fee or at the sum paid out under the professional or liability insurance, excluding indirect and consequential loss. An exoneration will not, however, hold up for loss caused by intent or deliberate recklessness on the part of the service provider or its managers, and reliance on it may be unacceptable according to standards of reasonableness and fairness. A well-drafted clause therefore takes those limits into account.
Example clause +
The Service Provider's liability is limited to the amount paid out in the relevant case under its professional liability insurance and, in the absence of cover, to the Fee over the last [six] months. This limitation does not apply in the case of intent or deliberate recklessness.
The client wants a real remedy in the event of professional negligence and therefore stipulates a cap that matches the size of the engagement, an obligation to insure, and an exception for intent and deliberate recklessness. The service provider prefers to limit liability to a foreseeable and insurable amount, excludes consequential loss and stipulates a short limitation period for bringing claims.
Intellectual property in the results
Regulate to whom the intellectual property rights in the Result belong. Without agreement, copyright and other IP rights in principle vest in the maker, that is, in the service provider, even though the client has paid. If the client wishes to acquire the rights or a broad right of use, that must be expressly transferred by deed or granted as a licence. Also record what happens to background material, tools and know-how that the service provider brings in, and whether moral rights such as attribution play a role.
Example clause +
All IP rights in the Result are transferred to the Client on delivery;
in so far as transfer requires a further deed, the Service Provider undertakes to cooperate in it. IP rights in background materials brought in by the Service Provider remain with the Service Provider, which grants the Client a right of use in respect of them.
The client wants to acquire in full the rights in the result it has paid for and therefore stipulates an express transfer with a duty to cooperate. The service provider prefers to retain the rights in its own methods and background material and grants at most a right of use in them, so that it can deploy them again elsewhere.
Confidentiality
A confidentiality clause obliges the parties not to share or use confidential information they exchange in connection with the engagement outside the purpose of the agreement. Describe what counts as confidential, what exceptions exist, such as information that is already public or a statutory duty to disclose, how long the obligation continues after the agreement ends, and whether return or destruction of data is required. The obligation operates reciprocally and extends to third parties engaged and to staff.
Example clause +
The parties treat Confidential Information as strictly confidential and use it solely for the performance of the Engagement. This obligation remains in force for [three] years after the end of the agreement and also applies to third parties engaged and to staff.
The client has an interest in a broad description of confidential information and a survival period that covers the sensitivity of the data. The service provider wants to retain workable exceptions, so that lawfully obtained or public information and legally required disclosure do not constitute a breach.
Penalty clause
A penalty clause attaches an immediately payable penalty to breach of a specific obligation, usually confidentiality or a non-competition or non-solicitation clause, so that loss need not be proved. Its effectiveness stands or falls on the drafting: the obligation being sanctioned, the amount of the penalty and its relationship to additional damages must be unambiguous. The court interprets the clause and may reduce an excessive penalty under Section 6:94 DCC; in consumer relationships, moreover, unfairness is assessed of the court's own motion.
Example clause +
On breach of the confidentiality clause, the party in breach forfeits an immediately payable penalty of EUR [amount] per breach, without prejudice to the right to additional damages in so far as the loss exceeds the penalty.
The client wants a penalty high enough to deter and one that can be claimed in addition to damages. The service provider seeks a moderate, internally consistent clause with a defined obligation and a sanction mechanism, in order to limit interpretation disputes and the risk of reduction.
Rescission and early termination
Alongside ordinary termination, this paragraph regulates the special grounds for an end: rescission for attributable breach after a notice of default, and immediate termination on bankruptcy, suspension of payments or a fundamental breach of contract. Record the consequences: final settlement of work performed, return of materials and data, and which provisions continue to have effect after the end, such as confidentiality, liability, intellectual property and choice of forum.
Example clause +
Either party may rescind the agreement with immediate effect if the other party, after a written notice of default allowing a reasonable period, fails to perform, or on the bankruptcy or suspension of payments of the other party. The provisions on confidentiality, liability and intellectual property remain in force after the end.
The client wants to be able to rescind quickly in the event of a shortcoming by the service provider and to recover the results and data already delivered. The service provider stipulates a prior notice of default with a reasonable period for cure, so that not every shortcoming immediately leads to rescission.
Governing law and jurisdiction
Conclude with the applicable choice of law and the competent court. Designating Dutch law and a specific court prevents disputes over jurisdiction and gives the parties clarity in advance about where a dispute will be resolved. For cross-border engagements it is advisable also to regulate the language of the proceedings and, if desired, arbitration or mediation as a preliminary step.
Example clause +
This agreement is governed by Dutch law. Disputes are submitted to the competent court of the district court of [place].
The client preferably chooses the court of its own place of business and a familiar language of proceedings. The service provider has an interest in efficient and predictable dispute resolution and may, depending on the nature of the engagement, stipulate mediation as a mandatory preliminary step.
Schedules
The schedules form part of the agreement and contain the detailed information that would overload the main text: the engagement description or Statement of Work, an overview of rates and planning, any general terms and conditions, and a data processing agreement where personal data are processed. Include an order-of-precedence provision in the main text, so that conflicts between documents are resolved unambiguously.
Example schedules +
The following schedules form part of this agreement: Schedule 1 (Engagement Description), Schedule 2 (Rates and Planning) and Schedule 3 (Data Processing Agreement). In the event of conflict, the main agreement prevails over the schedules.
The client wants the schedules to record the scope, planning and rates concretely and the main text to prevail in the event of conflict. The service provider ensures that references to its own general terms and conditions are consistent with the main text, so that no conflicting provisions arise.