Knowing the Different Types of Service Agreements


To become a Certified Professional in Supply Management (CPSM), you need to learn a lot of things and one of which is to familiarize your self with the basics in contracting and negotiations.

If you join our CPSM Training Review Programs, you’ll learn more CPSM Study Cheats, but for now we will teach you the different types of service agreements.


Master Service Agreement

Master Service Agreements contain most but not all of the terms between two contracting parties. The purpose of this type of contract is to speed up and simplify the future transactions of the parties involved.

The tedious and time-consuming process only happens at the beginning. Lesser amount of documentation is needed for future transactions, such as an issuance of a job order or purchase order.

Master Service Agreements are used in long-term client/vendor relationships. The service agreement may contain the following details:

  • Payment terms
  • Delivery requirement
  • Warranties
  • Intellectual Property Rights
  • Dispute Resolutions
  • Limitations

Professional Service Agreement

A Professional Service Agreement is unique, technical, and has infrequent functions performed by an independent contractor that is qualified based on his/her expertise, education, and technical abilities to provide the services.

Most of the time, professional service agreements are issued for short term or specific projects.

Companies hire professional services for the following jobs:

  • Consulting
  • Marketing jobs
  • Design
  • Software development
  • Editing services
  • Medical services
  • Auditing

Maintenance Agreement

Maintenance Agreement is a formal agreement between two parties wherein the other party promised to maintain the efficiency of a material or belonging of the other party. Maintenance agreements often contain regular checking and repairing specific materials or equipments.


Performance Based Contracts

Performance-based contracts identify expected deliverables, performance outcomes, and the payment is done after a successful delivery. Performance based contracts also use appropriate techniques to ensure agreed value of service or goods are delivered.

Here are the characteristics of a performance-based contract:

  • Emphasize results related to output rather than how the work is performed;
  • Deliverables, outcome and performance standards are clearly defined;
  • Use of measurable performance standards and outcomes;
  • Provide performance incentive and consequence for the non-performance of the deed; and
  • Tie payment to deliverables.

If you want to get more study cheats and pass the CPSM Exam, all you have to do is participate in our CPSM Training Review Program or our CPSM Boot Course Program.

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Types Service Agreements

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