What is a Building Service Agreement?
A Building Service Agreement is a legal contract between a client (such as a property owner or manager) and a service provider for building maintenance, repairs, or related services. It has all aspects of the scope of work, frequency, responsibilities, payment terms, and legal protections for both parties. This agreement ensures that the services are carried out professionally, timely, and without misunderstandings.
Who needs a building service agreement?
Any individual or business hiring Service Providers for maintenance, repair, or building services
Landlords managing residential or rental properties
Facility managers overseeing commercial buildings or office spaces
Owners of co-working spaces requiring regular upkeep and repairs
Housing societies or apartment associations hiring service vendors
Anyone looking to avoid service delays, hidden costs, or unreliable work
When should you use a building service agreement?
Before any maintenance or repair work begins
Prior to making any advance or full payment to the Service Provider
When hiring service providers for ongoing or one-time building services
Before allowing vendors access to your property
When you want to set enforceable quality standards and clear deadlines
To protect yourself from service delays, poor workmanship, or Service Provider walkouts
Why Building Service Agreement is Important?
Defines Roles and Responsibilities - This agreement clearly lays out what the builder is responsible for, the scope of work, and what the general Service Provider expects. This clarity helps everyone stay on the same page and avoids any potential misunderstandings.
Ensures Legal Protection - It sets up enforceable terms that shield both parties from breaches of contract, disputes, and any legal headaches that might arise.
Clarifies Payment Terms - The agreement details the payment structure, including rates, milestones, deadlines, and any extra costs, which helps prevent any payment-related conflicts.
Sets Quality and Compliance Standards - It ensures that the builder follows industry standards, building codes, safety regulations, and any specific requirements for the project.
Manages Project Timelines and Deadlines - The agreement outlines project schedules, deadlines, and penalties for delays, making sure everything gets done on time without any hiccups.
Safeguards Confidential Information - It protects sensitive information, construction plans, methods, and any business-related data from being misused or disclosed without permission.
Reduces Risk and Liability - The agreement fairly distributes risks, liabilities, and indemnities, ensuring that each party is accountable for their own work.
Provides a Dispute Resolution Mechanism - It includes structured procedures for resolving disputes, like mediation or arbitration, which can help keep legal costs down and avoid project delays.
Types of Building Service Agreement
1. Fixed Price Contracts
These are similar to lump sum contracts in construction, where a fixed price is agreed upon for a set of services over a specific period.
2. Cost-Plus Contracts
In this scenario, the service provider is reimbursed for actual costs incurred plus a predetermined fee or margin. This type is beneficial for services with variable costs.
3. Time and Materials Contracts
These contracts charge clients based on the time and materials used for the services provided. They are flexible and suitable for projects with uncertain scopes.
4. Integrated Service Contracts
These involve multiple services (e.g., maintenance, cleaning, security) provided under a single agreement, often with shared risk and reward structures.
Which parties are involved in the Building Service Agreement?
1. Service Provider (Builder)
Service Provider can be a company or individual responsible for providing building services such as maintenance, cleaning, security, plumbing, electrical work, or facility management. They ensure that the agreed services are completed as per the contract terms.
2. Client (Building Owner/Property Manager)
Every person from the person, business, or organization that hires the service provider to maintain or manage a building. They define the service requirements, payment terms, and quality expectations while ensuring timely payments.
Key Components of Building Service Agreement
Parties Involved – Names, contact details, and roles of both parties.
Scope of Services – General framework for services to be provided, with flexibility for future agreements.
Payment Terms – Details of pricing, invoicing, and payment schedules.
Confidentiality & Data Protection – Terms ensuring protection of sensitive information.
Liability & Indemnification – Defines responsibilities, limits liability, and protects against legal claims.
Intellectual Property Rights – Specifies ownership and usage rights of created work or services.
Duration & Termination – Agreement validity and conditions for termination.
Dispute Resolution – Specifies resolution methods (mediation, arbitration, or legal action).
Compliance & Governing Law – Ensures adherence to applicable laws and regulations.
Amendments & Modifications – Procedure for modifying the agreement when necessary.
Performance Standards & Quality Assurance – Defines expectations for work quality, timelines, and any specific performance metrics the Service Provider must meet.
Relevant Laws You Should Know
Indian Contract Act, 1872
In India, the validity of Service Agreement is governed by the Indian Contract Act, 1872 (Sections 10, 14, 23, 27 and 73). Service Agreement must be lawful and voluntary. The reasonable restrictions on trade to protect confidentiality are mentioned under Section 27.
Consequences of Breach
GST Implications
Governing Laws
If any party breaks the Service Agreement by not providing the services, another party can take action under the Indian Contract Act, 1872. Consequences may include:
- Legal Action - The aggrieved party can approach the court to enforce the agreement and recover losses caused by the breach.
- Compensation - The defaulting vendor may be held liable to pay monetary damages for any financial or business loss suffered by the client.
- Termination of Agreement - The non-breaching party can choose to terminate the contract immediately without further obligations.
- Impact on Professional Reputation - A breach can harm the vendor’s credibility in the industry, affecting future projects, client trust, and long-term business prospects.
As per the Goods and Services Tax (GST) Act, 2017, services rendered under the agreement are subject to GST. The service provider must charge and remit GST at the applicable rate. Both parties should clarify whether the prices mentioned are inclusive or exclusive of GST.
Arbitration and Conciliation Act, 1996
Under the Arbitration and Conciliation Act, 1996, disputes can be resolved through arbitration, offering faster, confidential, and fair resolution. Section 7 mandates arbitration if included in the Builder Service Agreement, while Section 8 allows courts to refer disputes to arbitration
An arbitration clause in your agreement ensures benefits like:
- Faster Resolutions: Avoids lengthy legal battles.
- Scope of Services: The description of services provided by the parties.
- Confidential Proceedings: Keeps sensitive business information private.
- Fair Dispute Resolution: A neutral arbitrator decides the case.
For Service Provider (Builder)
For Client
Do’s:
✅ Clearly define the scope of work, cost, and timelines in writing
✅ Maintain progress updates and transparency throughout the project
✅ Use quality materials and follow agreed specifications
✅ Get approvals in writing for any changes
Don'ts:
❌ Don’t begin work without a signed agreement
❌ Don’t exceed budget or deadlines without consent
❌ Don’t ignore client concerns or feedback
❌ Don’t make verbal promises that aren't documented
Do’s:
✅ Sign a detailed service agreement before work starts
✅ Clearly communicate expectations, timelines, and budget limits
✅ Make payments as per agreed milestones
✅ Inspect work regularly and document approvals
Don'ts:
❌ Don’t rely on informal or verbal arrangements
❌ Don’t pay large sums in advance without progress
❌ Don’t ignore signs of delay or substandard work
❌ Don’t keep changing requirements mid-project without updating the contract
Why Choose DigiLawyer for Building Service Agreement?
We ensure compliance with the Indian Contract Act, 1872, and the Arbitration and Conciliation Act, 1996, providing a solid legal foundation. Whether you need a standard template or customized clauses for non-compete or non-solicitation, we’ve got you covered.
Legally Approved Agreements - Drafted by legal experts, following all Indian laws.
Fast & Easy Process - Get your agreement online without any hassle.
E-Stamping & Registration Help - We take care of all legal formalities for you.
Customizable Agreements - Modify terms as per your business or personal needs.
Affordable & Transparent Pricing - No hidden charges, just clear and fair costs.
Secure Online Storage - Access your agreements anytime, anywhere.
Expert Legal Support - Our team is always available for legal guidance and dispute resolution.
FAQs Related to Building Service Agreement
Yes, a Building Service Agreement is legally enforceable if it meets the essentials of a valid contract mutual consent, lawful purpose, consideration, and capacity of parties. Once signed, it can be upheld in a court of law.
Yes, the terms of a Building Service Agreement can be negotiated by both parties before signing. This ensures that responsibilities, timelines, payments, and other key terms are clearly understood and mutually agreed upon.
It should include scope of work, project timeline, payment terms, materials and labor responsibilities, warranties, liability clauses, termination terms, dispute resolution methods, and governing law. These elements help avoid misunderstandings and protect both parties legally.
Yes, a well-drafted Building Service Agreement typically includes clauses on liability and insurance to protect both parties from potential damages, accidents, or legal claims during the project.
Yes, it can be terminated early if the agreement includes a termination clause. It usually allows either party to end the contract under specific conditions, such as breach of terms or with prior written notice.
No, it's not generally required to consult a lawyer to draft a building service agreement but one should consult a lawyer to get a legally verified agreement.
While you can visit DigiLawyer.ai to get legally verified agreements that has been backed by legal experts.
Notarizing a Building Service Agreement is optional, but it adds a layer of legal security. It helps establish the authenticity of signatures and the date of execution, which can be useful if the agreement is ever challenged in court. While not mandatory, it’s a smart precaution especially for high-value contracts or long-term vendor relationships.
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