Today the services market is quite varied and diverse. That is why there are many types of Service Provision Agreement. It should be admitted that the Service Provision Agreement for the site development is different from the Legal Services Provision Agreement. Despite the diversity of such treaties, they have common features that distinguish them from others. Which exactly?
Services regulation
According to para. 17 of Art. 1 of the Law of Ukraine “On Protection of Consumer Rights” dated 12.05.1991, No. 1023-XII, the service is the activity of the executor for the provision (transfer) to the consumer of a tangible or intangible benefit specified by the agreement, carried out according to the individual order of the consumer to meet his/her personal needs.
Provision of services begins with the conclusion of a service agreement. There are many types of such agreements (as well as services). Those can be a contract of carriage, and a contract of transport forwarding, and a storage contract, and an insurance contract, etc. The relations between business entities in the case of the provision of most of them are prescribed in the Civil Code of Ukraine (hereinafter – CCU). Nuances for other types of services provision can be found in the following normative legal acts: Commercial Code of Ukraine (hereinafter – Commercial Code), the Law of Ukraine “On Protection of Consumer Rights” of 12.05.1991, No. 1023-XII, the Law of Ukraine “On Audit of Financial Statements and audit activity” of 21.12.2017, No. 2258-VIII, etc.
But despite the diversity of Service Provision Agreements, they have common features that distinguish them from others.
Scope of the Agreement
The scope of the Service Provision Agreement is not the result that, after its achievement, is passed on to the customer (as in the contractor agreement), and the very process (action) that is immediately consumed.
Parties to the Agreement
The parties to the service agreement are the executor and the customer (para. 1 of Art. 901 of the CCU). The duties of the first (Service Provider) include the service provision (according to the customer’s request). The obligations of the customer are the payment to the Service Provider of the specified service, unless otherwise specified by the agreement.
Service Price
The Service Provision Agreement can be both paid and free of charge.
In case of payment, it is necessary to determine in the contract the size, term and procedure of payment by the customer (para. 1 of Article 903 of TCU). The price in the contract is set by the parties by agreement (para. 1 of Art. 632 of the CCU). If services are provided in the territory of Ukraine, then they should be paid in UAH (para. 1 of Art. 533 of the CCU, para. 2 of Art. 198 of the Commercial Code), except for cases when the use of foreign currency during the settlement in the territory of Ukraine for obligations to be allowed by the law.
The price can vary during the service provision. However, once the service is provided, it is no longer possible to change the price. For example, it may happen when it is non-fulfillment of the terms of the agreement. Therefore, if the contract cannot be executed not by the fault of the Service Provider, then the customer is obliged to pay to the Service Provider a reasonable fee for its “efforts”. This may be the reimbursement of expenses actually borne by the Service Provider, trying to fulfill obligations under the agreement. If the agreement cannot be executed by the fault of the customer, he/she is obliged to pay the full payment to the Service Provider (unless otherwise specified by the agreement or by the law).
If the service was provided free of charge and the Service Provider was not able to perform the duties (due to the fault of the customer or as a result of force majeure), the customer will be obliged to reimburse to the Service Provider all the actual costs necessary for the performance of the agreement (Art. 904 of CCU).
Agreement Duration
Agreement duration:
- is established by agreement of the parties, unless otherwise specified by law or legal acts (Art. 905 of the CCU);
- cannot be less than the deadline for the fulfilment of the economic obligations (para. 7 of Art. 180 of the Commercial Code).
The Agreement duration should be prescribed in the document itself. If the deadline for the fulfillment of obligations is not set or not determined by the claiming time, the creditor will have the right to request their execution at any time. The debtor in such a case will be forced to fulfill such an obligation within seven days from the day of claiming (para. 2 of Art. 530 of the CCU).
Service Provider liability
If the Service Provider fails to perform or deliver on commitments already made in improper form due to his/her fault, he/she is obliged to compensate to the customer for the damage caused by such actions in full (unless otherwise stated by the agreement) (Art. 906 of the CCU).
Approval Documents
It’s no secret that the business entity should obtain a license to provide certain types of services. Types of activities for which such an approval document is required are listed in the Law of Ukraine “On Licensing Types of Economic Activities” of 02.03.2015 No. 222-VIII (hereinafter – Law No. 222). Among them are: financial services provision, services in the field of television and radio broadcasting, construction services, etc.
Agreement Termination
The Service Provision Agreement can be terminated, in particular, by unilateral repudiation of the agreement, in accordance with the procedure and on the grounds established by the CCU, by another law or agreement of the parties. The Procedure and consequences of termination of the Service Provision Agreement are determined by agreement between the parties or by the law (Art. 907 of the CCU).
