Sample Service Contracts

Written by Helen Glenn Court
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No matter what you buy nowadays, you'll doubtless be offered a service contract along with it, for an additional fee. This goes for $25,000 cars, $1,500 laptop computers, $500 washing machines, $20 telephones, and everything in between. Clearly, some contracts are worth it, just as some are worthless. In considering whether to dole out the extra fee, you'll want to ask yourself a number of questions.

The first question is what the contract offers. Like a warranty, a service contract will cover repair and/or maintenance for a specified period, but above and beyond the warranty. It's important to read the fine print of the coverage. What's critical is often the labor to service a product, which leads to the second question. That is whether the service will cover more than the warranty does. The Federal Trade Commission offers a free brochure on the subject of product warranties that might be worth looking into.

The ratio of the purchase price and the warranty fee is critical. In the case of laptop computers, for example, a three-year contract generally costs about $300. That, more often than not, is a good example of a service contract that's well worth the price. Such agreements generally cover shipping and delivery, parts, and labor. They certainly should. The idea with a service contract is convenience, to save you one or more headaches.

Drafting Your Own Service Contract

The flip side of service contracts is when you need to draw one up for your own business. In this case, it's clearly in your best interests to study as many similar contracts as possible, and perhaps even use a pre-created one. Presumably you've already consulted with your financial and legal teams to cover those critical aspects of offering a service contract in the first place. In looking for sample service contracts, you want to go to a vendor that not only offers a variety of service contracts across industries but is either staffed or advised by legal and financial experts.


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