Service agreement
lawyer Toronto.
Service agreements, master service agreements, supply contracts and vendor terms, drafted and reviewed for Ontario businesses. Flat fee quoted before work begins, and most reviews come back the next business day.
Review timing starts once the engagement is confirmed and the documents and your questions are in. Jonathan confirms delivery with the quote; long or complex agreements may take longer.
· Reviewed by Jonathan Kleiman, J.D.
Ontario Bar
250+ reviews
consultation
A commercial contract lawyer for service, supply and vendor agreements
A service agreement is the contract under which one business provides services to another. Supply agreements do the same job for goods, and a master service agreement sets the terms for a relationship that will cover many projects. These are the contracts a business signs most often, and the ones most often signed unread.
Jonathan Kleiman is a Toronto contract lawyer who drafts and reviews commercial agreements for Ontario businesses, whether you're the one providing the service or the one paying for it.
- Service providers who need a client agreement or a set of standard terms they can reuse.
- Customers handed a vendor's standard form and asked to sign it as is.
- Suppliers and buyers setting up an ongoing supply or distribution arrangement.
- Businesses with a large client whose master service agreement arrived with a deadline.
Most reviews come back the next business day, and a standard draft typically takes 3 to 5 business days. The work is done by email, so it doesn't matter where in Ontario your business is. Every engagement begins with a free 30-minute consultation.
Which agreement do you need?
The name on the cover matters less than what the document does. These are the common types and when each one fits.
| Agreement | When it's used | Main point to watch |
|---|---|---|
| Service agreement | One provider, one engagement or one ongoing service | A scope clear enough to tell finished work from extra work |
| Master service agreement and statements of work | A long relationship with many projects, each described in its own statement of work | Which document wins when the two conflict |
| Supply agreement | Ongoing sale of goods: price, quantities, delivery and quality | Price changes, minimum purchase commitments and what happens to defective goods |
| Vendor agreement or standard terms | The other side's form, often presented as non-negotiable | One-sided liability caps, automatic renewals and broad indemnities |
| Consulting or contractor agreement | The provider is an individual or a one-person company | Whether the person is really a contractor. See independent contractor agreements. |
What a service agreement should cover
| Clause | What it does | What to watch |
|---|---|---|
| Scope and deliverables | Defines the work, the timeline, and how the customer accepts it | Scope described in a sales proposal that the contract never refers to |
| Price and payment | Sets fees, invoicing, due dates, deposits and late interest | Interest stated per month with no annual rate, and payment that depends on open-ended approval |
| Changes | Says how extra work is requested, priced and approved | No change process, so extras are argued about after the invoice |
| Term and renewal | Sets how long the agreement lasts and whether it renews | Automatic renewal with a short notice window to opt out |
| Termination | Sets when either side can end the agreement, and what's owed when they do | A right to terminate for convenience that only one side has |
| Warranties | States what the provider promises about the quality of the work or goods | Disclaimers that remove every promise, including the ones the sale depends on |
| Limitation of liability | Caps what one side can recover from the other and excludes some kinds of loss | A cap that protects only one party, or one so low the contract has no teeth |
| Indemnity | Makes one side pay for claims brought by third parties | Indemnities that sit outside the liability cap |
| Intellectual property and confidentiality | Says who owns the work product and what must be kept secret | No assignment of custom work, or a licence too narrow for how you'll use it |
| Disputes and governing law | Sets where and how a dispute is decided | Mandatory arbitration or a court in another province or country |
The guide to service agreements for Ontario small businesses goes through these clauses in more detail.
From draft to signature: how the work is done
Send the documents
Email the agreement with its schedules, or the deal terms if nothing is drafted yet, along with your deadline and your main concerns.
Flat fee quote
Jonathan quotes a flat fee and a timeline. Nothing is billed until you've agreed to both.
Understand the deal
He asks how the relationship will work in practice: what's being delivered, what could go wrong, and what a failure would cost you.
Review or draft
A review comes back with the risks explained in plain language and proposed changes marked up. A draft is written around your deal and your business.
Negotiate
You can take the markup to the other side yourself, or have Jonathan negotiate with their lawyer or contract team as a separate scope.
Sign and track
The final version is signed. Keep a note of the dates that matter, such as renewal notice deadlines and price review dates.
The clauses that decide who bears the risk
Limitation of liability
This clause caps what one party can recover from the other, often at the fees paid under the contract, and usually excludes indirect losses such as lost profits. Between businesses, Ontario courts generally enforce these clauses when they're clearly worded and cover what actually happened. A court can refuse where the clause was unconscionable when the contract was made, or where enforcing it would be contrary to public policy, but that's uncommon in commercial deals. So the negotiation is about the number, which claims fall outside the cap, and whether it protects both sides.
Indemnities
An indemnity is a promise to cover the other side's losses from certain events, typically claims by third parties. Standard forms often ask for an indemnity covering anything "arising from" the services, with no cap. A fair indemnity is tied to the indemnifying party's own breach or negligence, sits inside the liability cap except for a short list of agreed items, and runs in both directions where the risks do.
Payment and late interest
The payment clause should give a due date and a consequence for missing it. If you charge interest on late invoices, state an annual rate. Section 4 of the federal Interest Act says that when a contract sets interest by the day, week or month without stating the equivalent yearly rate, no more than 5% a year can be recovered. An invoice term of "2% per month" with nothing more runs into that rule. When a customer still doesn't pay, see the page on unpaid invoices.
Term, renewal and termination
Check how long you're committed and how you get out. Automatic renewal clauses extend the contract unless notice is given within a set window, sometimes 60 or 90 days before the term ends. A termination clause should cover ending the agreement for the other side's breach, with a chance to fix the problem, and say whether either side can leave without cause. It should also say what's paid for work in progress.
Warranties in a supply agreement
When goods are sold, Ontario's Sale of Goods Act implies certain terms, including that the goods are of merchantable quality and, where the buyer relied on the seller's skill, fit for the buyer's stated purpose. Under section 53, an agreement between the parties can change or exclude those terms, and suppliers' forms usually do. A buyer should know which promises have been removed and what's left in their place, such as a repair-or-replace warranty with a time limit. Sales to consumers are treated differently.
Who owns the work
If the provider creates something for you, such as software, designs, reports or content, the agreement should say whether you own it or only have a licence to use it. Copyright in commissioned work generally stays with the creator unless it's assigned in writing. Providers, for their part, should keep ownership of the tools and methods they bring to every job.
Have a service or supply agreement to sign?
Send it over first. Most reviews come back the next business day.
Provider or customer: what to look for in the draft
If you're providing the service or goods
- A scope and a change process that make extra work billable.
- Payment terms with a due date, an annual interest rate and the right to pause work when invoices go unpaid.
- A liability cap in proportion to what you're being paid.
- Ownership of your own tools, methods and pre-existing materials.
If you're the customer
- Deliverables and service levels specific enough to hold the provider to.
- A way out if the provider doesn't perform, without paying for the rest of the term.
- Ownership of, or a broad enough licence to, what you're paying to have built.
- A liability cap that isn't so low the provider has nothing at stake.
How Jonathan helps with a service agreement: scope and fees
You can hire Jonathan to review an agreement you've been given, to draft one for a specific deal, or to prepare standard terms your business can use with every customer. The fee is flat and quoted before work begins. The guide to flat-fee contract review explains how a review is scoped.
The services below can form part of your engagement. Your quote confirms which work and deliverables are covered by the agreed fee.
Services we can scope
- Free 30-minute consultation about the deal
- Reviewing a service, supply or vendor agreement and explaining the risks in plain language
- A markup with the changes worth asking for
- Drafting a service agreement, a master service agreement and statements of work, or a supply agreement
- Standard terms and conditions for your own customers
- Liability, indemnity, warranty, payment and termination clauses
- Negotiating with the other side, scoped separately
- Demand letters and Small Claims Court claims when an agreement is breached
Not included
- Tax advice on how a deal is structured or invoiced, which your accountant should give
- Advice on foreign law where an agreement is governed by the law of another country or province
- Regulatory approvals and licensing specific to your industry
- Patent and trademark filings, which go to an intellectual property agent
- Superior Court proceedings if a dispute is larger than the Small Claims Court limit. Jonathan refers these to trusted litigation counsel.
Call 416-554-1639 or book a free consultation. If the agreement has already been broken, see the page on contract disputes.
FAQs.
Common questions about service, supply and vendor agreements in Ontario.
What is a service agreement?
It's the contract under which one business provides services to another: what will be done, by when, for how much, and what happens if something goes wrong. It can be a two-page engagement letter or a long agreement with schedules. The same job is done by documents with other names, including consulting agreements, vendor agreements and terms and conditions.
What is the difference between a service agreement and a master service agreement?
A service agreement covers one engagement. A master service agreement, or MSA, sets the legal terms once for an ongoing relationship: payment, liability, confidentiality, ownership and termination. Each project is then described in a short statement of work that sits under it. An MSA should say which document wins if a statement of work contradicts it.
What is a supply agreement?
It's a contract for the ongoing sale of goods from a supplier to a buyer. It covers price and how it can change, minimum or maximum quantities, delivery, when risk passes, quality standards, and what happens to defective goods. In Ontario the Sale of Goods Act implies some terms into a sale of goods, such as conditions about quality and fitness for purpose, and the agreement can change or exclude them.
Do I need a lawyer for a service agreement?
No law requires one, and a simple, low-value arrangement may not justify it. A lawyer is worth it when the contract is worth a lot to your business, runs for years, is on the other side's standard form, or contains an indemnity, a limitation of liability, an exclusivity term or an automatic renewal you don't fully understand.
How much does a lawyer charge to review or draft a service agreement?
Jonathan quotes a flat fee after seeing the agreement or hearing what you need drafted, and before any work begins. The fee depends on the length and complexity of the document and on whether you want him to negotiate with the other side. The first 30-minute consultation is free.
How quickly can a service agreement be reviewed?
Most contract reviews come back the next business day, once the engagement is confirmed and Jonathan has the documents and your questions. A standard draft typically takes 3 to 5 business days. Long agreements with many schedules can take longer, and he'll confirm timing with the quote.
Can I charge interest on late invoices?
Yes, if the contract says so. State the rate as an annual figure. Under section 4 of the federal Interest Act, when a contract sets interest by the day, week or month without stating the equivalent yearly rate, no more than 5% a year can be recovered. A clause that says only "2% per month" runs into that rule. Mortgages on real property are an exception.
Are limitation of liability clauses enforceable in Ontario?
Between businesses, generally yes, if the clause is clearly worded and actually covers what happened. Courts can refuse to enforce one that was unconscionable when the contract was made or that would be contrary to public policy to enforce, but those cases are uncommon in commercial deals. That makes the wording of the cap, and its exceptions, one of the most important parts of the agreement.
Can the other side renew the contract automatically?
Only if the agreement says so, and many do. An automatic renewal clause extends the term unless one party gives notice a set number of days before it expires. Between businesses these clauses are generally enforceable, so check the notice window before you sign and put the date in your calendar.
Can Jonathan help if the other side has already broken the agreement?
Yes. He acts for businesses in contract disputes, starting with a review of the agreement and a demand letter, and in Small Claims Court for claims up to $50,000. Larger disputes that have to go to the Superior Court are referred to litigation counsel.
Signing a service or supply agreement? Have it reviewed first.
Send the draft or the deal terms. Flat fee quoted before work begins, and most reviews come back the next business day.