Service contract: how to guarantee the necessary security for your document

Nowadays it is becoming increasingly common to come across companies or professionals needing to hire third-party services. According to data from the Brazilian Institute of Geography and Statistics - IBGE, the service sector currently represents about 70% of Brazil's Gross Domestic Product. The Brazilian economic boost, previously carried out mostly by the industrial sector, gave way to activities in the service sector.

Due to the growth of activities in the sector, the conclusion of contracts for the provision of services has gained relevance to establish the rights and duties of the parties, in order to protect their interests - either through the exact delimitation of the object to be contracted or even through the creation of responsibilities, specifying the other characteristics of the service to be provided.

In this article, we will present what a service contract is, its specificities and what it must include in it to guarantee the desired security.

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What is a service contract?

A service contract is an agreement between two parties: the contractor (known as the service taker or customer) and the contractor (known as the service provider), in which the contractor undertakes to provide a certain service to the contractor in exchange for consideration (or compensation). The object of the contract may be the provision of any type of service, including material, immaterial, manual, or intellectual services, as long as they are lawful.

The service provision contract and the Consumer Protection Act

Article 593 of the Brazilian Civil Code states that the provisions provided for therein apply generally to service contracts that are not subject to labor laws or to a specific special law.

In this sense, with the exception of employment contracts, which are governed by the Consolidation of Labor Laws (CLT), in general, the provision of consumer services is subject to Law 8,078/90 (Consumer Protection Code - CDC), pursuant to article 1 of the Consumer Protection Code.

According to the CDC, the special law applies only to consumer contracts, that is, when the figure of the consumer and the supplier, in this case, the service provider, are present.

But how to identify the existence of a consumer in the service contract?

The Consumer Protection Code, in its article 2, establishes that “consumer” is any individual or legal entity that purchases or uses a product or service as final recipient”.

The law is not precise when defining who would be the final recipient of a service. This task was carried out by the jurisprudence that defined as a consumer, the user of a service that takes it to his own advantage. In other words, an individual or legal entity that contracts a service with the purpose of using, transforming or integrating it into its production process so that it can be offered to its customer, the consumer, is excluded from the definition of “consumer”.

Thus, contracts for the provision of consumer services will not be considered, to name a few examples, those contracts for transportation services concluded between an e-commerce company and a carrier for the delivery of the products sold by it, or even a contract for the provision of legal or accounting services. In these cases, the general rules provided for in the Civil Code apply. It is this type of contract that we will discuss below.

Features of the contract for the provision of services

Although the service contract may be signed verbally, it is important to consider doing so in writing, as this avoids questions about its terms. For the contract to be valid, it is important that you observe the following elements:

Lawfulness of the object 

Obviously, all contracts require a legal object to be valid. Service contracts whose objects are illegal activities or even those that violate good faith or good morals, for example, are null and void.

Capacity

Policyholders and service providers must be legally capable and have the appropriate authorization to enter into the contract.

Onerosivity

The service contract must stipulate the remuneration to be paid by the policyholder to the provider in exchange for the service. According to article 596 of the Civil Code, if the price of the service has not been stipulated or if the parties have not reached an agreement regarding the amount to be paid in return for the service provided, the amount will be arbitrated according to the custom of the place, the quality and the time spent providing the service.

The payment method for the negotiated price may also be freely fixed by the parties to the agreement, either after the service has been provided, in advance or in installments.

Very personal benefit

Taking into account that neither the contractor nor the contractor can assign contracts without the agreement of the other party (art. 608 of the CC), we can say that the provision of services is very personal or Personal intuition.

Thus, without the agreement of the service taker, there can be no appointment of a third party to perform the contracted service in place of the provider (outsourcing of the service), nor can the latter transfer the right to the services provided to another person without the consent of the provider.

It is important to remember that if the service to be provided is performed by a person who is not qualified to do so, such as lawyers, doctors, and other professionals who require specific qualification established by law, the service cannot be charged, given the prohibition of irregular exercise of profession.

And since the provision of services is a very personal legal business, if one of the parties dies, the contract ends immediately.

Temporary

The Civil Code, in its article 598, establishes that the service must be carried out within a pre-established period of time of four years, enshrining a rule that the provision of the service cannot be perpetual.

Although the Civil Code establishes rules of public order and cannot be removed by agreement between the parties, the truth is that during the First Civil Law Day organized by the Federal Justice Council in October 2012, Enunciation 32 to art. 598 of the Civil Code was approved, which provides as follows:

In service contracts in which the contracting parties are entrepreneurs and the economic function of the contract is related to the exploitation of business activity, the parties may agree on a period exceeding four years, given the specificities of the nature of the service to be provided, without constituting a violation of the provisions of art. 598 of the Civil Code.

In this sense, the prohibition provided for in article 598 of the Civil Code ended up being relativised.

How to draw up a good service contract?

As we have seen, the service contract is a document that formalizes the legal transaction, where the service provider undertakes to carry out some type of activity in exchange for compensation from the so-called service taker (or contractor).

In order for us to make a good service contract, it is important that the document contains the qualification of the parties, the object of the contract (the contracted service), the details of the services to be provided, the obligations of the contractor and the contractor, the liability of the parties, the amounts and conditions of payment, the penalties in the event of non-compliance or termination of the contract, the validity period of the contract and the election of court clause.

Always keep in mind that making a good service contract will guarantee the parties the rights and duties to be assumed by them.

Below, we have prepared a checklist so that no relevant information is left out of your service contract.

Qualification of the parties: who is the contractor in the service contract? What about the contractor?

The qualification of the parties is an extremely important and necessary aspect in any contractual instrument, which naturally includes the service contract. The qualification of the parties involves the complete identification of both parties involved in the legal relationship, including information such as full name, address, marital status, identification documents such as CPF or CNPJ, legal representative, telephone number, among others.

The qualification of the parties is important for several reasons. First, it helps ensure that both parties are identified and can be contacted if necessary. In addition, the qualification of the parties also helps to avoid confusion or misunderstanding about who the parties involved in the contract are, even helping in cases of execution of the contract through the courts.

Purpose and detail of the services in the service provision contract

The subject of the contract is one of the most important elements of any contract and is no different in the service provision contract. The object of the contract refers to the service that will be provided by the contractor to the contractor in exchange for compensation.

The object of the contract must be specified in detail in the document, containing accurate and complete information about the scope of the service, deadlines and conditions of execution so that the borrower can monitor and collect the proper execution of what was contracted.

Obligations of the contractor and contractor. Responsibility of the parties

The obligations of the parties refer to the responsibilities, rights, and duties that they have in relation to the contracted service. Failure to comply with obligations by one of the parties may have legal consequences for the other party, especially if the non-compliance causes harm and loss to the innocent party.

In this sense, it is important to establish, in detail, what is expected of both the borrower and the provider in relation to the services being contracted.

Amounts and payment terms

In return for the provision of services, the contracting party must remunerate the contracted party pecuniarily. The parties must negotiate the amounts and terms of payment (deadlines, form and manner in which the payment will be made).

Then, in addition to the parties negotiating the amounts involved for the execution of the services, they must establish whether the payment will be in advance, or after the completion of the services, or even in installments. Depending on the type of service and the agreement made, compensation can also be made with part at the beginning and the rest at the end.

Regarding the payment method, it is possible to state which means will be used for payment, whether through cash, bank transfer or deposit, pix, etc.

Penalties

To ensure compliance with the agreed provisions, it is recommended to provide in advance for the penalties to be applicable to one of the parties in the event of non-compliance with the negotiated obligations.

Penalties may include the imposition of a fine, withholding of remuneration, the re-execution of services, suspension of the contract, and even the termination of the contract, among others.

Term of validity

The term of validity of the contract is the duration of the contract, that is, it is the period during which the contract takes effect.

It is quite common for the parties to pre-determine a specific period for which the contract will be active, but the Brazilian Civil Code, in its article 598, establishes a maximum term of 4 (four) years for service provision contracts.

This time limit imposed by law is intended to protect the parties from being bound by very long agreements and against clauses that would impose on the parties exacerbated penalties in the event of termination or even negotiation clauses that become economically unfeasible over time.

But such a device does not prevent service contracts from being concluded with a term of validity exceeding 4 years.

An alternative is the express renewal of the contract for another period at the end of the term of the contract. This can occur as many times as necessary, through additive terms, at which time commercial and financial issues, deadlines, and technical aspects involved can be reevaluated.

Alternatively, the parties may also enter into a contract for an indefinite period, in which circumstance it can be terminated at any time, upon prior notice from the party requiring the termination of the other party.

In turn, Statement No. 32 of the First Commercial Law Conference, promoted by the Federal Justice Council in 2012, sought to address the exception to this time limitation in contracts, providing the following:

In service contracts in which the contracting parties are entrepreneurs and the economic function of the contract is related to the exploitation of business activity, the parties may agree on a period exceeding four years, given the specificities of the nature of the service to be provided, without constituting a violation of the provisions of art. 598 of the Civil Code.

In the foreseen cases, therefore, the parties may agree to a period longer than the four years provided by the Civil Code, given the specific nature of the service to be provided, without this constituting a violation of the provisions of art. 598 of the Civil Code.

Termination of the contract for the provision of services

Service contracts are terminated in the following situations:

• Because they are very personal contracts, with the death of any of the parties;
• due to the closing of the deadline or completion of the work;
• due to default on the part of either party; or
• the impossibility of continuing the contract, motivated by force majeure;
• In the event of any supervening hypothesis provided for in the contract.

Since the purpose of a service contract is to support and provide more security for the parties, it is essential that there be a well-defined clause containing the conditions and possibilities if the agreement is breached, because if the service is not delivered on time or with satisfaction, as well as if payment is not made, as a consequence and if provided for in a contract, there is a possibility or not of breaking the contract before the deadline.

If the parties have not stipulated a specific term of validity for the contract, it is considered that it was concluded for an indefinite period and, therefore, either party may terminate the contract unilaterally, upon prior notification sent to the other party.

It should be noted that article 599 of the Civil Code establishes that “if there is no stipulated deadline, nor can it be inferred from the nature of the contract, or from the custom of the place, any of the parties, at their discretion, may terminate the contract”.

As seen, this rule does not conflict with the provisions of article 598 of the same Code, since the conclusion of an indefinite contract is an alternative to the 4-year time limitation of fixed-term contracts.

It should be noted that the rule provides the possibility of contractual “resolution”. However, the term is impropriety, since “resolution” is a form of termination of the contract due to non-compliance with an agreed obligation. In this case, it is a contractual resilience, that is, a right that the parties have to withdraw from a contract by their mere liberality, under the terms of article 473 of the Civil Code, upon prior notice. If, however, given the nature of the contract, one of the parties has made significant investments for its execution, the unilateral complaint will only take effect after a period compatible with the nature and size of the investments has elapsed.

The deadline for notification to be observed by the complaining party, when not expressly established in the contract, must comply with the following provisions of the sole paragraph of article 599 of the Civil Code:

• I - eight days in advance, if the salary is fixed for a month or more;
• II - four days in advance, if the salary has been adjusted per week, or fortnight;
• III - the day before, when you have been hired for less than seven days.

Despite the fact that the text of the legal provision contains the term “salary”, it is understood that the legislator had the objective of dealing with payment for remuneration for the contracted services. This is because salaries are paid to employees by their employers and the contractual instrument to be concluded in these cases is an employment contract and not a contract for the provision of services.

Finally, it should be noted that failure to comply with notice periods gives rise to the possibility of a claim for losses and damages by the injured party.

Election of the court clause

The election of court clause is an important aspect of the service contract, since it binds and expressly defines which location (city/state) judicial matters will be dealt with, if the parties are faced with this need.

As it is a place that can be defined by the parties, it is common for the parties to establish in their contracts the place where the services are provided as the competent court, or even places that are easier to act.

Electronic signature and how Clicksign can help

As we have seen, in order to draw up a good service contract, it is important that it has:

• The full qualification of the policyholder and the service provider;
• The description of the object and details of the services;
• Price of the service;
• Obligation of the parties;
• Penalties;
• Conditions for contract termination;
• Term of validity; and
• Forum clause.

But for the contract to be properly formalized, it must be signed by the parties.

Currently, the contract can be signed with electronic signature, which provides more security and convenience to the contracting parties.

There are three types of electronic signatures, which are classified according to the types of signer authentication used: simple electronic signatures (with more basic authentication methods, such as the signer's email or their geolocation and computer IP), advanced (which uses more refined authentication methods, such as facial biometrics and/ or Selfie with a document combined with other authentication points, giving the signature a high level of security) and the qualified one (the one that requires the use of a digital certificate issued by ICP-Brazil).

With the Clicksign platform, it is possible for the user to send and sign their contract with any of the three types of signatures provided by law, with full legal validity, under the terms of Provisional Measure 2,200-2, which provided for the use of electronic means to formalize documents and the new Law 14,620/23, which included paragraph 4 to article 784 of the Code of Civil Procedure.

The recent provision provides for the admission of any type of electronic signature provided for by law in executive titles and the dismissal of two witnesses when the integrity of the instrument is verified by the signature provider.

The use of Clicksign's electronic signature platform helps to make the conclusion of your service contract a faster, safer and more efficient process. Try for free!