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Third-Party Services Agreement

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THIRD-PARTY SERVICES AGREEMENT

This Third-Party Services Agreement (the Agreement) is made and entered into as of by and between Client Name: , a organized under the laws of , with its principal place of business at (Client), and Service Provider Name: , a organized under the laws of , with its principal place of business at (Provider).

RECITALS

WHEREAS, Client requires certain services described herein to support Client's business operations, and Provider represents that it has the capability, personnel and expertise to perform such services for Client on the terms set forth in this Agreement;

WHEREAS, Provider will perform specified third-party services as an independent contractor and not as an employee or agent of Client, and Provider will engage any subcontractors only as permitted under this Agreement;

WHEREAS, the parties desire to set forth the terms and conditions under which Provider will provide the services, the payment for such services, and the rights and obligations of the parties.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1. "Services" means the tasks, deliverables and obligations described in the Services Statement attached hereto and completed in accordance with this Agreement. If no separate statement is attached, the Services are as described in the Services Description field below.

2. SCOPE OF SERVICES; PERFORMANCE

2.1. Provider shall perform the Services in a professional and workmanlike manner consistent with industry standards and in compliance with all applicable laws and Client policies communicated in writing. Provider shall supply qualified personnel and necessary materials, unless otherwise agreed in writing.

2.2. Change Orders. Any change to the scope, schedule or price shall be effective only upon written Change Order signed by authorized representatives of both parties. Provider will notify Client in writing of any cost or schedule impact prior to commencing changed work.

3. TERM

3.1. This Agreement shall commence on the effective date set forth above and shall continue for an initial term of unless earlier terminated pursuant to Section 10. Thereafter the Agreement shall .

4. FEES AND PAYMENT

4.1. Compensation. Client shall pay Provider fees in accordance with the Fee Schedule set forth below or in an attached exhibit. Fees are exclusive of taxes unless otherwise stated. Provider shall submit invoices in accordance with the billing schedule and Client shall pay undisputed amounts within days of receipt.

4.2. Late Payment. Overdue amounts shall accrue interest at a rate of or the maximum rate permitted by law, whichever is lower.

5. CONFIDENTIALITY

5.1. Definition. "Confidential Information" means non-public information disclosed by a party that is marked or reasonably understood to be confidential, including business plans, customer data, technical designs, pricing, and other proprietary materials.

5.2. Obligations. Receiving party shall protect Confidential Information using at least the same degree of care it uses to protect its own confidential information but in no event less than reasonable care, and shall not use or disclose Confidential Information except as necessary to perform under this Agreement or as required by law. Receiving party shall ensure that its personnel and permitted subcontractors are bound by equivalent confidentiality obligations.

5.3. Exclusions. Confidential Information does not include information that is or becomes publicly available through no fault of receiving party, is rightfully received from a third party without restriction, is independently developed without reference to the disclosing party's Confidential Information, or is approved for release by written authorization.

6. INTELLECTUAL PROPERTY

6.1. Ownership. Except as expressly set forth herein, each party retains all rights in its preexisting intellectual property. Subject to payment in full, Provider hereby grants Client a non-exclusive, non-transferable, worldwide license to use Provider-developed deliverables created specifically for Client under this Agreement solely for Client's internal business purposes.

6.2. Third-Party Materials. Provider shall identify any third-party materials included in deliverables and shall secure appropriate licenses for Client's use. Client's rights to third-party software or materials are limited to the licensed terms provided by the third-party licensor.

7. WARRANTIES; DISCLAIMERS

7.1. Mutual Warranty. Each party represents that it has the full power and authority to enter into this Agreement and perform its obligations.

7.2. Provider Warranty. Provider warrants that the Services will be performed in a professional and workmanlike manner consistent with industry standards for a period of following delivery. Provider's sole obligation for breach of this warranty shall be to re-perform the nonconforming Services or, if re-performance is not commercially practicable, to refund the fees attributable to such Services.

7.3. Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PROVIDER DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

8. INDEMNIFICATION; LIMITATION OF LIABILITY

8.1. Indemnification by Provider. Provider shall indemnify, defend and hold harmless Client and its officers, directors and employees from and against any third-party claims, liabilities, damages and expenses (including reasonable attorneys' fees) arising out of Provider's negligence, willful misconduct, material breach of this Agreement, or infringement of third-party intellectual property rights caused by Provider's deliverables.

8.2. Indemnification by Client. Client shall indemnify, defend and hold harmless Provider from claims arising from Client's misuse of the Services, Client data, or Client's breach of its obligations under this Agreement.

8.3. Limitation. EXCEPT FOR LIABILITY ARISING FROM WILLFUL MISCONDUCT, GROSS NEGLIGENCE, OR A PARTY'S INDEMNIFICATION OBLIGATIONS, EACH PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED or the total fees paid by Client to Provider under this Agreement in the preceding 12 months, whichever is less.

9. INSURANCE

Provider shall maintain commercial general liability insurance, professional liability (errors and omissions) insurance, and worker's compensation as applicable, in amounts customary for the industry but not less than the limits specified here:

10. TERMINATION

10.1. Termination for Convenience. Either party may terminate this Agreement for convenience upon days' prior written notice to the other party.

10.2. Termination for Cause. Either party may terminate immediately upon written notice if the other party materially breaches this Agreement and fails to cure within days after receiving written notice specifying the breach.

10.3. Effect of Termination. Upon termination, Provider shall cease performance and deliver to Client all work in progress. Client shall pay Provider for Services performed through the effective date of termination and for any non-cancelable commitments incurred prior to termination. Sections concerning payment, confidentiality, indemnification, intellectual property and limitations of liability shall survive termination.

11. NOTICES

All notices required or permitted hereunder shall be in writing and delivered by hand, nationally recognized overnight courier, or certified mail (return receipt requested) to the addresses set forth below or to such other address as either party may designate by notice in accordance with this Section.

12. AMENDMENTS; WAIVER; COUNTERPARTS

12.1. Amendment. No modification, amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by authorized representatives of both parties.

12.2. Waiver. No failure or delay by either party in exercising any right shall operate as a waiver of that right, nor shall a single or partial exercise of any right preclude other or further exercise of that right.

12.3. Counterparts; Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature, each of which shall be deemed an original and all of which together shall constitute one instrument.

13. GOVERNING LAW; ENTIRE AGREEMENT; SEVERABILITY

13.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflicts of law principles.

13.2. Entire Agreement. This Agreement, together with any exhibits and written Change Orders executed by the parties, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals and communications, whether written or oral.

13.3. Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect and the parties shall negotiate in good faith to replace the invalid provision with a valid provision that, to the extent possible, achieves the original economic intent.

MISCELLANEOUS

14.1. Independent Contractor. Provider is an independent contractor. Nothing in this Agreement creates an employment, joint venture, partnership, or agency relationship between the parties.

14.2. Subcontracting. Provider may subcontract performance of the Services provided that Provider remains responsible for the acts and omissions of its subcontractors and obtains Client's prior written consent where Client reasonably requires it for confidentiality or security reasons.

CLIENT

Printed Name:

By:

Date:

Title:

PROVIDER

Printed Name:

By:

Date:

Title:

Enter text✕

What a Third-Party Services Agreement Is and Why It Matters

A Third-Party Services Agreement is a written contract that defines the relationship between an organization and an external vendor retained to perform services. It sets the scope of work, service levels, deliverables, pricing, data handling, intellectual property ownership, confidentiality, insurance and indemnity obligations. The agreement allocates risk, defines approval and termination workflows, and often requires proof of compliance with rules such as HIPAA, PCI or industry-specific regulations. Electronic execution is commonly used; signNow is a secure, compliant, cost-conscious eSignature option used across industries in the United States.

Why a Clear Third-Party Services Agreement Protects Your Organization

A well-drafted agreement clarifies responsibilities, limits liability, enforces performance standards, and preserves regulatory compliance. It reduces disputes, supports audit readiness, and ensures consistent handling of data, IP, and payment terms across vendor relationships.

Why a Clear Third-Party Services Agreement Protects Your Organization

Which Teams Typically Prepare and Sign These Agreements

Multiple departments collaborate to create and approve third-party contracts; responsibilities vary by organization size and complexity.

  • Procurement and Sourcing teams: manage vendor selection, negotiate commercial terms, and verify pricing and SLA compliance.
  • Legal and Contracts counsel: draft clauses, manage risk allocation, confidentiality, IP assignment, and dispute resolution details.
  • IT and Security teams: assess technical controls, encryption, access controls, and data residency or transfer requirements.

Involving these stakeholders early reduces review cycles and the likelihood of post-signature compliance gaps.

Authorized Signers and Typical Roles

General Counsel

Legal officers review risk allocation, approve indemnities and confidentiality language, and confirm that termination and remedy clauses align with corporate policy and regulatory duties.

VP Procurement

Procurement executives sign commercial terms, ensure SLA and pricing commitments match purchase orders, and confirm that certificates of insurance and required vendor documents are in place.

Essential Security and Compliance Elements to Include

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
Audit Trail: Tamper-evident logs and timestamps
Certifications: SOC 2 Type II; ISO 27001
Regulatory Support: ESIGN and UETA coverage
Industry Compliance: HIPAA BAA available where required
Accessibility: WCAG 2.0 Level AA compliance

Key Legal and Financial Risks of an Incomplete Agreement

Contractual Gaps: Unclear SLAs expose you to service shortfalls
Insurance Shortfall: Insufficient coverage increases recovery risk
Data Breach Liability: Noncompliance can trigger regulatory fines
Tax Penalties: Incorrect reporting may invoke IRC §6721 fines
I-9 Noncompliance: Paperwork errors can trigger 8 CFR penalties
HIPAA Violations: Missing BAA elevates breach liability

Common Preparation Mistakes to Avoid

  • Failing to define precise deliverables and acceptance criteria leads to disputes and unpaid invoices.
  • Neglecting data-handling clauses or transfer controls increases regulatory exposure and breach risk.
  • Skipping verification of vendor insurance and certifications creates recovery gaps if incidents occur.
  • Using inconsistent governing law or ambiguous termination language prolongs litigation and complicates enforcement.

Real-World Uses of Third-Party Services Agreements

These examples show how organizations apply contractual controls to common vendor engagements and the operational outcomes they achieve.

Optica Ventures LLC

A venture firm engaged a cloud analytics provider to process portfolio data with a BAA where needed

  • The vendor provided SOC 2 reports and contract-level confidentiality clauses
  • As a result, legal and operations teams reduced review time and improved audit readiness while preserving data protection commitments.

Martin Properties

A property manager contracted a maintenance vendor for recurring services across multiple states

  • The contract included standardized SLAs, insurance minimums, and invoicing terms
  • That standardization shortened procurement cycles, improved vendor accountability, and helped reconcile payments across dozens of sites.

Step-by-Step: Completing a Third-Party Services Agreement

Follow these sequential actions to prepare, review, and execute a clear, enforceable agreement with a vendor.

  • 01
    Gather Information: Collect vendor legal name, EIN, contact, and insurance certificates.
  • 02
    Define Scope: Describe services, deliverables, performance metrics, and acceptance criteria.
  • 03
    Allocate Risk: Specify indemnity, liability caps, IP ownership, and data protection obligations.
  • 04
    Execute: Ensure authorized signers approve and parties sign with required authentication.

Typical Contract Routing and Approval Flow

A reliable routing workflow reduces turnaround time and ensures required reviewers approve before signature.

  • Upload: Store the draft in a contract repository or document management system.
  • Assign Reviewers: Add Legal, Procurement, Security and budget approvers in sequence.
  • Request Signatures: Designate authorized signers and select authentication strength.
  • Archive: Capture signed PDF, audit trail, and related exhibits for retention.

Core Clauses to Include in Every Third-Party Services Agreement

Include these six clause groups to ensure the agreement governs delivery, liability, compliance, and the relationship lifecycle.

Scope of Services

Detailed description of tasks, deliverables, milestones, acceptance testing and measurable performance indicators that define completion and invoicing triggers.

Service Levels

SLAs, response and resolution times, credits for failures, escalation procedures and reporting obligations for measuring performance.

Data Protection

Security controls, incident notification timelines, data residency, encryption requirements and any required HIPAA or PCI addenda.

Indemnity & Liability

Mutual or one-way indemnities, limitations of liability, and exclusions tailored to the risk profile and regulatory exposure.

Insurance & Certs

Required insurance types and limits, proof of coverage, and obligation to notify of material changes or cancellations.

Termination & Remedies

Termination for convenience and cause, cure periods, transition assistance and post-termination data return or destruction.

Typical Digital Workflow Settings for Online Completion

When completing the agreement online, configure authentication, routing, and retention to match your compliance needs.

Field Configuration
Authentication Email + SMS one-time code or stronger KBA where required
Signature Type Standard electronic signature or PKI-based digital signature if needed
Routing Order Sequential or parallel approver flow depending on review needs
Retention Store signed PDF and audit trail per retention policy

Digital Signing and Platform Considerations

Choose a platform that supports required authentication, audit trails, and the file formats your teams use.

  • Integrations: Salesforce, NetSuite, Google Workspace, Microsoft 365
  • File Formats: PDF, DOCX, and HTML supported
  • Authentication Options: Email, SMS, KBA, or SSO

Ensure the selected provider can issue a machine-readable audit trail and support any necessary BAAs or regulatory configurations.

Timing and Filing Deadlines You Should Note

Several administrative and regulatory deadlines can affect how and when vendor agreements are processed and reported.

W-9 Provision:

Provide a completed W-9 to payers when requested; no fixed federal filing deadline

1099-NEC Reporting:

Issue recipient and IRS copies by January 31 for nonemployee compensation

I-9 Retention:

Retain I-9s for three years after hire or one year after termination, whichever is later (8 CFR §274a.2)

Insurance Renewal:

Obtain updated certificates before policy expiration to maintain continuous coverage

Contract Effective Date:

Use MM/DD/YYYY format; date determines obligations and statute of limitations timing

Key Milestones from Draft to Onboarding

Track these numbered milestones to measure progress and ensure a controlled handoff after signature.

01

Draft Prepared

Document completed with scope, pricing, and exhibits ready for review.

02

Internal Review

Legal, security and procurement approvals finalized before external negotiation.

03

Execution

Authorized signers complete signatures with required authentication and audit trail captured.

04

Onboarding

Vendor provides deliverables, credentials, and initial reports per SLA for go-live.

Comparing eSignature Pricing and Capabilities for This Agreement

This vendor comparison highlights starter pricing and key capability differences that matter when executing a Third-Party Services Agreement online. signNow appears first in the table by design.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial No No No No
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About Third-Party Services Agreements

Answers to common questions about enforceability, signatures, notarization, and handling compliance issues when using electronic execution.


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