How to Draft a Service Agreement for Agencies & Clients (Worldwide)

Your business does not matter whether small design shop in London or big marketing firm in New York; your business depends on clear contracts. It is easy when your client is on the opposite side of the street. However, this is not the case when your client is on the other side of an ocean.

A weak contract turns a small issue into a huge legal fight. A strong contract, however, makes sure everyone knows the rules before the game even starts.

This guide applies to the agency owners, freelancers, and the small business leaders that engage with clients internationally. We will take a tour around the five most important sections of a bulletproof service agreement, with special attention to the information that is the most important when it comes to crossing a border. That is the basis of safe and successful international business.

Part 1: The Foundation – Defining the Relationship (The “What” and “Who”)

The biggest source of contract trouble is often right at the start: not clearly defining what you are selling and who is doing the buying. This seems basic, but when cultural differences and time zones get involved, simple words can get lost.

1. The Scope of Work (SOW): Your Playbook

This is the most significant section of your contract deserving the name Scope of Work, or SOW. This part informs the client of what you will and what you will not do. It must be in the form of easy instructions.

For worldwide success, your SOW must be extremely detailed:

• List Deliverables: Do not just say “build a website.” Instead, list: “Deliverable 1: A five-page website structure map (PDF). Deliverable 2: Custom design mock-ups for Home and Product pages. Deliverable 3: Final, coded website using HTML/CSS, tested for responsiveness on Chrome, Safari, and Firefox.”
• Set Time Limits: Clearly state the project start date and the end date. If the project has steps, use firm dates for each milestone. This helps when your client is 12 hours ahead or behind you. If they miss an approval deadline, your contract needs to show how the final delivery date shifts.
• Limit Rounds of Changes: This is a huge money saver. State clearly: “The fee includes two rounds of revisions on the design mock-ups. Any further changes will be billed at an hourly rate of $X.” This stops “scope creep”—where a project slowly grows larger without the fee changing.
• Define Exclusions: State what is not included. Examples: This contract will not deal with copywriting services, search engine optimization (SEO) services, or maintenance after launch date.

Why this matters worldwide: When a case is taken to a court that is not your home country the court will only examine the text of the dispute that is verified. They will not conjecture about the meaning of you. There is no better defense than clear SOW text.

2. Roles, Contacts, and Authority

You need to know who on the client’s side can actually approve things and who can sign the final check.

• Key Contacts: Name the key individual that you communicate with (Project Manager) and the individual who has payment power (Finance Contact). Identity, including names, work positions and email address.
• Approval Authority: It is essential to make it clear that you should not be blamed in case of any delay related to waiting until the approval of the specified contact of the client. For example: “The Agency requires written sign-off (email is acceptable) from [Client Contact Name] for all final deliverables. Delays in sign-off extend the project timeline day-for-day.”

Part 2: Money Matters – Fees and Payments

Dealing with money across borders adds two major points of risk: currency and taxes.

1. Currency and Exchange Rates

This is the fastest way to lose money in an international deal. You must remove all doubt about which currency is being used.

• Be Specific: It is essential to make it clear that you should not be blamed in case of any delay related to waiting until the approval of the specified contact of the client.
• Choose the Payer: As the agency, you want to be paid in your home currency if possible. If the client insists on paying in their currency, you must decide who takes the risk of the exchange rate changing.
  • The Smart Clause: “All invoices are payable in USD. If the Client chooses to pay using a different currency, the Client is responsible for covering all exchange rate differences and bank transfer fees. The final amount received by the Agency must equal the full USD amount shown on the invoice.”

2. Payment Schedule and Late Fees

Your schedule needs to protect your cash flow. I always advise my clients to tie payments to major project milestones, not just time.

• Standard Schedule Example:
  • 30% Down Payment: Due upon contract signing (before any work starts).
  • 40% Mid-Project Payment: Due upon approval of the Design Mock-ups.
  • 30% Final Payment: Due before the final files are handed over (launch/delivery).
• Late Fees: You must have a strong penalty for late payments, especially internationally where legal action is costly.
  • Direct Statement: Within thirty (30) days of the invoice date, the payments are due. In the event of default reason being delays, one and one half percent (1.5) per month will be attached to the outstanding balance, beginning on the 31 st day.

3. Taxes and Withholding

There are changes in tax laws depending on a country. You must have a clause that imposes the burden of local taxation on the client, unless a definite international treaty to the contrary.

• Tax Clause: “The charges and listed under this Agreement do not reflect any local, state, federal, or international duties, tariffs, or any other taxes and duties due by the Client, such as any withholding taxes. It is the Client who has to pay all such taxes and full agreed-upon fee to the Agency.”

Part 3: Protecting the Work – Intellectual Property (IP) and Ownership

Who owns the final design? Who owns the custom code? This must be perfectly clear to avoid a legal mess later on. The rule you are aiming for is “Work for Hire.”

1. The “Work for Hire” Clause

In most countries, a “Work for Hire” clause means that the person who paid for the work owns the copyright the moment it is created. If you are the agency, you need to be sure that your final deliverables become the client’s property only after they pay you fully.

• The Transfer of Rights: “Upon the Agency’s receipt of the final payment for the Project, the Agency transfers all rights, title, and interest in the final Deliverables (such as the finished website code or final logo design) to the Client. Before final payment, all such Deliverables remain the sole property of the Agency.”

2. Agency Tools and Licenses

Agencies use templates, font licenses, stock photos, and software tools to create client work. The client buys the final product, but they do not buy the tools used to make it.

• Protecting Your Property: “The Agency retains full ownership of any pre-existing software, methods, tools, templates, or general knowledge used to create the Deliverables. The Client receives a non-exclusive, worldwide license to use these embedded items only as part of the final Deliverable.”
  • Example: You own the custom template code you use for every client. The client gets a license to use that code within their specific website, but they cannot sell the template to other companies.

3. Confidentiality and Privacy

You and your client will share secret business details. A confidentiality clause is essential worldwide.

• Simple Confidentiality: “Stipulate Confidential Information (e.g. trade secrets, financial information, client lists). Include the clause that will not disclose such information to a third party within a specified duration (e.g. three to five years upon the expiry of the contract).”

Part 4: The Safety Net – Liability, Termination, and Conflict

This section covers the “what ifs.” What if someone wants to end the contract early? What if there is a mistake in the work?

1. Limits on Liability

This is where you protect your agency from being sued for a fortune over a simple error. No matter how good you are, mistakes happen.

• Maximum Liability: You want to limit the amount of money the client can sue you for. A common limit is the total amount of money paid under the contract.
  • Clause Example: “The aggregate liability of the Agency to the Client with respect to any claim, error, or harm involving this Agreement is capped by the sum of money actually paid to the Agency by the Client with regard to the special project.”

2. Termination

Both you and the client need a way to end the agreement early if things go wrong.

• Termination for Cause: One of the parties will infringe upon the contract (e.g.: agency has missed a deadline, client has not paid). You are supposed to provide the aggrieved party a written notice and a period (say 10 days) during which a person shall correct the defect and yet the contract will not terminate.
• Termination for Convenience (No Cause): This enables either party to terminate the deal at its own behest. This occurs in long-term retainer contracts.
  • Must include a notice period (e.g., 30 days) and a clear fee structure. The Client has the right to cancel this Agreement at any point within a thirty (30) day written notice. In case of termination by the Client, the Client will have to pay for all the work done until the time of termination.

Dive deep into: Resignation Letter Notice: How to Quit Your Job the Right Way

3. Dispute Resolution

How do you solve a fight without flying across the world for a court case?

• Mediation First: Always insist that the parties should first undertake mediation. Mediation is less expensive, less time-consuming, and it provides an opportunity to find a deal with the help of the neutral person.
• Arbitration: This has more strength than mediation. Arbitration is an alternative technique applied to settle a case in which the parties consent to a decision made by a private (paid) arbitrator without the case going to a court. You will have to give the name of the place where this will occur (the “seat of arbitration”).

Part 5: The Worldwide Clause – Governing Law and Venue

This is the single most important clause for international work. It answers the question: If we fight, whose rules apply?

1. Governing Law

The Governing Law clause states which country’s or state’s laws will be used to understand and enforce the contract. As the agency, you should always choose the laws of your home state or country.

• Simple Clause: “The Agreement will be under the laws of the State of Texas, United States of America, and it will be interpreted in regard to the conflict of law principles.”

2. Venue (Jurisdiction)

The Venue clause states where any lawsuit or arbitration must take place.

• Simple Clause: “Any disputes arising under or related to this Agreement shall be settled exclusively in the state or federal courts located in [City, State], and both parties agree to this location.”

When you take the laws of New York and say that the venue is London, you make a confounding tangle. The judge in London will be forced to take time to learn New York law so that he could hear you. It is always best to select the laws and the court system of one place (preferably the home base). Dive deep into: How to Draft an Application for Service of Summons Through Newspaper Publication

Final Thoughts and Next Steps

There should not be fear of writing a service agreement, but creating trust by having rules that are straightforward. Your contract in international business with clients should be a legal roadmap to success.

Check this guide and update your existing template of service agreement.

Remember these three points:

1. Clarity is King: Use the simplest possible language in the SOW.
2. Define Currency: Remove all doubt about which money you are using and who pays the exchange fees.
3. Name Your Home: Ensure that the Governing Law and Venue is addressed towards your home state or country.

When negotiating a deal beyond the 10,000 dollars mark, then you need to have a local attorney weaving through your final model. Feel free to connect with me for deeper into how to write small but legally effective confidentiality clause or the tax question of a particular country such as Canada or the UK.