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Contract for Services – Part 1: What Is It and What Are Its Characteristics?

Whenever a service is offered, either a contract for services or a work contract is meant. This differentiation is very important, as it involves applying various legal norms, e.g. with regard to termination, defects or compensation. In this series of articles, STARTUPS.CH is therefore going to explain what the contract for services is about. This first article reveals what the contract for services is and where it can be applied.

 

What Is the Contract for Services?

The contract for services is governed by article 394 et seq of the Swiss Civil Code. It reads that under the contract for services the contractor is obliged to perform duties or services assigned thereto. In general, it can be said that contracts for services apply to all services where the outcome cannot be guaranteed beforehand. In the contract for services, it is taking proper action that is owed, but not a specific work such as a painting. If it is a piece of work that is owed, a work contract is in place. Medical examinations, legal assistance or marketing measures are all examples of contracts for services.

Scope of the Contract for Services

It is always recommendable to precisely define the scope of a contract for services. This will not only let avoid any uncertainties, but also prevent disputes. However, it is often impossible for the scope to be exactly specified in advance. Due to the very nature of the contract for services, it is not clear at the beginning, when e.g. you discuss with your event manager how a corporate anniversary should look like, what exactly is going to be arranged. If nothing is agreed, the scope is predetermined by the type of the work to be done, which often lets only outline the specifics. In general, it can be said that the more know-how the contractor has, the more discretion he or she has. The customer’s hypothetical will has always be taken into account, however. Furthermore, the contractor is obliged to act diligently and loyally (article 398 clause of the Swiss Civil Code).

Personal Performance

Basically, the contract for services should be performed by the contractor personally (article 398 clause 3 of the Swiss Civil Code). The Contractor may depart from that if it has been agreed so. In many cases such agreement is implied. If, due to its nature, a contract for services cannot be performed by a single person or work distribution is the norm in a given industry, this can be assumed through implication. For a contract for services under which a comprehensive software solution is to be developed, the customer (depending on the lead time) cannot expect this to be done by a single person. In particular, personal performance is advisable where unique quality and the contractor’s prestige are very important. This is often the case where, like with lawyers, it is the contractor who is central to the project.

 

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