Service Agreements in Nigeria: Key Things Every Business Should Know

Services are not physical products; they are actions performed for the benefit of another party in exchange for value. If you hire a software developer or a tailor, what ensures the service will be delivered as promised? This is where service agreements come in.

What is a Service Agreement?

A service agreement is a legally binding contract between a service provider and a client. It outlines the terms, scope, payment, and expectations of the service.

While service agreements can be oral, it is strongly recommended that they be written, as written contracts are easier to enforce in court.

It is important to distinguish a service agreement from an employment contract:

• Service agreements are typically business-to-business or client-to-service provider contracts.

• Employment contracts govern employer-to-employee relationships.

Key Components of a Service Agreement

1. Scope of Service – Clearly defines the services to avoid ambiguity and disputes.

2. Duration & Termination – States how long the agreement will last and under what conditions it can be terminated.

3. Payment Terms – Specifies the amount, method, and timing of payments.

4. Obligations of Each Party – Clarifies the responsibilities of both provider and client.

5. Dispute Resolution – Outlines mechanisms such as mediation or arbitration.

6. Confidentiality & Intellectual Property – Protects sensitive information and ownership of creative/technical work.

7. Governing Law & Jurisdiction – Determines the applicable laws and courts.

Legal Basis in Nigeria

Like all contracts, service agreements must satisfy the elements of a valid contract: offer, acceptance, consideration, intention, capacity, legality, and certainty.

Relevant Nigerian laws and regulations include:

• Contract Law (common law principles received in Nigeria)

• Companies and Allied Matters Act (CAMA) for service-providing businesses

• Federal Competition and Consumer Protection Act (consumer protection)

• Sector-specific regulations (e.g., legal, medical, telecoms, consultancy services)

Case Reference:
In Attorney General of Bayelsa State v. Odok (2024), the Supreme Court upheld a consultancy agreement between a law firm and the Bayelsa State Government. The court affirmed that service agreements are binding and enforceable, even where a business name is used provided the real legal entity is identifiable. Importantly, a party cannot enjoy the benefits of a service contract and later deny its validity.

Why You Need a Service Agreement

1. Protects both the provider and the client.

2. Provides legal remedies in case of default.

3. Builds professionalism and trust in business relationships.

4. Avoids the pitfalls of oral promises (see our article on oral contracts in Nigeria).

Conclusion

For service providers and clients alike, relying on handshakes is risky. A written service agreement ensures clarity, enforceability, and protection under Nigerian law.

At Maverick Solicitors, we draft clear, practical, and enforceable agreements tailored to your business needs.