What to put in a service contract (and what to leave out)

A contract is not paperwork you do to look professional. It is the record of what you and the customer agreed to, written down before anyone is angry. When a job goes sideways, the contract is what you both read, and what a judge reads if it gets that far. Most of the disputes contractors end up in are not about bad work. They are about what was supposed to be included, when it was supposed to be done, and what it was supposed to cost.

This guide lists what a residential service contract usually covers, the clauses that cause trouble, and where federal law sets a floor. It is general information, not legal advice. Contract law, home improvement rules and required notices are set mostly by the states, and several states regulate home improvement contracts in detail. Use this as a checklist, then pay a local attorney to review your template. Our state guides point to the agencies in each state.

The basics every contract needs

• Who. Your legal business name exactly as registered, address, phone and any license number your state requires on contracts. The customer's full name, the service address and the billing address if different. If the customer is a landlord, property manager or HOA, the name of the entity and the person authorized to sign for it.
• Date. When the contract was signed. It matters for deadlines, including any cancellation period.
• Signatures. Both parties. Electronic signatures are routine now; make sure your system records who signed, when, and which version of the document they saw.

How detailed should the scope of work be?

More detailed than feels necessary. The scope is where most disputes start. "Clean house exterior" means one thing to you and another to a homeowner who assumed it included the windows, the deck and the fence.

A good scope says:

• What you will do, in specific terms: areas, surfaces, quantities, materials, brands or grades where they matter.
• What is excluded. This list prevents more arguments than any other line. Painting the trim, hauling away the old unit, patching drywall after the electrician's cut, the second coat, the north side of the fence. If you are not doing it, say so.
• Assumptions. Conditions your price depends on: water and power available on site, normal access, no hidden rot behind the siding. Say what happens if an assumption turns out to be wrong.
• Customer responsibilities. Move cars, secure pets, clear the work area, provide gate codes, be reachable for decisions.

Attach photos from the estimate visit when they help. A picture of the stain you said you could not guarantee to remove is worth a page of wording. If you sell in tiers, keep the scope of each option separate and clear; our guide to good, better, best quotes shows how.

Price, deposits and payment terms

State the price and how it is built: a fixed price for the defined scope, a per-unit price (per window, per linear foot, per visit), or time and materials with a rate and an estimate. Then spell out how and when you get paid:

• Deposit. The amount and what it is for, such as ordering materials. Some states limit deposits on home improvement work or regulate how they are handled; check before you set yours.
• Progress payments on longer jobs, tied to milestones the customer can see, not to dates.
• Final payment. When it is due (on completion, on receipt of invoice, within a set number of days) and how it can be paid.
• Card fees and late charges. If you add a card surcharge or a late fee, state it in the contract. Both are regulated, and the rules vary by state and by card network.
• Taxes. Whether the price includes sales tax, if your service is taxable where you work. See sales tax on services.

A clear payment section is the best collection tool you have. If you ever have to chase a bill, our guide to collecting unpaid invoices starts with what the contract says.

Change orders: the clause that saves the most money

Customers change their minds mid-job. Crews find surprises. Both are normal. The problem is extra work done on a handshake and billed later to a customer who remembers it as a favor.

The contract should say that changes to the scope must be agreed in writing, with the price and any schedule impact, before the work is done. Then follow it every time. A text or e-signed change order with a line description and price is enough for most small changes. If you discover hidden damage, stop, photograph it, explain the options and get approval before you open the wall further.

Schedule, delays and access

Give a start window and an expected duration rather than promises you cannot control. Say what can push the schedule: weather, material delays, permit or inspection timing, customer changes, and the customer not providing access. For outdoor trades, state your weather policy plainly. For recurring service, state the visit frequency and what happens when a visit is skipped for weather or access.

Warranty, insurance, permits and cleanup

• Warranty. What you stand behind, for how long, and what voids it. Keep it short and specific. Our warranty policy guide covers how to write one, including federal rules if you warrant products.
• Insurance. A line stating you carry general liability, and workers' compensation where required, with a certificate available on request.
• Permits. Who pulls them and who pays. If a permit is required, it should be pulled under the right license, usually yours.
• Cleanup and disposal. What you haul away and what stays. Disposal fees for old equipment or debris belong in the price or as a listed extra.
• Property protection. What you will protect, and what the customer should move. Mention anything you have seen that is already damaged.

Cancellation rights and the FTC Cooling-Off Rule

If you sell at the customer's home, federal law may give the customer the right to cancel. Under the FTC's Cooling-Off Rule, a buyer can cancel certain sales made at home, at work or at a temporary location, and the window closes at midnight on day three, counting business days from the sale. For sales at the buyer's home, it applies to purchases of $25 or more; for temporary locations, $130 or more. Saturdays count as business days; Sundays and federal holidays do not.

When the rule applies, the seller must give the buyer a copy of the contract or receipt and two copies of a cancellation form, in the same language used in the sales presentation. If the buyer cancels, the seller has 10 days to refund payments. The rule has exceptions, including sales made at your permanent place of business, sales by phone, mail or online, and purchases needed to meet an emergency, with specific conditions. Read the FTC's page for the details that apply to your sales process.

Many states have their own home solicitation or home improvement cancellation rules, which can be broader than the federal rule. Check your state before you write your cancellation clause. Separately, decide your own policy for customers who cancel after any legal period: what deposit is refundable, and what happens if materials were special-ordered.

Clauses to leave out

• Review gag clauses. The Consumer Review Fairness Act makes it illegal to use form contracts that bar or restrict customers from reviewing your business, charge a fee for a review, or take ownership of review content. The FTC's guidance explains what is still allowed.
• Waivers you cannot enforce. Broad clauses claiming you are never responsible for anything can be unenforceable and make the customer distrust everything else you wrote.
• Legal language you do not understand. If you cannot explain a clause to a customer in one sentence, ask your attorney what it does or remove it.
• Copied templates from another state. Required notices differ. A template from a national website may miss what your state requires and include what it prohibits.

Making the contract easy to sign and easy to find

A contract only works if it is signed before the work starts and can be found when there is a question. Build your standard terms into your quote so approval and signature happen in one step on the customer's phone, and store the signed version with the customer record and job photos. A CRM with e-signed quotes keeps the signed scope, change orders and payment history together, so anyone in the office can answer "what did we agree to?" in seconds. For private jobs where payment rights matter, read our guide to mechanics liens as well; some states require specific lien notices in or alongside the contract.

Frequently asked questions