Contract or services: how to choose the type of contract and what should be included in it

The difference between a service and a contract

Many entrepreneurs and ordinary people often confuse two concepts - paid provision of services and contracting. Because of this, you can mistakenly conclude the wrong contract, and as a result, get the wrong result that was needed. Such confusion arises due to the lack of a clear distinction between services and work in legislative acts. Therefore, it is best to figure out what is what.

First of all, it is necessary to distinguish between the terms provision of services and performance of work. The first means a certain process that does not guarantee a result, in the second - on the contrary, the result of the work performed is important

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Simply put, the result of a contract to perform a certain type of work is ultimately what you can see with your own eyes (and sometimes touch with your hands). This can be sold, accumulated and made a profit from it.

A service is a certain activity that pursues a certain goal, but does not have a material result.

. Here the process itself is the basis, but what comes out of it fades into the background.

For example, activities in the field of communications, medicine, training, auditing, and tourist services are clearly services (clause 2 of Article 779 of the Civil Code of the Russian Federation). But, on the other hand, the following cannot be considered services:

• technological, research and experimental activities;
• transportation of goods and people;
• construction of any facility;
• opening deposits and bank accounts;
• storage of property;
• property management on a trust basis;
• carrying out various assignments.

Sometimes, one transaction can be simultaneously regarded as both a service and a contract

(for example, vehicle repairs).

Thus, for the construction of a residential building, a contract is concluded, and for its maintenance, a contract for the provision of paid services is concluded (the result is visible, but it is inseparable from the object). A corresponding agreement is signed for the provision of legal services, but if this is a one-time event, then it is more advisable to conclude a contract agreement.

Contract or services: how to choose the type of contract and what should be included in it

Civil legislation regulates relations related to the performance of work and the provision of services in different ways.
For the former, a contract is intended, and for the latter, a contract for the provision of paid services. But at the same time, the Civil Code of the Russian Federation (unlike the Tax Code of the Russian Federation) does not contain a clear definition of the terms “work” and “service”. So how do you determine what type of contract to enter into in a particular situation? And what happens if you draw up the wrong contract? The answers to these questions are in our article today 10/26/2018 Author: Alexey Krainev

Work or service: read the Civil Code of the Russian Federation

As stated in paragraph 1 of Article 702 of the Civil Code of the Russian Federation, under a contract, one party (contractor) undertakes to perform certain work on the instructions of the other party (customer) and deliver its result to the customer, and the customer undertakes to accept the result of the work and pay for it. The essence of the work that may be the subject of a contract is specified in paragraph 1 of Article 703 of the Civil Code of the Russian Federation. It says that a contract is concluded for the manufacture or processing (processing) of a thing or for the performance of other work with the transfer of its result to the customer.

In turn, under a contract for the provision of paid services, the contractor undertakes, on the instructions of the customer, to provide services (perform certain actions or carry out certain activities), and the customer undertakes to pay for these services (clause 1 of Article 779 of the Civil Code of the Russian Federation). As we see, in this case the subject of the contract is the commission of actions or the implementation of activities. Examples of such actions (such activities) are given in paragraph 2 of Article 779 of the Civil Code of the Russian Federation. These can be communication services, medical, veterinary, auditing, consulting, information services, training services, tourism services and others.

So, the main difference between the subjects of a work contract and a contract for the provision of paid services lies in the essence of the main responsibility that the contractor assumes. If we are talking about the fact that the customer must receive from the contractor a certain final, and, as a rule, material result of the activity (a document, a building, a fence, a pit, a working car, etc.), and the activity itself is only a necessary condition for formation of such a result, then in terms of the Civil Code of the Russian Federation we are talking about work. And, therefore, relations to achieve or create such a result and transfer it to the customer must be regulated by a contract.

If the essence of the performer’s obligation lies directly in the commission of any actions, the result of which does not exist separately from them and is not transferred to the customer, then the emerging relations between the parties must be regulated by a contract for the provision of paid services.

Thus, to correctly select the type of contract in each specific situation, the parties only need to ask themselves one question: what exactly will the customer pay the contractor for. If the receipt of remuneration is associated with the transfer of some result of activity to the customer, and without this result the activity of the performer itself is not paid in any way, then we are talking about work and a contract.

If the very fact of performing any activity (performing a specific action) is paid for, and not the result obtained, then we are talking about a contract for the provision of paid services. For example, such an agreement formalizes participation in a court hearing or holding a seminar.

How the Tax Code defines the terms “work” and “service”

Tax legislation contains clear definitions of the terms in question. Thus, according to paragraph 4 of Article 38 of the Tax Code of the Russian Federation, work for tax purposes is recognized as activity whose results have a material expression and can be implemented to meet the needs of an organization and (or) individuals.

And a service for tax purposes is an activity, the results of which do not have material expression, are sold and consumed in the process of carrying out this activity (Clause 5 of Article 38 of the Tax Code of the Russian Federation).

Differences between contract and service contracts

Correctly determining the type of contract is of great practical importance. The fact is that contracts for the provision of services and services differ significantly in the scope of the rights and obligations of the parties. Therefore, an error in the qualification of a contract can lead to serious consequences.

Execution of the contract by third parties

Thus, under a work contract, the performer (contractor) has the right to involve third parties to perform the work, unless the contract directly states that he is obliged to perform the work personally (Clause 1, Article 706 of the Civil Code of the Russian Federation). But the contractor under a contract for the provision of paid services does not have such a right. He can involve third parties in the provision of services only if this is expressly permitted in the contract itself (Article 780 of the Civil Code of the Russian Federation). This means that if the parties mistakenly entered into a work contract instead of a contract for the provision of services, and in this case the services are actually provided by a third party, this may become the basis for depriving the contractor of the right to remuneration.

Let's give an example. Let’s assume that the parties have formalized a contractual obligation to hold a seminar for the customer’s employees. In this case, the contractor acted only as an intermediary, and directly attracted another organization with personnel with the necessary qualifications to conduct the seminar. However, this possibility was not specified in the contract with the customer. In such a situation, if a dispute arises, the court will re-qualify the contract. As a result, the contractor may be left without remuneration, since under the terms of the contract and taking into account the provisions of the Civil Code of the Russian Federation on an agreement for the provision of paid services, he did not have the right to attract a third party.

Unilateral refusal to fulfill the contract

Also, the two agreements under consideration differ in terms of possible unilateral refusal of the transaction. Under a contract, only the customer has this right. He may, at any time before delivery of the results of the work, refuse to fulfill the contract without explanation, having paid for the part of the work already completed by the contractor (Article 717 of the Civil Code of the Russian Federation). As for the contract for the provision of paid services, it can be terminated by refusal of its execution by either party at any time. In this case, the customer who has canceled the contract pays the contractor the expenses actually incurred by him (Clause 1 of Article 782 of the Civil Code of the Russian Federation). And if the contractor refuses the contract, then he compensates the customer for the associated losses (Clause 2 of Article 782 of the Civil Code of the Russian Federation).

We also note that the customer has the right to refuse the contract if the contractor performs the work so slowly that he clearly does not meet the deadlines established by the contract (Article 715 of the Civil Code of the Russian Federation). But the service agreement does not provide for such an opportunity for the customer.

Preparation of “closing” documents

There are other differences too. For example, Article 720 of the Civil Code of the Russian Federation requires that the transfer of work results be documented in a separate document (act or other similar document). If this document is missing, then there is no reason to believe that the contractor has fulfilled his duties, and, therefore, he does not have the right to receive remuneration (resolution of the Arbitration Court of the Central District dated April 2, 2018 No. F10-551/2018 in case No. A84-228 /2017). The service agreement, on the contrary, does not require the execution of any “closing” documents (resolution of the Arbitration Court of the Central District dated 04/09/18 No. F10-1299/2018 in case No. A23-140/2017). This means that the customer’s obligation to pay for services does not depend on whether the parties have drawn up an act (another similar document) or not. The opposite rule may be provided for in the contract itself (resolution of the Arbitration Court of the East Siberian District dated July 18, 2018 No. F02-3133/2018 in case No. A58-7306/2017).

What must be included in contract and service contracts?

There are also differences in terms of the content of contracts and paid services. Thus, in the contract it is necessary to establish criteria that make it possible to determine a specific type of work (clause 1 of Article 702 of the Civil Code of the Russian Federation), as well as conditions for the initial and final dates for the completion of work (clause 1 of Article 708 of the Civil Code of the Russian Federation).

As for the contract for the provision of services for a fee, in order for it to be considered concluded, it is enough to fix the conditions defining the specific type of service (clause 1 of Article 779 of the Civil Code of the Russian Federation). However, it must be taken into account that industry laws may provide for other rules for drawing up an agreement for the provision of paid services. For example, contracts for the provision of tourism services (agreement for the sale of a tourism product) must contain the information listed in Article 10 of the Federal Law of November 24, 1996 No. 132-FZ “On the Fundamentals of Tourism Activities in the Russian Federation.” In particular, this includes information about the tour operator and the amount of financial security for the tour operator’s liability, information about the tour operator’s liability insurance agreement or a bank guarantee, information about the tourist and the price of the product (in rubles), and other data.

As we can see, as a general rule, the list of mandatory conditions for a contract is wider than for a contract for paid services, since it includes an indication of the start and end dates for the work. This means that if the parties mistakenly entered into a service agreement instead of a work contract and did not specify the deadlines for the completion of the work in the agreement, then the agreement they executed simply will not have legal force. Indeed, according to the rules of the Civil Code of the Russian Federation, contracts are interpreted not by name, but by the essence of the relations arising between the parties (clause 3 of Article 421, Articles 422 and 431 of the Civil Code of the Russian Federation). Therefore, after establishing the fact that work is performed under the contract, and not services are provided, it will be reclassified as a work contract. A contract that does not contain terms for the completion of work is considered not concluded. Consequently, the contractor will not be able to demand the remuneration provided for in such an “agreement,” and the customer will not be able to demand the transfer of the corresponding result to him. In addition, such an “agreement” cannot serve as documentary evidence of expenses for either party, since legally it does not exist.

How to indicate the price of work or services

But the price condition, as a general rule, is not mandatory either for a contract or for a contract for the provision of paid services. If you draw up an agreement without establishing a fee for work or service, the customer will have to pay the contractor the amount at which similar work or services are usually valued (clause 3 of article 424, clause 1 of article 709 of the Civil Code of the Russian Federation, clause 54 of the resolution of the Plenum of the Supreme Court RF No. 6, Plenum of the Supreme Arbitration Court of the Russian Federation No. 8 dated 07/01/96). It is clear that this approach to determining the price is fraught with disputes, so you should not skip this point when drawing up a contract.

When formulating a condition on the cost of work or services, it is necessary to clearly state whether the price includes VAT. The fact is that if this issue is missed, then the contractor will have the right to collect tax in excess of the contract price (clause 15 of the Review of the practice of resolving disputes under construction contracts, approved by information letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated January 24, 2000 No. 51).

And when concluding contracts for the provision of legal services related to the conduct of legal cases, you need to consider the following. Neither the customer’s obligation to pay for services, nor the amount of such payment, nor the procedure for determining the price of services can depend on the decision made by the court (resolution of the Constitutional Court of the Russian Federation dated January 23, 2007 No. 1-P and the Presidium of the Supreme Arbitration Court of the Russian Federation dated December 2, 2003 No. 11406/03) . In particular, the cost of services under such an agreement cannot be established as a percentage of the amount collected through the court (resolution of the Arbitration Court of the West Siberian District dated March 30, 2018 No. F04-334/2018 in case No. A46-6600/2017).

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Differences between treaties

Without going into details, the structure and process of drawing up both documents are similar. In both there are two parties - the customer and the performer, actions are carried out for a certain fee.

However, there are several key differences

:

• as a result of concluding an agreement for the provision of paid services, it is impossible to obtain something tangible, but if it is a contract, some material result is guaranteed;
• when contracting, it is not prohibited to involve third parties (subcontractors), and when providing services, all the work must be done by the contractor;
• the contract must specify the payment period;
• The customer must accept the work from the contractor by drawing up an acceptance certificate; for the service performed, this is possible only by mutual agreement of the two parties.

Since the contract is bilateral in nature, both parties (customer and contractor) have equal rights and obligations. The general contractor is responsible for the actions of subcontractors

, and for failure to fulfill obligations on the part of the customer, the general contractor is responsible to the subcontractor.

Based on this, the law regulates in different ways the algorithm for drawing up contracts and resolving possible controversial issues regarding them.

Provision of services

The basic rules are contained in articles 779-783 of Chapter 39 of the Civil Code. According to the provisions of these articles, the contractor must provide services to the customer in the form of certain activities or specific actions. The customer, in turn, is obliged to pay for these services.

The subject of the contract may be therapeutic or preventive measures, financial and legal analysis of the company’s activities, tourist services, and so on. The law does not provide for separate rules on the form of this agreement. Basically, transactions are concluded in ordinary written form. But in some cases, notarization is required. These include, for example, transactions between legal entities or those where one of the parties is an individual. The contract is considered concluded when agreement is reached on all terms. At the same time, failure to comply with the written form makes it impossible to confirm the transaction in the event of controversial situations.

The parties are the customer and the contractor. If customers can be both individuals and legal entities, then the performers must be properly registered with the tax service and be legal entities or individual entrepreneurs. To carry out certain types of activities, a license or other permits may be additionally required.

Services are provided according to the customer's instructions. There are no special requirements in this case provided by law. However, in practice, the contract does not stipulate specific tasks. But they can be issued in the form of an application.

How to draw up a contract

Chapter 37 of the Civil Code of the Russian Federation is devoted to the execution of a contract. And the requirements for their form can be found in Article 432 of the Civil Code of the Russian Federation

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The contract is drawn up so that it contains the following details:

:

• Title of the document;
• information about each party (company - its name and registration data, individual entrepreneur - initials, certificate of right to operate, individual - passport details, SNILS and TIN numbers);
• the reason for concluding the contract (format of the actions performed);
• bilateral rights and obligations;
• the amount of monetary remuneration for the result of the work, compensation for the contractor’s expenses incurred (the possibility of issuing an advance is discussed). It is also indicated how the payment will be made (cash or non-cash);
• conditions for delivery and acceptance of work, as well as deadlines for their completion;
• conditions for terminating the contract in case of failure to fulfill the prescribed points and the amount of the penalty for this;
• ways to resolve conflict situations if they arise;
• general provisions;
• details, signatures and seals of both parties.

Contract

Let's move on to the next document. Having studied the main provisions of the contract for the provision of paid services, the differences in the contract become obvious. Let's find out what the features of this concept are. It means carrying out relevant work during which something is created or processed. In the future, it becomes the property of the customer.

If we do not consider the work of state and municipal services, the Civil Code of the Russian Federation provides for three types of relevant contracts. These include in a row:

1. Domestic. In this case, the contractor must perform certain work. Basically, they relate to repairs and minor construction (painting walls, installing parquet, roof repairs, etc.).
2. Building. The contract is concluded for more serious work. In accordance with it, the customer must provide the necessary conditions, and after completion of construction, accept the work and make payment.
3. To carry out design and survey work. In accordance with the contract, the contractor must draw up technical documentation or carry out surveys, and the customer must accept and pay for the work. Examples include text and graphic materials to determine design and architectural features for subsequent construction; improvement of plots of land, etc.

Terminology and types of contracts used

Determining the supplier, contractor, performer is an important point when drawing up relevant contracts, since in each case different legal norms are applied and, accordingly, different levels of responsibility of the parties. The initial way to determine a supplier, contractor, performer is to carefully study the concepts themselves:

• A supplier is any organization or individual that supplies specific goods or services to customers.
• A contractor is an individual or legal entity performing work in accordance with the customer’s instructions.
• A contractor is a person who, under a contract, undertakes to perform certain work or provide a service.

At first glance, all the concepts are very similar and overlap in many ways. How can you determine what the difference is between them? The surest way to identify a supplier, contractor, performer is to determine what type of contract he works under.

The supplier (seller) carries out its activities under a supply agreement; this is one of the types of purchase and sale agreements (Article 506 of the Civil Code of the Russian Federation). This type of agreement is concluded most often when it comes to the transfer for a fee within a specified period of any goods used in production, business or other activities. We are not talking about personal, home use here.

The contractor works under a work contract (Article 702 of the Civil Code of the Russian Federation). It provides for paid performance of specified work with the obligatory transfer of the result of its activities to the customer.

The contractor is guided by an agreement for the provision of paid services (Article 779 of the Civil Code of the Russian Federation), according to which he is obliged to perform certain actions in the interests of the customer or carry out certain useful activities in exchange for financial compensation.

What is the difference between a contract and a supply contract and an employment agreement?

According to the requirements of Article 506 of the Civil Code of the Russian Federation, the supplier is obliged to transfer the goods produced or purchased by him to the buyer, who, in turn, must accept the goods and pay for them. However, despite all the external similarities between contracting and supply, we are talking about fundamentally different relationships and objects of the transaction.

Delivery, according to Article 510 of the Civil Code of the Russian Federation, involves the shipment of goods, that is, a varied assortment, usually standard items that are prepared in advance for sale. In this case, the subject of the transaction is precisely these things, and the degree of participation of the supplier in their production does not matter for the transaction. When contracting, the contractor is required to do work aimed at altering, repairing or manufacturing a specific, often individual, thing (building a house, renovating an apartment, etc.).

Labor relations can also be similar to a contract. Moreover, in practice, there are even cases of employers deliberately disguising labor relations as contracts in order to save money by not paying contributions for employee insurance. The list of differences between an employment agreement and a contract is directly stated in Article 15 of the Labor Code of the Russian Federation. The main thing is that the employee undertakes to personally perform systematic work within the framework of his profession (qualification) in the interests and under the control of the employer. In this case, the employee receives payment for the work performed, calculated on the basis of salary or tariff rate.

***

Summing up the results of the analysis, we note that making a clear distinction between a contract and contracts that are externally similar to it will allow practitioners to quickly understand the legal meaning of each of the transactions considered and correctly apply the norms of the Civil Code of the Russian Federation in relation to them.

Works and services

The main concepts in both agreements are “. Article 128 of the Civil Code of the Russian Federation states that they are objects of civil rights. These are interrelated concepts both in theory and in practice. Article 783 of the Civil Code of the Russian Federation states that all provisions on contracts are used when providing services. If this does not contradict the norms provided for the contract for the provision of paid services (Articles 779-782 of the Civil Code of the Russian Federation).

However, due to the fact that the difference between a work contract and a contract for the provision of services in relation to their objects is not specified in the Civil Code, different interpretations appear, which are used not only by theorists, but also by judges when making decisions.

Examples

The above difference may seem simple. However, in practice many questions arise. Thus, the result of the provision of services can also be a thing that can be touched, for example, a claim prepared by a lawyer, a diploma of higher education and other cases. Despite the material nature of the result, all judges recognize such contracts as the provision of services.

For example, the court in case No. F04-425/2009 (20193-A45-39) found that the agreement in question could not be recognized as a contract. Its essence was as follows. The appraiser had to evaluate the property within a specified time frame for a certain amount of remuneration. After this, he undertook to provide a work acceptance certificate. The court explained its decision by saying that the subject was the assessment, and not its result. Therefore, the contract was recognized for the provision of services.

A question may arise regarding contracts under which the contractor is obliged to perform certain actions. And if specific results are achieved, then pay more money than the amount that was initially provided. In this regard, you can consider a contract for the provision of medical services. It can provide both treatment and cure. The second case includes the first. However, treatment does not always bring the desired result.

Recovery turns the agreement into a regular service contract. In this case, it may contain a double amount. Then the smaller one is in the action, and the double one is paid when a positive result is achieved. If the terms of the contract stipulate only the “effect”, then you should use paragraph 3 of Article 424 of the Civil Code of the Russian Federation, according to which calculations are carried out at regular prices.

Distinctive features of a contract for paid services

Two different contracts.

It should be noted that this type of agreement is very similar in its main features and characteristics to a contract agreement.

According to the definition of such an agreement established by civil law, the contractor agrees to provide the customer with the service provided for in the agreement, and the customer accepts and transfers money for it.

The parties to the agreement are:

1. Executor. An enterprise, officially registered entrepreneur or individual with the strength, means and qualifications to provide services. Often, special admission, permission or license is required to provide certain services;
2. Customer. A company, individual entrepreneur or individual who needs to provide a service.

This agreement is similar to a contract transaction in that the contractor performs specific actions at the request of the customer for a set fee. Accordingly, in some matters, the parties to the agreement may use the rules on contract transactions or the rules on household contracts.

By its nature, a service agreement is considered:

• not free. The contractor performs what is required of him for a fee specified in the agreement;
• mutually binding, that is, generating legal relations after its conclusion;
• bilateral.

The special terms of this agreement include:

• subject of the contract. The parties must clearly understand the characteristics of the ordered service and the expected positive effect from receiving it. The point is that the service is not considered a material object and neither is the effect from it. For example, teaching a child dancing or gymnastics. The material expression of such a service cannot be identified, but the expected effect will be expressed in increased flexibility, plasticity of the child, strengthening of muscles;
• deadlines. The agreement sets the final and initial dates, and sometimes intermediate dates for the stages.

Both transactions are similar not only in their content, but also in the methods of resolving controversial issues.

Employment contract and contract

These two types of transactions also have similar features. But we can also note the differences between employment contracts and work contracts. Conflicts may arise in the future due to a lack of understanding of the nuances of these agreements. Therefore, it is necessary to distinguish between two concepts. This is easy to do by considering the scope of regulation, the nature of legal relations, the duration of the work, payment, performers, and rest time. Let us express the difference between an employment contract and a work contract in the table of differences: