What Is a Personal Service Contract?

Contracts are important tools to protect the interests of both parties to business transactions. They can be used to buy goods and services or to secure the services of freelancers and independent contractors. One special type of contract is a personal services contract.

A personal services contract retains the services of an individual who possesses skills or talents not easily substituted by someone else. Individuals who may be retained by a personal service contract include writers, artists, musicians, professional athletes and other professionals with rare skills or talents. The fees paid for the services are often substantially higher than other possible substitutes given the individual's specialized talents and skills.

A small bakery makes gourmet muffins. The company decides to retain the services of a famous baker on a popular cooking cable network to endorse the muffins at a marketing event. The contract provides that the celebrity, and no one else, is to appear at the event and give the endorsement. The celebrity baker must appear and perform. She cannot send any other person to do the endorsement.

A personal services contract must be enforceable. It must include an offer, an acceptance of the offer and consideration -- something of value that is exchanged between the parties. The bakery in the above example gives consideration in the form of a payment of money to the celebrity baker in exchange for appearing and giving the endorsement. Each party must have legal capacity to contract, and the contract must relate to a legal purpose. The contract does not necessarily have to be in writing, but a written contract helps to protect both parties.

While a court will usually not force the service provider to work, she may have to pay damages if she doesn't fulfill the contract. A court may enjoin, or prevent, the service provider from providing the same service to another. For example, if the celebrity baker in the example decided to breach the contract because of a better offer in New York on the same day, a court may enjoin the celebrity from performing in New York.