Service agreement in Kenya: Template, Key Clauses and Local Law (2026)

What is a service agreement in Kenya, and what does the law require? A service agreement in Kenya is a business-to-business contract under which one party (the provider) supplies services to another (the customer) for payment. It sets out the scope of work, service levels, charges, payment, liability and how the relationship ends. A master service agreement (MSA) is a service agreement built to last: the parties sign it once, then add specific pieces of work through separate statements of work, each governed by the same core terms. Kenya has no single service agreement statute. The contract rests on the Law of Contract Act (Cap 23) and the common law, which require the usual elements of a valid contract: offer, acceptance, consideration, intention to create legal relations, and certainty of terms. Two local points matter in practice. First, withholding tax: a customer paying for professional, management or certain contractual services to a resident provider is generally required to deduct withholding tax at source, commonly 5 percent, and remit it to the Kenya Revenue Authority through iTax, with VAT potentially applying on top, so the agreement should be clear about who bears what. Second, data protection: where the provider processes personal data for the customer, the Data Protection Act 2019 applies, and the agreement should set out the provider's duties as a processor and may require the provider to be registered with the Office of the Data Protection Commissioner. This article is general information, not legal advice. Tax treatment and sector rules turn on the facts, so confirm the position with a Kenyan advocate or tax adviser. Last verified October 2026. ## A Kenya service agreement template you can copy ```

SERVICE AGREEMENT This Agreement is made on [DATE] BETWEEN: [CUSTOMER NAME], of [address] ("Customer") AND [PROVIDER NAME], of [address] ("Provider") 1. SERVICES The Provider will supply the services described in Schedule 1 (the "Services") with reasonable skill and care. [For an MSA: individual work is ordered through Statements of Work that incorporate these terms.] 2. TERM AND RENEWAL This Agreement begins on [START DATE] and runs for [N] [months / years], renewing for further periods of [N] unless either party gives [N] days notice not to renew. 3. SERVICE LEVELS The Provider will meet the service levels in Schedule 2. [Set out any service credits or remedies for failing to meet them.] 4. CHARGES, TAX AND PAYMENT The Customer will pay the charges in Schedule 3. The Customer will deduct withholding tax at the applicable rate and remit it to the Kenya Revenue Authority, giving the Provider the certificate. Charges are [exclusive / inclusive] of VAT. Invoices are payable within [N] days. [Interest on late payment.] 5. CUSTOMER OBLIGATIONS The Customer will give the Provider the access, information and cooperation reasonably needed to supply the Services. 6. INTELLECTUAL PROPERTY Each party keeps its pre-existing IP. IP created specifically for the Customer under this Agreement [is assigned to the Customer on payment / is licensed to the Customer], as set out in the relevant Schedule. 7. CONFIDENTIALITY Each party will keep the other's confidential information secret and use it only to perform this Agreement. 8. DATA PROTECTION Where the Provider processes personal data for the Customer, it acts on the Customer's instructions, applies appropriate safeguards, and complies with the Data Protection Act 2019. 9. WARRANTIES AND LIABILITY The Provider warrants it will perform with reasonable skill and care. Liability is [capped at the charges paid in the prior [N] months], excluding indirect loss, subject to losses that cannot be excluded by law. 10. TERMINATION Either party may terminate for material breach not remedied within [N] days, or on insolvency. The Customer pays for Services properly delivered up to termination. 11. DISPUTE RESOLUTION The parties will first attempt negotiation, then [arbitration in Nairobi under the Arbitration Act / the courts of Kenya]. 12. GOVERNING LAW This Agreement is governed by the laws of Kenya. Signed: For the Customer: __________ For the Provider: __________ Name / designation / date Name / designation / date

- **Service levels (clause 3).** If the services must perform to a standard, for example uptime or response times, set measurable service levels and say what happens when they are missed, such as service credits.
- **Charges, tax and payment (clause 4).** Say whether charges include VAT and how withholding tax is handled, so there is no argument about gross versus net. A resident provider of professional or management services is commonly subject to 5 percent withholding. Set clear payment terms and a late payment remedy.
- **Intellectual property (clause 6).** Separate each party's existing IP from anything created for the customer. Decide clearly whether new IP is assigned or licensed, and tie an assignment to payment.
- **Data protection (clause 8).** If the provider handles personal data for the customer, the Data Protection Act 2019 applies. Record the provider's duties as a processor, including acting on instructions and applying safeguards, and consider whether registration with the Data Protection Commissioner is required.
- **Liability (clause 9).** A fair cap, usually linked to the charges, with indirect loss excluded, keeps risk proportionate. Some liabilities cannot be excluded by law, so carve those out. ## Red flags to watch for - **Scope creep with no change process.** Without a change mechanism, the provider does extra work for free or the parties argue. Put changes through a written change or statement of work process.
- **Silence on tax.** If withholding tax and VAT are not addressed, the price is ambiguous. State both.
- **Uncapped liability.** A provider with no cap carries open-ended risk, and a customer with an unfair cap carries the loss. Agree a reasonable cap.
- **No data protection clause where personal data flows.** The customer can breach the Data Protection Act 2019 through its provider. Add the processor wording.
- **No clear exit.** Without termination and transition terms, ending a long service relationship is painful. Plan the exit and any handover. ## A note on jurisdiction and current law A Kenyan service agreement rests on the Law of Contract Act and the common law, with the local overlay in tax (withholding tax and VAT on the charges) and in data protection under the Data Protection Act 2019 where personal data is processed. Because tax treatment, registration requirements and sector rules turn on the facts, confirm the position with a Kenyan advocate or tax adviser. Adira is built around Indian corporate law first and is architected to expand. Deeper, verified Kenyan coverage is on the roadmap rather than live today, so use this template as a sound starting point and have local counsel check anything high-value. ## Where a contract workspace helps A master service agreement is a frame that many statements of work hang on. The work that outlasts drafting the frame is keeping every statement of work consistent with the MSA, tracking renewal and notice dates, and holding the charges, tax and liability terms steady across a growing relationship. Keeping the drafting, review and version history in one AI workspace tuned to how your company contracts means the service levels, tax and liability terms stay consistent across the MSA and every statement of work, with edits made in plain language. [Adira](https://adiralaw.com) is one workspace built to work this way. This template alone is enough to put a fair Kenyan service agreement in place. *This article is general information, not legal advice. Tax, data protection and sector rules turn on the facts and change, so have a qualified Kenyan advocate or tax adviser review anything important. Last verified October 2026.*