Statement of Work vs Contract
Last updated: February 2025
Quick Comparison
| Aspect | Statement of Work (SOW) | Contract |
|---|---|---|
| Legal standing | Typically not standalone; relies on a master contract | Fully self-contained and legally binding |
| Content focus | Scope, deliverables, timelines, acceptance criteria | Full legal terms including liability, IP, termination |
| Flexibility | Easily created for each new project | Requires formal amendment to change terms |
| Relationship | Subordinate to the contract it operates under | The overarching legal framework |
What Is a Statement of Work (SOW)?
A document that defines the specific scope, deliverables, timelines, and acceptance criteria for a particular piece of work.
Key Features
- • Details what work will be done and by when
- • Specifies deliverables and acceptance criteria
- • Typically sits under a master agreement
- • Can be amended without changing the overarching contract
Best For
- • Defining individual projects under an ongoing relationship
- • Complex engagements requiring detailed scope documentation
- • Situations where scope may vary between projects
What Is a Contract?
A legally binding agreement containing all essential terms including scope, payment, liability, termination, and dispute resolution.
Key Features
- • Contains all terms needed to be legally enforceable
- • Covers commercial, legal, and operational provisions
- • Binding on all parties once executed
- • Can be a standalone document or umbrella agreement
Best For
- • Any legally binding business arrangement
- • Standalone engagements without a master agreement
- • Establishing the legal framework for a relationship
When to Use a Statement of Work (SOW)
Use a SOW when you have a master service agreement in place and need to define individual projects or phases. It keeps scope discussions separate from legal terms, allowing faster project kick-offs.
When to Use a Contract
Use a full contract when there is no existing master agreement, or for standalone engagements where all terms need to be in one document.
Which Does Your Business Need?
Most established business relationships benefit from a master contract with individual SOWs for each project. For one-off engagements, a single contract covering both legal terms and scope is simpler. Ensure your SOW is always governed by a contract.
FAQ
Is a Statement of Work legally binding in the UK?
A SOW can be legally binding if it contains all elements of a contract (offer, acceptance, consideration, and intention to create legal relations). However, it is usually designed to operate under a master agreement that provides the full legal framework.
What should a SOW include?
At minimum: project description, deliverables, timeline, milestones, acceptance criteria, pricing, and any project-specific terms. It should also reference the governing master agreement.
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