This is a contract typically made between an individual
and a car dealership when a person is buying a new car. Often times, the service
contract comes as part of the price of the car in that all the scheduled maintenance
that is not covered by the warranty (which covers malfunctions and breakdowns), such as
oil changes, tire rotations, etc, will be covered under the contract for a certain
period of time, or a certain number of miles driven.
So the
contract becomes a selling point for the car, and also sometimes people simply like to
purchase such contracts because it gives them peace of mind that they will not have to
pay for or worry about any servicing needs in the near future.
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