What Are The Conditions to Expect In A Master Service Agreement?
Agreement & Contract

What Are The Conditions to Expect In A Master Service Agreement?

An MSA or master service agreement is an agreement between two parties wherein they agree and come to terms on the majority of points that will govern their future transactions and mutual actions. An MSA facilitates the two parties to negotiate future transactions and agreements more quickly and effectively.

This happens because the two companies take recourse to the strong foundations of the master agreement while carrying out their future transactions. So, they need not negotiate terms again and again.

The service of a master's is very common in the professional services industry. It makes you work with the service provider, project by project without re-checking the various rules and regulations about how you both should work together.

You may also read How to Draft a Service Agreement?

This way it serves the purpose of the onward momentum of the ongoing relationship, irrespective of the type of the project they are working on and so on.

Thus, MSA is an understanding between us and our clients on what we consider important and how we will carry out a healthy, moral and mutually gainful professional business relationship.

The Kind Of Terms & Conditions In An MSA Agreement

The legal department of every company has a somewhat different idea about what should or should not be contained in an MSA. But in case you’re going to hire a professional services team, there is a strong likelihood of some common ground and some terminology that you’ll need to understand.

Though the titles and ways of formatting are likely to differ from company to company, the MSA your company receives from any professional firm may contain the following sections:

  • There may be one section explaining what the Master Service general terms include or do not include in matters of project-specific agreements such as statements of work
  • Terms of Confidentiality
  • Rights to Intellectual Property
  • When, how, and how much the relationship can be discussed or disclosed
  • The conditions under which the work will be done;
  • How the client will review, reject, or approve deliverables
  • What each party will be responsible for providing or maintaining throughout the term of the services agreement
  • Consequences/implications of either party failing to comply with terms of the agreement
  • Agreement to refrain from soliciting each other’s employees or clients
  • Procedures for resolving legal disputes
  • Indemnification provisions in the event that either organization issued by a third party
  • Warranty or support information for work performed by the firm for the client
  • Insurance and/or security requirements for the service provider (and possibly the client)
  • Expectations about how the money, fees, expenses, and payments will be handled
  • Language relating to the MSA agreement’s term and how either party can terminate a specific statement of work, as well as how either party can terminate the MSA if necessary.

What Are The Expected Conditions In Master Service Agreement:

Let us divide the various sections to know in a better way of what to expect and why they are important:

You may like to read Know All About The Service Agreement

1. The More General Terms

To begin with, there should be a section that clearly mentions that the Master Services Agreement exists in addition to contracts for specific services.  It should also mention that you are hiring the firm for some time to enhance your performance.  

Every project provided by the service provider to the client, such as training, website development, software implementation, and so on, is shown negotiated in a statement of work (SOW), which is a project-specific addition to the Master Service Agreement.

These spell out the problems to be addressed for every individual project, what all the overall scope include and what it doesn’t, about the team involved, crucial dates &s milestones, the overall price, the billing deadlines, and so on.

2. The Mutual Confidentiality

The MSA should include a section that establishes confidentiality protection. This is important because we’re into the client data and working so closely with their leadership teams on the details of their various aspects like sales, marketing, and the future company growth strategy.

On the other hand, firms will be frequently training, consulting, and doing such things with clients in a manner that requires us to share unusual aspects of how we successfully operate.    

This is so because what the clients can understand from our unique experience is hugely valuable, thus we expect the protection of mutual confidentiality for what we share.

3. About Intellectual Property Rights

There is a section on intellectual property rights. This typically states who holds the rights to various processes and/or deliverables before, during, and after the work is completed.

This addresses who holds the authority over the deliverables/work and how the service provider shifts ownership rights upon acceptance. It also states who is the owner of the processes and/or tools used to create the deliverables. These are commonly known as a firm’s intellectual property (IP).

In one way, we’re like a “knowledge factory,” constantly shifting know-hows and digital assets to the client organisation through a range of collaborative projects.

4. About The Disclosure Of Relationship

If you’re thinking of working with a professional services firm, you may want them to share instances of familiar work which they’ve done for companies with same type of needs or goals like yours.

As an adjusted agreement, you may consider language requiring the service provider to obtain your written approval before some parts of your collaboration come up in public-facing material. Service providers may be willing to accept this compromise.

Also read Master Service Agreement: How Is It Important in IT Outsourcing?

5. How May The Work Be Performed    

It often happens in MSAs.  A section is included therein which spells out what each party will be responsible for throughout the time period of the relationship to complete the work successfully.  It is important to discuss these obligations beforehand so that everyone knows what they’re agreeing to.




How to Write a Master Service Agreement?
Agreement & Contract

How to Write a Master Service Agreement?

What is a Master Service Agreement (MSA)?

Before getting into the details, let us understand what is behind the Master Service Agreement. MSAs are mostly there in agreements for the provision of services, like there may be an agreement to provide information technology (IT) consulting services.     

An MSA agreement is considered as a contractual agreement between two or more parties wherein both parties agree to abide by certain terms & conditions that will decide future transactions. The MSA is like an anchor document. It will guide the creation of additional documents, like Work Order Statement of Work (SOW).  

You may also read How to Draft a Service Agreement?

These later documents commonly describe in more detail the specific services to be done, common terms, legal fees, specific contractual terms and so on.  

MSA contract

What To Consider While Drafting MSAs   

MSAs provide a clear vision in performing the work in the contract. So, care should be taken while drafting MSAs It is a contract that impacts the functional aspects:

1. About the Scope of work: This makes it possible for both the parties to understand what type of work is expected to be performed.

2. Terms of Price and Payment: It allows both parties to reach an agreement on price, method of payment, and payment schedule.

3. The provision for change: The description of all the procedures that each party must follow to make changes to the agreement. All the changes are done as per written adjustments either for additional work or for schedule changes.

4. The Resolution of Dispute: This is about how the two parties should conduct themselves in case some problem arises during the engagement. This helps reduce litigation costs and also throws light on how they will solve disputes during the contractual relationship. For instance, disputes can be addressed by appointing a mediator. A mediator is an independent individual who works out a resolution between both parties. Alternatively, parties may prefer to resolve disputes using the method of arbitration, which is a cheaper alternative to going to court.

5. The End or Termination: It provides the procedures using which a party may finish the contractual relationship. This clause is all the more important in deciding which party should pay damages for violating a contract.

Also, read What Are The Conditions to Expect In A Master Service Agreement?

There are two popular types of termination. Termination for convenience takes place when a party wishes to exit the relationship for no specific reason as such. On the whole, termination for the cause takes place when one party does not perform the obligations or duties agreed to in the contract.

6. The Term: This decides the length of time of the contract. This clause typically includes renewal conditions and procedures. 

7. The Venue of legal arbitration: It defines the location of arbitration or court jurisdiction.

8. Warranties & Representations: These give us the facts as they are shown in the contract. The facts that made a party to enter into the contract is called representation. Warranties also influence the facts in the future.

For instance, product warranties frequently make sure that the product will include all the promised features (representations) and will move forward as per the description. If not, in case the warranty will fulfill the cost of a replacement. Essentially a warranty obligates a seller to comply with the representations in the purchase agreement.

9. Indemnification Provisions: This provision relieves one party from being held liable for damages. It is also called a hold harmless provision. These lay out what actions one party (seller) agrees to take responsibility for if a third party sues the other party (buyer).

10. Insurance Coverage: It spells out the required amount of insurance coverage that the parties must keep with themselves.

11. The Security Requirements: It brings about the minimum level of security the parties should maintain.

12. Human Resources: It spells out the human resources required to develop and operate new applications or provide additional services.

13. The terms of Confidentiality:  In this, all parties agree not to share information with third parties.

14. About Allocation of Risk. This brings out a broad outline of the risks that each party will assume, all the more so, since the new contract may impact existing contracts.

15. Intellectual property rights (IPL): It provides the ownership and regulation of intellectual property, for example, patents and copyrights.

When both parties sign the MSA, you get an effective contract. It is well understood, a well-drafted MSA can foresee future disputes and give ways to resolve them, which can save a lot of time and money for both parties

You may like to read Know All About The Service Agreement