Master the “Master Services Agreement”
A Master Services Agreement (MSA) is an agreement between the two parties to a service contract that details the expectations for both parties of their work together. MSAs are not project-specific contracts, instead, MSAs state the general agreement between the parties regarding all their work together. This means that the parties may use the same MSA with different project-specific Statement of Work (SOW) for each different future projects they have together. MSAs will allow the parties to negotiate future agreements efficiently, as they will only need to focus on negotiating the project-specific terms such as the scope of service, time of service and payment terms for each project.
What is included in an MSA varies depending on the parties using the MSA, but it usually addresses:
- Dispute resolution policies if conflicts arise, including whether arbitration of mediation should be used.
- Jurisdiction is the law that will govern the agreement.
- Forum is the place where the hearing or meeting will take place.
- Limits on warranty to address the agreement on the scope and coverage of the warranty.
- Limits on liability to address who is the responsible party in the event of a lawsuit.
- Confidentiality to prevent the parties from sharing any confidential information with outside parties.
- Termination policies to address when and how the agreement may be terminated.
- Intellectual Property Rights, including decisions on how the parties want to handle the ownership and regulation of all copyright, trademark, patents, and trade secrets.
- Insurance, to address the parties’ agreement on how to handle all insurance coverage and expenses.
- Taxes, to address how and who is responsible to pay the applicable taxes.
- Indemnification, to address how the parties will compensate each other for losses caused by each party to the other, i.e. when a third-party sues.
- Risk allocation, to address which party bears the risk at different stages of the transaction.
- Force Majeure, to address the parties’ obligation and liability when things that are not within the control of the parties happens, such as issues that arise due to acts of God, flood, fire, earthquake, explosion, governmental actions and war.
- Attorneys fees, and whether the parties bear their own costs or the loser pays.
Many small businesses use the same contract template for all clients rather than negotiating from scratch for each client before they begin work. A well-drafted MSA can serve as a good template for similar services a small business performs for different clients and reduce the chance of litigation between the parties. And by using the same MSA with different project-specific SOWs, businesses can save significant cost on drafting detailed, customized contracts from scratch every time for a new transaction.
If you need help with your MSA, feel free to schedule a consultation with an attorney using this link or calling our office at 323.543.4453.