What is a Master Service Agreement (MSA)?
Here at BetterLegal, our aim is to help you deal with all the legal intricacies of starting a business without needing to spend massive amounts of money on legal fees. A Master Service Agreement is only one of the many services we want to help you understand what it is.
What is an MSA?
A Master Service Agreement, or an MSA contract, is a templated agreement between a service provider and a customer. These MSAs can vary a little depending on the customer type, services provided, industry type, and a few other factors. However, one of the major benefits is that, because they are a type of template, the format of the MSA is easily understood across any industry and state.
Legally, an MSA agreement is a contract between two or more parties that signifies the terms and conditions that will govern all current and future courses of activities and responsibilities. By employing an MSA, businesses can ensure the speed of authorization of future agreements. MSAs create a quality framework for contracts that acts as a foundation for all future business activity.
A master service agreement is meant to simplify and speed up legal processes to be able to jump into the important work to be done while stilling being legally covered. It also makes future contract agreements simpler, by maintaining a standard structure. Most MSAs include the following basic terms:
- Confidentiality: Both parties agree not to share any company secrets with anyone outside the company itself.
- Delivery requirements: The businesses decide what will be delivered and by whom.
- Dispute resolution: This decides how disputes will be settled, should something happen during the duration of the contract.
- Geographic locations: This just dictates where the work will take place.
- Intellectual property rights: Both parties decide who owns the IP of the final deliverables.
- Limitations of liability: This outlines the level of liability that each party has in the event of any legal disputes.
- Payment terms: These are terms for the schedule and amount that should be paid for the work being done.
- Venue of law: This is where an agreement is made on the location where a law suit would be held, should the need arise for either party.
- Warranties: How long is the work guaranteed and what does that cover?
- Work standards: This important piece of the MSA decides what level of work is acceptable to deliver at the end of the contract.
Businesses use MSAs to make contract negotiations simpler, since this templated format is easily understood and commonly used. The agreement allows each company to focus solely on the terms of the agreement, instead of painfully going through the structure while reinventing the wheel.
Benefits of an MSA
Using an MSA will save your business time and money!
Completing a contract between two businesses can be a long and expensive process. A business can end up paying out massive amounts of money on legal fees, as many lawyers charge high hourly rates. Getting a deal done faster is best for both parties! Using the MSA format, two parties can quickly agree to the main terms. A motivated company can write an MSA in only a few days, whereas many agreements can take weeks or even months of going back and forth with standard contracts!
The beauty here is that an MSA still protects both parties, even though it simplifies and speeds up getting that protection in place. When a disputes arise, the MSA quickly points out whose fault any issues are. There’s not a lot of time or money involved in going through the legal ramifications, since MSAs are kept so simple and understandable.
As we’ve mentioned, an MSA is like a template or blueprint. The added benefit here is that once a company drafts one MSA, it’s extremely easy to copy that first one, tweak a few key details, and reuse that MSA hundreds of times!
What You Should Include in an MSA
For a successful MSA, it’s all in the details. Think of your MSA as the bedrock of your ongoing, long-term business relationships. By covering all contingencies and planning for unforeseen issues, your MSA ensures your business contract’s strength and health. As such, your MSA should include the following information:
- Issues that each party could face during service.
- What each company agrees to do with or for the other.
The further in detail your MSA goes, the clearer the agreement can spell out where liability is between both parties. That is, as long as you don’t go overboard with an overly complicated contract. Some of the specific, common points of concern that MSAs cover across industries are:
- Delivery and installation: The MSA should cover when and by whom a product should be delivered and installed.
- Background checks: Here we list requirements for any employees that we hope to work on the project.
- Project management: Spell out who is making decisions during the duration of the project.
- Charges to expect: Both parties agree on the expected costs of the project.
- Terms of payment: This should cover the schedule and amount of payments to be made.
- Insurance: The parties agree on how to handle insurance for the agreement, with the intent to avoid litigation in the future.
- Escrow: Decides whether either party will place money in a trust while the work is being done.
- Government requirements: Lists where the work will happen, often with the legal and financial implications in mind.
- Liability: The MSA should spell out who is liable for what, should something happen during the contract’s duration.
- Tax responsibilities: Decides which party will be responsible for paying taxes that come up from the project.
- Third-party coverage: Sometimes the MSA is covering an agreement between more than two parties. In this case, the MSA should cover how all of these things apply to every party involved.
- Out clauses and causes for agreement termination: In the event of a “corporate divorce” or separation of parties, what should happen?
BetterLegal can help!
While writing an MSA on your own for the first time can be done using free resources, BetterLegal can save you time at every step. We have the perfect MSA template available to you in a live document editor, as straightforward and powerful business formation and state compliance services! You’ll never go back to doing any of these things yourself.