What is a Master Services Agreement (MSA)?
An MSA is a comprehensive B2B framework agreement that outlines terms and conditions for various services, such as professional and managed services, hardware, and licensing. It covers long-term B2B relationships, not B2C.
With an MSA in place, you don't need to negotiate terms for each project. Instead, you can create Statements of Work (SoW) for specific projects, referring back to the MSA. SoW can modify MSA terms if allowed. Both parties are bound by the MSA and the executed SoW. This simplifies B2B service agreements.
5 reasons you need an MSA
If you are a technology business that provides professional services and managed services, and want to onboard your customer only once in the relationship, this is the document for you.
If you are a Microsoft Partner our template has the option to include NCE (New Commerce Experience), CSP (Cloud Service Provider) and Hardware clauses.
Here are some other reasons why you want to have an MSA:
Consistency and efficiency
An MSA is a framework agreement that should outline the terms and conditions for all your services. Instead of negotiating new agreements for each customer, you can reference the MSA, which saves time and reduces costs.
It also ensures that your customers are all working under the same terms and conditions.
Having a comprehensive MSA can help reduce your legal risks. It establishes clear guidelines for issues such as payment terms, confidentiality, warranties, and limitations of liability.
It also helps to prevent disputes by outlining the responsibilities of each party, minimising the likelihood of misunderstandings or disagreements.
When you have a well-drafted MSA in place, your customers will feel more confident in your business.
The MSA shows that you are professional, transparent, and take your legal obligations seriously. This can lead to increased customer satisfaction and loyalty.
While an MSA is a framework agreement, it is still flexible enough to allow for negotiations on certain terms.
This can be especially helpful when working with larger customers who have specific needs or requirements. Negotiating specific terms within the MSA can help you close deals faster and more efficiently.
Save time and money
By having an MSA in place, you can avoid the time and expense of negotiating new agreements for each customer for each project or service.
You can also minimise the risk of legal disputes and associated costs by having clear terms in place. Additionally, if you ever need to hire a lawyer to help resolve a dispute, having a well-drafted MSA can help make that process more efficient and cost-effective.
How long does an MSA last?
We usually recommend an initial term of 12 months with an auto renew every 12 months thereafter with a right for the customer to give notice to terminate 90 days to expire at the end of each term. However, feel free to make your initial term and renewal terms longer!
Can a Statement of Work (SoW) conflict with an MSA?
Yes, the SoW may conflict with the MSA. A good, flexible MSA should have a clause stating that, if a conflict arises between the documents, the SoW will take precedence.
What is in an MSA?
The MSA serves as a framework or foundation for future engagements or projects between two parties. It includes all the information that would be included in other more specific contracts (e.g. Professional Services Agreement, Managed Services Agreement, Sale of Goods and NCE/CSP wording) under one roof.
It can cover a wide range of topics, including payment terms, delivery issues and remedies, intellectual property ownership, confidentiality, warranties, liability, data protection and termination. By addressing these topics upfront, both parties can avoid future disputes.
It is an essential tool for managing your business relationships, establishing the terms and conditions of an ongoing business relationship. Ultimately having an MSA in place saves time, provides clarity, and fosters a collaborative, successful work relationship.
While the specific contents of an MSA can vary depending on the nature of the business relationship, here are some common areas that a Master Services Agreement typically covers:
Who is involved?
The MSA identifies the parties involved in the agreement, including their legal names and addresses.
When will the relationship begin?
Either the date of the agreement/SOW but it can also have an effective date from a prior date if you already started to provide services and now wish to contract.
Scope of the work
The MSA outlines the types of services that the service provider will offer to the client. It may provide a general description of the services or refer to separate SoWs (Statement of Work) for specific projects or engagements.
SLAs (Service Level Agreements) and performance metrics
The MSA may include provisions regarding service levels and performance recourse that the service provider is expected to meet.
Show me the money! The MSA specifies the payment terms (rates, billing frequency, invoicing procedures, and any applicable taxes or additional charges). It may also cover issues related to payment disputes, late payments, or financial penalties. It also has three pricing increase mechanism to cover all your increased payment issues including any third-party increases.
IP (Intellectual Property)
Do not forget to include your IP! It is essential to address the ownership and usage rights of IP created or provided and clarify who retains the ownership of the IP.
Confidentiality and Data Protection
The MSA should also protect the confidentiality of sensitive information shared between the parties. Be sure to outline the obligations regarding data protection, privacy, and security measures to safeguard confidential or personal data.
Term and termination
Sadly, all good things come to an end. Make sure you set out the duration of the agreement, including the start and end dates. It is wise to also have provisions for early termination, termination for cause, or notice periods required for termination.
The MSA can also specify the process for resolving disputes, such as through negotiation, mediation, or arbitration. It may also identify the governing law and jurisdiction for legal proceedings, if necessary.
Liability and Indemnification
Accidents happen, and so this section is so important to address the allocation of risks and liabilities between the parties. It may outline limitations of liability, insurance requirements, and provisions for indemnification in case of damages, losses, or claims arising from the services provided.
Governing Law and Entire Agreement
The MSA typically includes a choice of law clause, specifying which jurisdiction's laws govern the agreement. It may also state that the MSA represents the entire agreement between the parties, superseding any prior or contemporaneous agreements or understandings.
Questions to consider when drafting an MSA
Preparing for potential issues in advance is important. A service delay or a vendor going bankrupt could derail the project.
Here are some useful questions to answer for your MSA:
- What services will you provide? Professional, managed or both?
- Have you included wording for Microsoft (DPoR, CPoR, NCE, CSP)?
- Who will be held responsible for each part of the project?
- What work will you do together?
- What are you agreeing to provide?
- When will you deliver the product/service and who is responsible for setting it up?
- Who is managing the project and who will deal with the fallout if things go wrong?
- Who will supply / conduct background checks for employees working on the project?
- Who will pay and when and how often? When will payments stop?
- Who will cover insurance expenses?
- Do you want to hold funds in escrow, how will they be released?
- Are there Government requirements, taxes, and tax responsibilities to consider – who will pay?
- How should you handle services provided by a third party?
- How can you call time when one or both parties want to terminate the relationship?