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What Is A Master Services Agreement (MSA)?

I had written about the steps you should take when launching your agency. Included were two critical contractual documents that I recommended:

  1. Master Service Agreement (MSA) – The general contract covering the relationship between our organization and the client’s organization. The MSA can be a standalone contract or it can be incorporated into a larger business agreement between the two parties that includes actual project deliverables. Rather than do this, we separate project deliverables into an SOW.
  2. Statement of work (SOW) – a document that specifically outlines the terms, deliverables, and resources required to complete a specific project or task.

How To Write A Bulletproof SOW

If you’re doing ongoing work with a client, separating the two is ideal since you can simply propose each engagement with a new SOW but you don’t have to renegotiate the MSA that covers the overall relationship.

What Is A Master Services Agreement (MSA)?

A master services agreement (MSA) is a legal contract between two parties, typically a company and a vendor, that establishes the terms and conditions for the provision of services by the vendor to the company. The MSA sets forth the rights and obligations of both parties with respect to the services to be provided, including the scope of the services, the fees to be paid, and any other terms and conditions that apply to the relationship between the two parties.

The purpose of an MSA is to establish a clear and detailed understanding between the parties about the terms and conditions under which services will be provided, and any other relevant aspects of the relationship. An MSA can help to avoid misunderstandings or disputes between the parties by setting out the expectations and responsibilities of each party in a clear and concise manner.

So, while the SOW covers the deliverables and timeline, the overarching document that we include in any vendor/client relationship is the Master Services Agreement (MSA). In other words, two parties can sign an MSA with respect to the relationship, and then that MSA can govern each of the SOWs with a client where you’re doing one or more projects or engagements. In other words, we utilize MSA to govern our relationship with a client and an SOW to define the deliverables and timeline.

NOTE: While I recommended that an SOW template be reviewed by your attorney, a Master Services Agreement must be reviewed to ensure that it’s a legally acceptable document by both parties. Often, each party’s attorneys will review and red-line the document… redlining is simply the act of requesting adjustments in the legal verbiage so that both parties agree.

What Sections Should Be In A Master Services Agreement?

A master services agreement (MSA) typically includes a number of key sections that outline the terms and conditions of the agreement. These sections may include:

  1. Introduction – This section typically provides an overview of the purpose and scope of the MSA, as well as any definitions of key terms that are used throughout the document.
  2. Services – This section typically outlines the specific services that will be provided by the vendor to the company, as well as any additional services that may be provided at the request of the company.
  3. Billing – This section sets out how the client is billed, when payments are expected, and what happens if payment conditions are not made. If you’re including the actual deliverables without an SOW, the MSA can set out the actual fees that the company will pay to the vendor in exchange for the services provided as well.
  4. Terms and Termination – This section outlines the duration of the MSA and any circumstances under which the agreement can be terminated early and the process for doing so.
  5. Confidentiality – This section sets out the obligations of both parties with respect to the confidentiality of information shared under the MSA. It typically includes non-disclosure agreements and how any client data will be utilized, stored, and removed at the time the relationship is ended.
  6. Intellectual Property – This section addresses any issues related to intellectual property (IP), such as ownership of IP created or developed under the MSA and any licenses granted to the company.
  7. Representations and Warranties – This section sets out the representations and warranties made by both parties with respect to the MSA and the services provided.
  8. Indemnification – This section outlines the responsibilities of each party with respect to indemnifying the other party for any losses or damages that may arise in connection with the MSA.
  9. Governing Law – This section specifies the jurisdiction and law that will govern the MSA. This is a critical one if your client is located in a different state or country. The last thing you want is to have to cover the travel costs and hire attorneys outside of your attorney’s jurisdiction.
  10. Dispute Resolution – This section sets out the process for resolving any disputes that may arise under the MSA, such as through arbitration or mediation.
  11. Miscellaneous – This section may include any additional provisions or clauses that are specific to the MSA.

An MSA is a critical contract that you should always agree upon with your client, have reviewed by both their attorneys and your attorneys, have signed by both the vendor and the supplier, and have on hand to reference in the event of any type of dispute or disagreement.

Douglas Karr

Douglas Karr is the founder of the Martech Zone and a recognized expert on digital transformation. Douglas has helped start several successful MarTech startups, has assisted in the due diligence of over $5 bil in Martech acquisitions and investments, and continues to launch his own platforms and services. He's a co-founder of Highbridge, a digital transformation consulting firm. Douglas is also a published author of a Dummie's guide and a business leadership book.

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