MSA (Master Service Agreement)

A master service agreement, or MSA, is a contract reached between parties, in which the parties agree to most of the terms that will govern future transactions or future agreements. A master service agreement allows the involved parties to more quickly negotiate future transactions or agreements, because they can rely on the strong foundation of the master agreement for future business, so that the same terms need not be repetitively negotiated, and you only need to negotiate terms specific to the latest deal.

Contracts in the information technology, contract research, and similar “open-ended” fields are often negotiated as a “Master Service Agreement” and a “Statement of Work”. Typically, the Master Service Agreement specifies generic terms such as payment terms, product warranties, intellectual property ownership, dispute resolution, and the like.

Each project – a program to be written, a research project to investigate murine effects of a compound, or the like – is negotiated in a Statement of Work, a project-specific rider to the Master Service Agreement, to specify the problem to be solved, schedule, price, and the like.

A Master Service Agreement is not the same as a work order. The MSA does not control the hours one works or the amount of payment. It does not address specific projects or jobs. However, since those terms are often in a work order, and if the work order conflicts with the terms of the MSA, the work order will be nullified.

It is recommended one have a contract lawyer review the Master Service Agreement before it is signed, especially if one has never negotiated a MSA before, or if there is language you do not understand. An attorney can help one negotiate an agreement that will protect the company’s interests.

Clauses that call for automatic termination for work not performed in a particular time frame can be problematic. Typically, one does not want the termination clause to be so specific or demanding. One should have the flexibility to take into account the realities of business.

Related Articles