

A Master Service Agreement (“MSA”) is a comprehensive legal contract that establishes the overarching terms and conditions governing the ongoing business relationship between two or more parties.
It serves as a foundational document for all current and future interactions, including the provision of services, the exchange of goods, or any other agreed-upon activities.
Unlike individual contracts that address specific projects or transactions, an MSA acts as an umbrella agreement. This means that it sets the general framework for the relationship. Under the MSA, the parties will typically agree on Statements of Work (“SOWs”) for each specific project or engagement. The differences between MSAs and SOWs are explained here.
The MSA outlines the general rules, responsibilities and expectations that will apply to all subsequent dealings between the parties. This includes key aspects such as:
- Scope of services: while the MSA may provide a general outline of the services that may be provided, the detailed scope of services will typically be set out in the relevant Statement of Work
- Payment terms: agreed-upon payment methods, schedules, and any applicable late payment penalties
- Confidentiality: provisions for protecting sensitive information exchanged between the parties
- Intellectual property rights: ownership and usage rights for any intellectual property created during the course of the relationship
- Liability: clauses outlining the extent of each party’s liability for damages or losses incurred by the other party under the MSA and – if applicable – each SOW
- Termination: procedures for terminating the MSA, including grounds for termination and any required notice periods
- Dispute resolution: mechanisms for resolving any disputes that may arise, such as mediation or arbitration.
By establishing these fundamental terms upfront, an MSA streamlines future negotiations, reduces administrative burdens, and minimizes the risk of misunderstandings or disputes.
Why use MSAs?
MSAs are crucial for ongoing business partnerships because they offer numerous advantages. By establishing a clear and comprehensive framework for the relationship, MSAs:
- Guarantee essential agreements: ensuring critical terms are negotiated and agreed upon before service commences.
- Minimise disagreements: providing a shared understanding of expectations, reducing the likelihood of disputes
- Save time and money: streamlining future negotiations and reducing the need to re-discuss fundamental terms for each project
- Provide a consistent framework: ensuring consistent treatment and expectations across all projects and services
- Reduce legal costs: by addressing common issues upfront, MSAs can help reduce the need for costly legal intervention in the future.
Disadvantages of MSAs:
- May not be appropriate for all situations: as mentioned earlier, MSAs may not be suitable for one-off projects or short-term engagements
- Require careful drafting: inaccurate drafting can lead to ambiguity and potential disputes
- May require significant initial negotiation time: reaching agreement on all terms within the MSA can be time-consuming, particularly regarding liability clauses
- Can become outdated: over time, the MSA may become outdated and no longer reflect the current business realities of the parties
- May stifle flexibility: in some cases, the detailed provisions of an MSA can limit the parties’ ability to adapt to changing circumstances or pursue new opportunities.
MSAs are highly prevalent in modern business, particularly for organizations engaged in ongoing or recurring relationships. They offer a valuable framework for managing these interactions and mitigating risks. If you are considering entering into a long-term business relationship, it is strongly recommended that you explore the benefits of an MSA.