I. WHAT DO YOU UNDERSTAND BY MSA?
The Master Service Agreement (MSA) is one of the most common types of contract agreements used in open-ended relationships. A master service agreement is an agreement that clarifies the objectives of the service and sets out the obligations of both parties. In addition, this contractual document lists current and potential contractual services. It is a contract in which the parties agree to a number of terms that will govern the upcoming transaction or future agreements. Contracts like these are useful in areas that involve a large number of transactions between the service provider and the customer and may include a separate statement for each transaction. MSAs establish a contractual framework that will guide all future actions.
II. PURPOSE OF MASTER SERVICE AGREEMENT
Companies use Master Service Agreements (MSAs) to facilitate and make contract negotiations simpler. Through Master Service Agreements (MSA), the company and its customers work on a wide range of, but important issues that could jeopardize the contract prematurely. By doing this in advance of a specific contract, companies can focus more on specific contract matters, such as price and timeframe, when the actual contract arises. MSAs are often complicated agreements. By discussing the issues beforehand, when no specific contract is being negotiated, companies can avoid time pressures and have time to carefully identify and address any potential problems.
Once the company has gone through the Master Service Agreement negotiations, it will be conscious of the types of concerns and problems that may arise. This is beneficial because the company will be aware of future problems and will be able to address them when drafting the next Master Service Agreement.
III. ADVANTAGES OF MASTER SERVICE AGREEMENT
- SIMPLIFIES THE CONTRACT - With standard negotiations in the MSA, the parties will not have to go back on the conditions of the agreement. These terms and conditions may apply to the agreement. This agreement allows both the parties to spend time discussing the terms of the agreement. Thereafter, they can proceed with the work described in the agreement.
- NEGOTIATIONS IN ADVANCE - The parties would negotiate in advance, the terms, and conditions of the Master Service Agreement. It will recognize what kind of matters or problems may arise. This is an advantage, as the company will know what the future problems are and will be able to solve them beforehand.
- LESS TIME - By negotiating the terms and conditions in advance, the parties can compute their time to other areas of the law.
IV. KEY CLAUSES UNDER MASTER SERVICE AGREEMENT
- Confidentiality - Confidentiality is one of the key provisions of the MSA. This will include the condition that companies will not share any confidential information with other organizations. This will include any type of trade secrets and intellectual property that is part of the company.
- Dispute Resolution - This clause will include a dispute resolution mechanism chosen by the parties. If the dispute needs to be resolved the nature of the dispute will also be stated in the MSA.
- Jurisdiction - This clause will determine which courts will handle the agreement in the event of a dispute. Usually, an agreement will hold a clause that the dispute will be under the jurisdiction of a particular district court.
- Geographic Location - In the MSA, the location where the tasks is to be performed will be outlined here.
- Payment Clauses - Here the agreement would set out what payment is required to be carried out by the companies according to the contract.
- Intellectual Property - The matter dealt under this clause is relating to the possession of intellectual property by the parties.
- Warranties and Guarantees - For a particular type of product and service, there will be certain types of warranties and guarantees. Warranties will be associated with the products offered or the services provided. Guarantees will be a form of third-party verification for services provided or products delivered during the MSA.
- Standards of Work - Usually in the Master Service Agreement, there will be definite standard of work to be done in the contract. If the standards of work fall below the particular standards, then that can lead to some kind of dispute. However, if the standards are maintained by the parties there will be no disputes.
MSAs are the legal game changer for any ongoing business association. They develop a negotiation template with a reference point that removes the need to re-create a new contract for every single action between the parties. MSAs work by deciding on key terms and conditions, but also by allowing for modifications and further adjustments. By laying the legal foundation for the future of the relationship, MSAs facilitate each party involved, to move quickly and respond to a changing business environment.