If your company provides professional services to clients, then you’re already familiar with master service agreements. Usually called an MSA, this type of contract is spells out important agreements negotiated between a managed service provider and its clients. Since an MSA defines an ongoing relationship that affects current and future projects, it’s important to know what to include in your master service agreements.
Advantages to Using an MSA
If a company and its clients are getting along well, why do they need to formalize their relationship in a contract? Some of the advantages to using an MSA include:
- can be used for repeat customers, and to cover multiple projects for a single customer;
- spells out responsibilities for both parties;
- helps manage expectations; and
- simplifies contract negotiations for ensuing work.
Anatomy of an MSA
Contracts can be massive, complicated documents containing scores of components and the typical MSA is no exception. Having an MSA with a lot of sections will not help you unless those sections are right for your company. A master service agreement usually contains sections covering these important topics:
- Limitation and Liability. Your MSA should spell out who is responsible if something goes wrong and limit your company’s liability.
- “Out of Scope” work. Know how to handle a client’s request for work that falls outside typical project-related boundaries.
- Contact person. Designate specific people to contact if with questions or concerns.
- Termination. Sometimes it’s necessary to terminate a client relationship. Your contract should state how to do this efficiently and with the least possible trouble.
- Protecting IP. Make sure you and your client understand who owns intellectual property your employees use while completing their projects.
- Non-competes or confidentiality agreements. During IT projects, company secrets, insider information, proprietary software, and other confidential data is exposed. Include confidentiality clauses in your MSAs to protect your company.
Consequences of a Weak MSA
Even with the most careful planning and the best intentions, projects can go awry. Maybe a key piece of equipment stopped working, costing your client important business. Or your employees didn’t fix something quickly enough to keep the client happy. A weak MSA spells trouble for you if litigation looms, while a well-written MSA protects both you and your client.
Do your master service agreements or other contracts need the attention of an experienced business attorney? Contact Virtus Law at 612.888.1000 or send us an email at info@virtuslaw.com. Our main office is in Minneapolis, Minnesota. Other offices: Edina, Mendota Heights, and Red Wing.
