Select Location


Written by:
Prachi Sethi
Published on

A Master Services Agreement or MSA is a service transaction contract concluded by two parties. The agreement sets forth both parties' expectations. A master services agreement is a wide-ranging agreement enabling the parties involved to understand the key problems, expectations, and how disputes and other issues should be dealt with. The MSA streamlines the process of negotiating of new agreements between the parties, so that everybody understands how to operate together. The MSA simplifies negotiating. It should specify what every side of the agreement must do to uphold its side. The overall objective of a Master Services Contract is to speed up the ratification of future contracts and simplify them.

An MSA enables the parties to prepare for the future and adjust themselves to changes in the business landscape—revealing possible problem areas or concerns. MSAs also reduce the time limit pressure and provide parties time to react and to modify. MSA is most suited to long term relationships, which need to expand and develop at length and security. The MSA's flexibility can resolve the controversy and enable both parties, even under changing circumstances to preserve their fundamental relationship and to save them time and money.


  • The possession of the property in development.
  • Royalties in respect of new innovations and discoveries. 
  • How fresh information can be disclosed while confidentiality of the agreements are maintained.
  • Compensation for an action by a third party.
  • Alternative settlement of disputes and distribution of legal expenses.
  • Working schedules that depend on local circumstances of employment.
  • Orders of purchase and price changes dependent on economic variables such as costs of equipment, cost of living etc.


A Master Service Agreement acts as the basis or the bedrock of the long-term business relations between the parties and also acts as a testing stone and foundation of all the future agreements. MSA in general should include all the possible issue that may arise in future between both the parties involved in the business relationship, action to be taken jointly by the parties and responsibilities that have been assigned individually to both the parties.

The clause that structures the MSA are as follows:

  • Background inspections: The MSA should include this if you have any workers requirements.
  • Confidentiality: The contracting parties may agree not to discuss with any third party any corporate secrets.
  • Delivery/installation: States when a product is to be shipped and who is in charge of the initial shipment.
  • Dispute resolution: A master services agreement should include how a disagreement may be resolved by the parties in case a dispute related to the business arises.
  • Escrow: If one party places money in a trust, the MSA should be used to describe the circumstances under which the other party is able to earn that money. 
  • Requirement of the country and the government: Parties must agree where the work will be done by the personnel. The way to work on a project is determined has consequences for local, state and federal taxes.
  • Insurance: Arrange in advance how insurance and coverage are to be handled.
  • Intellectual Property Rights: The rights to intellectual property may be covered by MSA. The parties may determine how to regulate and own matters such as patents and other intellectual property. In certain situations, the customer will obtain full intellectual property and in others, the seller gives permanent rights but maintains its own intellectual property and patents. 
  • Liability of the parties: This agreement should provide a list of the party accountable for an occurrence in the case of a complaint. The master services agreement should specify the party taking the risk.
  • Causes of termination provisions for the contract: Out: Businesses are divided, therefore the MSA should explain how the parties address it.
  • Management of the project: State responsible. If no side agrees who should manage distinct project components, your project might easily go awry.
  • Delivery requirements: Detail who will deliver the deliverables and when they are due.
  • Security: Parties should agree to whom the product or project will be handled and paid for security.
  • Work standards: Define what is acceptable to each party.  When a party fails to meet working standards, a common cause of conflict is created, therefore well-defined expectations in the MSA can assist to prevent future problems.
  • Tax liabilities: The company should decide how tax costs and liabilities are to be shared.
  • Payment terms: The anticipated project cost together with paid schedule should be indicated by the MSA. Include the cost predicted and who pays, when, how frequently and how long payments will be made and how long.
  • Seat of law: A Master Services Treaty should define where, for instance, an arbitration, a certain state or federal court will occur.
  • Warranty coverage: Parties can utilize the MSA to determine the scope and coverage of warranty.


For on-going business connections, MSAs are a legal play changer. They establish a negotiating template and a point of reference that removes the need to re-create a new contract for all actions. MSAs function by deciding particular terms of reference but also allowing for further changes. By providing a legal basis for a future partnership, MSAs let each party to move quickly and adapt to a changing business situation.