Master Service Agreements (MSA): what they are and how to create them

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Cory Shrecengost
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Do you have a long-standing customer relationship but find yourself endlessly governing negotiating terms? How much time do you think you could save if you could carry out the work under an already agreed upon understanding? Probably a lot. Time-saving and reduced paperwork are some of the major advantages of putting a master service agreement in place with your long-standing customers.


But what are the finer details of a master service agreement and how can you create them? Read on to find out.


Disclaimer: This information is intended for general informational purposes only. This is not intended to be legal advice and should not be a substitute for professional legal advice. Consult a licensed attorney for legal advice or representation.


What is a master service agreement in business?

A Master Service Agreement (MSA) is a contractual agreement used in open-ended or longer-term business relationships between two or more parties that set out the governing terms and conditions of all current and future interactions and responsibilities.


Master Service Agreements act as a contractual foundation. When both parties know their relationship will likely continue long into the future, they help speed up the process and simplify subsequent transactions.


Master service agreement checklist - what to include?

Your master service agreement is the foundation of all your ongoing, so it needs to be detailed to create a successful master service agreement that covers all possible contingencies.


To start, you should include:

  • Specific responsibilities
  • Promises that the parties are making regarding their current practices
  • Standard the parties want each other to uphold
  • All possible issues or conflicts that could occur throughout the relationship
  • What each party will do individually and together

It’s essential to be clear about each party’s roles and responsibilities, so if a conflict arises, you know who is responsible for fulfilling all obligations.

What you should address in your MSA

Alongside clearly setting out responsibilities, actions, and obligations, there are some critical areas you need to cover in more detail. Let’s look at what you should include, using IT infrastructure support services as an example.


Services

Here, you’ll need to outline who will be responsible for the delivery of the product or service and who will take charge if something goes wrong. In our IT example, this includes what IT services need to be provided on an ongoing basis and, if services experience downtime, delays, or any other issues, who will be culpable.


Employee management

Each party also needs to list requirements for employees or other people responsible for the relationship. Who will be the main point of contact if things like background checks or screenings are necessary, who receives notices and how, and what is expected on both sides of the agreement.


Income and expenses

In this section, you’ll need to determine how costs are handled and how payments will be processed. In our IT examples, these will align with ongoing service delivery, like SaaS deployments or infrastructure support.


Requirements and liabilities

Here, you’ll cover the obligations that each party needs to carry out

you’ll cover precisely how and where work will occur. And who will be held liable for complying with regulations. These will differ from state to state, so it’s worth digging into the specifics, especially if you work with a company that operates in a different one to yours.


Third-party coverage and concerns

Third parties can introduce additional roles and responsibilities, so you need to highlight who will be responsible for handling disputes and actions if they arise. For example, if a company is working with another IT provider to provide services, how will their relationship affect yours and vice versa?  Who will be responsible for any legal issues that arise from the mistakes of third parties?


Termination

Lastly, suppose either party breaches the terms of the contract. In that case, you’ll need to outline what will happen if the agreement is terminated. Will there be a grace period while you find another provider, or will all services cease at the point of termination? Do you want to be able to terminate for no reason at all with a notice period?  Do you want to stop the other party from being able to do so?


Comparing MSAs to other related document types


What’s the difference between an MSA and SLA?

The difference between an SLA (Service Level Agreement) and an MSA lies in the focus of each agreement. While both outline the standards and duties that a service provider is responsible for during service period, SLA terms are more specific and act as more of a customer service promise for metrics such as uptime and availability. An SLA will also likely outline the credits or remedies for breaches of the outlined terms. A master service agreement defines the overall terms and conditions that will apply to future dealings or arrangements. These MSA elements include compensation, costs, timelines, confidentiality, and dispute resolution.

 

What’s the difference between an MSA and SOW?

A SOW is a document that more specifically outlines the scope of work to be performed, deliverables, timelines, and other important details typically for a single project. In comparison, an MSA establishes the the overarching terms, conditions, and framework of the working relationship so that a new contract does not need to be drafted for each new project. The SOW also typically falls under the umbrella of the MSA.


What’s the difference between an MSA and ISA?

An Inbound Services Agreement (ISA) is an MSA from a particular point of view, namely from the point of view of a purchaser. Evelina Yarmit, Commercial Counsel at Dropbox, outlines the difference and why you might prefer one over the other:

”MSAs are Master Services Agreements which can cover any type of service, and be both inbound and outbound.  An ISA is labeled to help designate that it is an MSA for vendor services as it is for ‘inbound’ services.  It can also help companies differentiate between general services and SaaS Services (as some companies use different MSA templates between those two services).  If a company seeks to templatize as many legal agreements as possible, it can be helpful to give the agreements different names as often a company has different requirements and risk tolerances depending on its position in the relationship (e.g., purchaser vs. seller)”


How to make master service agreements easier to create and send

Now you should have a good idea of what to include in your master services agreement. However, creating these kinds of contracts isn’t easy. Thankfully, with the right tools at your disposal, the process can be made much simpler.


Here are a few ways you can create and send master service agreements in a fraction of the time.


Creating a master service agreement template

If you’re sending out contracts on a regular basis, a master service agreement template can be a real game-changer.


With Templates, you can create a perfect master service agreement template and then reuse it as often as you need. With the basics covered, you can then perform minor tweaks to suit each industry and client, so you can quickly replicate contracts in a fraction of the time.


Speed up signing with eSignatures

Once you’ve crafted your perfect master service agreement contract, you need to make it easier for the other party to sign. This is where eSignatures shine, as in a few clicks, you can send out your agreements and have them returned in a matter of minutes.


Convenience is the name of the game, and with eSignatures, your team, customers, and clients can sign key documents anytime, anywhere—making your sales cycle run like clockwork.


Eliminate steps with CRM integration

Jumping between multiple platforms just to create and send a signature request is time-consuming and unnecessary—so why not cut down on the amount of siloed tools and get work done faster? By integrating eSignatures with your CRM, you can free up resources and even remove some pesky manual tasks that slow you down.


With the Dropbox Sign API integration, you can populate your master service agreement contracts, set signing orders, send agreements, and automate reminders within your CRM. This lets you streamline your sales cycle, all while taking the most frustrating tasks off your plate.


Make your master service agreement move faster

The faster you can set up and sign master service agreements, the faster you can get to work delivering the services your customers want and need. Dropbox Sign lets you do just that by helping you to create and share contracts in a fraction of the time.

Remove barriers to contract signing
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