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By Mari-Ann Vellerand
Head of Customer Success at Avokaado
Growth is great, but it can also lead to uncertainty.
For the legal counsel and the management of a growing company, the fragmented overview of the contracts that come in and go out of the company leaves questions at the back of their heads.
The concern is valid. Contracts account for 70-80% of business operations. Setting out the terms and conditions of your relationship with another company early on can remove this ‘uncertainty’. A master service agreement (MSA) can help you here.
In this article, we’ll break down everything you need to know about MSAs and guide you into using an automated master service agreement template. Here we go.
A master service agreement or MSA is a formal contract between two parties to simplify the negotiation process. A standard MSA spells out the essential terms and definitions that both parties need to comply with, as well as the consequences for any breach that may happen. So basically, it’s a way to make things official while protecting both companies’ interests.
Service agreements can be used for a one-time project, but more often they’re used by companies with ongoing business relationships. Especially when there’s a possibility of future deals with the same party. Consider MSA agreements as an umbrella for a certain project that will govern individual statements of work (SOW) for future tasks. In such cases, the contract may include options for renewal (or even early termination).
Typically, MSA agreements contain the following:
One of the big benefits of using a master service agreement is it can speed up the contractual negotiations. How?
Let’s say you’ve entered a business venture and expect multiple projects to come out of the business partnership. MSAs set the general provisions that both parties agreed upon. That means if there’s a new project, you only need to put in the specific details of each new task to your statement of work.
However, let’s be honest ― no business relationship is perfect. Unforeseen events can always occur. An MSA can be used to delineate responsibility.
So what are some examples of such events? Below are some cases.
That’s why you should prepare an MSA before making any business ventures. It’s for your company and employers. So before you draft, ask first…
In a nutshell, the MSA should provide a roadmap for the parties’ relationship. It sets out the ground rules so that both sides know what to expect.
As a starting point, here’s something like a master service agreement checklist:
Make sure to include these key clauses:
Definition of the parties’ respective roles and responsibilities
It’s not uncommon for one party to feel like they are being taken advantage of ― like they’re working harder than the other party. So including a statement of roles and responsibilities in an MSA will give the transparency that both parties need for working smoothly.
Description of the services to be provided
Do you ask, “What services can I expect?”. Well, this clause should answer that. Defining the services that will be provided can be a good reference point. No party will overpromise or underdeliver their service. It’s a good way to avoid scope creeping.
Detailed pricing structure
Getting an agreement on the pricing is often one of the most difficult aspects of negotiating a contract. However, it’s important to be clear on the clause that’ll specify the cost of the delivered service. The pricing structure should be detailed in the agreement to avoid misunderstandings and disputes later on.
Termination clause
A termination clause is when you don’t have to pay penalties if your contract is canceled. This usually specifies who can cancel the contract and for what reasons. However, it shouldn’t be confused with a “force majeure” clause that excuses both parties from performing their contractual obligations if an occurrence out of their control stops them.
Confidentiality provision
A confidentiality clause, which is referred to as a nondisclosure, is a common feature of a service agreement. A clause like this is a legally binding agreement between the parties to keep certain information confidential such as trade secrets, proprietary information, or sensitive business information.
Indemnification clause
This clause protects the business from any damages or losses that may occur as a result of the other party’s negligence or wrongdoing. By including this clause in the agreement, the business can be sure that it will not be held liable for any damages incurred.
Dispute-resolution clause
Conflict is an inevitable part of any business relationship. Even the most well-intentioned partners can have disagreements about the terms of their agreement. If a conflict does arise, a plan is in place for how to handle it, ensuring that they have a process in place for addressing conflict before it has a chance to escalate.
Whenever you write an MSA, be sure to include provisions for all eventualities so there’s no confusion for parties. MSAs that are well-written eliminate the need to renegotiate terms over and over again.
Here’s where it gets real. When you apply everything we’ve talked about so far. You may choose to build from scratch or model it from a previous MS Word contract template. However, you may want to reconsider for a few reasons.
So our suggestion is to use a service agreement template. Yet, we don’t encourage you to use a template that the internet offers you. You need an online template that can be customized to your unique needs and lets you do automated contract drafting.
Opt for a service contract template that’s comprehensive and covers all of the key points that should be included in an MSA. Take the time to read through the template carefully and tailor it to your specific needs.
Here’s an automated service agreement template that ticks everything we mentioned. A free service agreement template from Avokaado.
A simple note: Avokaado’s team of legal engineers is made up of professionals with more than 15 years of experience in employment, corporate, services and cooperation, transitions, and real estate law.
So what’s in Avokaado’s template? Here are some that you’ll find:
First, know that Avokaado is an automated document generation software. They let you create a document based on an automated template.
To use the service contract template in Avokaado, simply follow the 5 steps below:
If you’re looking for a way to simplify and streamline your business relationship with your service providers, consider using a master service agreement. It can help ensure that everyone is on the same page when it comes to expectations, deliverables, and deadlines.
We’ve provided a free template for you to use as a starting point ― just download it, fill in the blanks, and send it off to your contractors. Like a modern way to manage all your contract lifecycles? Use a modern CLM that can automate your end-to-end contract workflows.
You can automate any document and streamline any process using Avokaado Operational Intelligence Platform. Book a demo to learn more!
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