Contracts are an integral part of doing business, but they can be time-consuming to draft and negotiate. For businesses that require multiple contracts, whether for clients or contractors, a master service agreement (MSA) can be the ideal solution.

With an MSA, you do not have to re-establish the contract terms every time you create a new contract. Rather than creating a whole new agreement every time, you can use an MSA that outlines the standard legal terms, and then modify the finer points of the contract based on the project's needs.

What is a Master Service Agreement (MSA)?

A master service agreement is a legal contract that specifies expectations for all parties involved in an exchange of goods or services. When you use an MSA, you simplify and streamline the contract negotiation process. To address all potential legal concerns, an MSA may be extremely complicated.

MSAs are sometimes confused with service-level agreements. Unlike an MSA, a service level agreement (SLA) is a contract between two parties for a set period of time. For instance, a quarterly maintenance contract with a particular provider could be considered a service-level agreement.

The key components of a master service agreement depend on the industry and products exchanged. Industries that benefit from MSAs include:

• Oil and gas
• Manufacturing
• Agriculture
• Telecommunications
• Food and beverage
• Retail stores
• Warehouses and storage facilities
• Shipping and logistics
• Facilities maintenance
• Financial services
• Sales and marketing
• Human resources

Whether you are a service provider or recipient, establishing the terms of your current and future contracts through an MSA can improve your operational efficiency and contractual relationships.

Since they are designed to cover every legal eventuality, MSAs can also reduce your overall liability. This can save you time and money in the event of a disagreement or breach of contract.

The purpose of an MSA is to address broad legal concepts while allowing you to adjust certain details, such as deliverables, pricing, and payment terms. An MSA also addresses general contractual concerns about accountability, responsibility, and risk allocation.

As a business owner, you can ideally apply an MSA to all your future contracts.

Information and Terms That an MSA Should Include

An MSA is useful because it establishes the legal requirements for the exchange of goods and services. It can streamline contract negotiations by eliminating potential conflicts before they arise. Clauses of a master service agreement may include:

• Product or service type
• Delivery and management responsibilities
• Insurance coverage, indemnification, risks, and liability
• Cost projections, payment terms, and deadlines
• Taxes, escrow, and security responsibility
• Terms for failure to pay
• Contract termination terms
• Dispute resolution, arbitration, and litigation
• Confidentiality and intellectual property terms
• Warranties for services and products
• Procedures to address product defects or errors

An MSA can strengthen the relationship between businesses, contractors, and clients by clearly outlining the terms of the agreement from the outset. This gives both parties a starting point from which to negotiate the contract, and allows each party to address potential points of contention before issues arise. Once you reach an agreement, you can then continue using the same terms for future agreements with the same party or others.

Key Advantages of Master Service Agreements

In today’s high-speed business world, efficiency is critical for a successful enterprise. MSAs facilitate efficiency by speeding negotiations, addressing potential pain points, and creating a template for future transactions.

A Quicker Negotiation Process

One of the primary benefits of an MSA is the speed it lends to negotiations. Since you establish the fundamental agreement terms, you avoid or reduce lengthy discussions about liability, property rights, responsibilities, and warranties. Since these terms are already laid out, you can adjust them rather than starting from scratch.

Once you establish the basics, you can discuss products and services without extensive contract review. This allows all parties to complete the contract process with minimal effort.

Protection For All Parties Involved

An MSA lets you focus on products, pricing, and delivery without worrying about shifting expectations. Both parties can accept the established terms without time-consuming legal review.

When you create a new contract every time you need a good or service, it's easy to overlook important details. Indemnification, intellectual rights, and other important terms may change to your detriment. An MSA protects both parties from unexpected contract changes and oversights.

A Template for Future Contractual Agreements

The fundamental goal of a service contract is to establish the terms of exchange for goods and services. A contract must also address potential issues, disagreements, and misunderstandings that may arise.

With an established MSA, you have already determined which terms work best for you and your organization. You can use the MSA as a template for contracts with other clients or providers. Even if the other party does not agree with all the terms, the MSA establishes a starting point for negotiations.

Effortlessly Construct and Optimize Contracts With Aline

Master service agreements can be complex, especially when you must manually review documents. A digital contracting process lets you track contract terms, changes, questions, and approvals all in one easy-access document.

Digital contract optimization lets all stakeholders weigh in on the contract before signing. Dynamic approvals automate the approval process, for quicker, more efficient in-house decision-making.

Upon contract completion, a digital contracting process allows you to send the contract for signatures in a specific signing order. That way, you can make sure your contract is fully executed by all the necessary parties.

Aline provides a smart document platform where you can create and optimize your master service agreements with ease. We use an AI-facilitated Software as a Service (SaaS) platform to create contract processes tailored to your needs.

Contact Aline today to streamline your master service agreement procedures with cutting-edge digital contracting technology.