One of the best things a business can do to grow is build strong relationships with good contractors. Working with people who you trust to not only do the job on time, but to do the job well is critical to ensure you’re not paying for fixes or rework down the track.
When engaging contractors, it is best practice for businesses to have a Master Services Agreement or ‘Service Level Agreement’ in place to streamline their current and future project work.
A Master Services Agreement (or MSA) is a contract which outlines the key details of the relationship between the two parties – the business and their contractor – who intend to have a long-term relationship. The contract details key points for the relationship, ensuring parties agree on the expectations for each party, the overall goals of the relationship, any payment terms, and details on how any conflicts should be resolved.
An MSA will generally be drafted prior to or alongside the first Scope of Work agreement which details the specifics of a new project which the business is hiring the contractor to complete.
MSA’s are useful agreements to have in place for long-term relationships because they make it easier and faster to begin new projects when they arise, rather than waiting until a new contract has been drafted and negotiated each time.
Master Service Agreements outline the risks and responsibilities of each party for current and future projects. By clearly establishing roles and expectations early in the relationship, businesses can implement a comprehensive risk allocation strategy and avoid unnecessary disputes.
It is often ideal to have an MSAs between parties when attempting to establish a successful working relationship. It ensures that any possible disputes can be quickly and easily resolved.
MSAs should be used when the relationship between businesses and their contractors when an ongoing project will involve the creation of products by the independent contractor for the business. The MSA avoids major disputes by outlining upfront before the works begin by:
Defining ownership of property in a development
Defining how royalties associated with new inventions or discoveries as part of a project will be attributed
Defining how new information can be released while maintaining confidentiality and privacy agreements
Defining the indemnity parameters to protect the parties from legal liability resulting from actions taken relating to the project
Defining the process for alternative dispute resolution and how any legal fees will be allocated during this process
Defining expectations for work schedules of each party, response timelines and any regular communications requirements
Defining the process for Purchase Orders and pricing based on economic factors like materials cost, cost-of-living, etc.
As MSAs are used to cover large, ongoing relationships between businesses and their independent contractors, they must cover a wide range of terms. These documents typically outline details on:
Product delivery
Payment terms
Dispute resolution
Confidentiality terms
Limitations on liability
Services warranty
Intellectual property rights (IP)
Termination
For more specific details on what you should include in an MSA view our MSA Template.
Master Services Agreements are contracts frequently used to establish a working relationship between businesses and contractors. They are a useful agreement to have in place between when a business trusts and is satisfied with their contractor and intends to continue working with them for the foreseeable future.
The details in an MSA vary based on the situation and the parties involved, however the purpose remains the same – to enforce transparency into responsibilities in the relationship and protect both parties from damage or loss should a dispute arise.
Businesses who frequently employ independent contractors often have a template of all their standard requirements. Some are even leveraging legal automation technology like Plexus to simplify their MSA contracting process further and have their projects begin sooner.
Plexus' contract management software gives you everything you need to accelerate business productivity in one modular platform. Get contracts signed faster, streamline document workflows, collaborate in real-time and integrate with the apps you already rely on.
One of our consultants will be in touch ASAP to answer your questions and determine your requirements.
Want to speak to someone instead? Call us on 1300 983 907
One of our consultants will reach out to you shortly.
Get weekly legal transformation best practices, benchmarks and trend analysis.
Thanks for subscribing
We use cookies on this site to enhance your user experience and improve our services. By using our website, we assume you're ok with this. View our privacy policy for details.
Modernise your legal function with the Digital Transformation Guide for General Counsels.
The eBook is on its way to your inbox. You can also download via the link below.
Download now