A Master Service Agreement (MSA) is a contract between two parties to agree to most of the terms that will govern future transactions or agreement. It allows them to negotiate any transactions, issues or agreements quickly. The MSA provides a strong base to bring two parties under single roof with defined set of rules and regulations designed for the sake of both parties.
The MSA outlines the responsibilities and goals of each parties during profit and loss of the company. Typically, it includes the following:
- Payment terms
- Product warranties
- Property ownership
- Dispute resolution
- Geographic location
- Venue of law
- Social responsibility
- Business ethics
- Insurance Policies
- Work Standards
Two important reasons of having a Master Services Agreement for your company
In case of any dispute, the agreement will decide the fault and avoid parties to take a dispute to court. It saves money of the parties and the time of the law firm for small business. Vault Legal is a law firm having skilled and experienced lawyers to provide various cost-effective legal services near Melbourne and Sydney. They charge a fixed rate or on a retainer basis to their clients of all sizes including small businesses, start-ups and entrepreneurs.
1. Indemnification
Indemnification is an efficient method to resolve legal disputes. It protects the party from being held liable for losses and injuries incurred by the company. Regardless of the fault, each party takes the responsibilities of damages, profit or loss happened.
It is a system to allow one party to safeguard or hold harmless another party against existing or prospect losses. The indemnifying party agrees to pay for damages and pay all legal fees it has caused or may cause in the future, regardless of which party is at fault. It avoids the situation of pointing fingers at everyone else and shifts the risk to its insurers.
2. Risk Allocation
The MSA helps the businesses to implement a risk allotment strategy that considers business realities. The MSA clearly outlines the responsibilities and risks of contractors and employees for the duration of the project. In case there is change in project work, the need to negotiate may be eliminated to reduce the disputes through the use of risk allocation.
Statement of Work: the blueprint of MSA for future agreement
It is a provision in Master Service Agreements that provides a official document outlining the precise work activities, the deliverables, and the timeline for work to be accomplished.If you have created the MSA for your company, it is very easy to use it as a template for negotiations in the future. It provides a blueprint that allows both parties to focus on important details of the discussion.
Before signing the MSA, carefully look at the terms for termination of the agreement. Your MSA should not control your working hours, job profiles and define some specific projects. The MSA is a one-time process that defines the long-term progress of your company. It defines the type of concerns or issues that may come up and build a strong base to face ups and downs of future.
