Research shows that 60 to 80% of business transactions are governed by contracts, and with that in mind, it’s vital that you evaluate the way your business makes legal agreements with others, as these transactions have the power to make or break your company. Master service agreements (MSAs) are a perfect place to begin the process.
What is a master service agreement?
In the tech world, MSAs are most often associated with a company making promises to a development partner or customer.
For those unfamiliar, a master service agreement refers to a contract between two parties, stating the terms and conditions of all future activities those parties will be involved in together. Master service agreements can govern anything from real estate developments to purchase orders, and in the tech world, they are most often associated with a company making promises to a development partner or customer.
7 Key Clauses for Your Master Service Agreement
Without laying out the terms of these critical areas, you could leave your company vulnerable to litigation.
No matter who you’re partnering with, your master service agreements should cover some important ground. Without laying out the terms of these critical areas, you could leave your company vulnerable to litigation for not holding up your end of the bargain:
1. Confidentiality
If you are working with a third-party service provider, you must include phrasing that prohibits them from sharing secrets about the company or project with anyone else. Doing so ensures that your competitors won’t possess information they can use to damage your company or get ahead in the market.
2. Delivery Requirements
Your master service agreements should clearly define the specific responsibilities and activities that fall under each party’s purview and what products or services will be delivered at the end of the project. They should also detail acceptable work standards, delivery dates, and the procedures to follow if these delivery requirements are not (or cannot be) met.
3. Pricing Structure
Each of your master service agreements needs to include critical information regarding your pricing structure and what the project will ultimately cost. It’s an especially important aspect, as it will protect your business and your budget as economies shift and prices change.
4. Dispute Resolution
Don’t wait until problems arise to figure out how to resolve them. Your MSA should already include information about the dispute resolution process before the project even begins. Detail what forms of resolution are acceptable (e.g., arbitration) and where the dispute should occur geographically.
5. Intellectual Property Rights
Who owns the patents? What rights to the intellectual property does the other party have? Answering questions like these helps you avoid legal disputes over ownership and use.
6. Indemnification Clause
These clauses are also critical for business protection. In the event that the other party suffers losses or damages due to their own negligence, your business will not be held liable.
7. Termination Clause
This part of the agreement lays out the terms of who can cancel the contract and what constitutes a good reason for it. A clause like this can keep you from having to pay penalties in the event of a cancellation.
Get Top Notch Legal Assistance With Your MSAs
When it comes to creating or reviewing your master service agreements, it’s best not to go it alone.
Master service agreements are critical for streamlining your operations and getting future work done quickly without the need for negotiations or drafting new contracts. However, they must be done right to avoid exposing your business to unnecessary risk of disputes and litigation.
With that said, when it comes to creating or reviewing your master service agreements, it’s best not to go it alone. A tech law attorney at Lancaster Tech Law can help business owners in Lancaster, PA, and the surrounding areas take control of their future and draft MSAs that are fair for both parties and provide a safeguard for your future business endeavors.
Call today to schedule a consultation, learn about the unique flat-rate fee structure, and get started on the path toward better business protection.