Master Service Agreements(often abbreviated “MSAs”) are a type of contract in which two parties agree to a business relationship and the terms which will govern future transactions and agreements between the two. MSAs are also commonly referred to as a “Statement of Work” or “Master Contract”. These contracts are designed for long lasting relationships and are commonly found in industries such as IT, Oil and Gas, Security, Biotech and Engineering. Many large companies have corporate policies requiring a MSA before a contractor can perform work.
MSAs typically have 2 parties: “the contractor” who will be performing the services, and the “contractee” (often simply referred to as “the company” in a MSA) who will be requiring the services of the contractor.
Unlike other kinds of contracting agreements, a MSA does not just cover a one time job, but rather multiple jobs over a period of time. This makes these agreements a perfect fit for any kind of relationship which is open ended and long lasting. Examples of such scenarios could be:
A security firm(the contractor) entering into an agreement with a construction company(the contractee) to provide surveillance and security at all of the construction sites over a given period of time; or
An oil and gas company(the contractee) engaging a transportation company(contractor) to deliver materials to all of its well sites.
In instances such as the ones described above, the relationship between the contractor and contractee will not be a one time job, but rather multiple jobs which will be performed over a period of time. Often times, the parties will not know where and when all of the future jobs will need to be performed, but they do know that when such work is needed, the contractor will be the one performing the work. Thus, a MSA is designed for companies which want to have an ongoing mutually beneficial relationship.
If your business is contemplating entering into such a relationship with another party, having a MSA is absolutely crucial. Such relationships often involve the potential of hundreds of thousands or millions of dollars worth of work over a period of time. It is simply foolish to have any uncertainties or vagueness in these kinds of agreements. Furthermore, many large companies require the existence of a MSA before any work can be performed. Most large companies will have a standardized MSA that they offer contractors, it is absolutely imperative that you don’t sign a standardized MSA given to you by a large company until you have it reviewed by an attorney. The standardized MSAs offered by large companies are almost always drawn up in their favor. Having an attorney to help protect your interests is essential to making sure that your company is safe.
The Contract Law attorneys at Stoner Law Offices help businesses in drafting, reviewing and negotiating MSAs and Standard Agreements. This can often be done at affordable, one time fees. Call us at 412-515-0939 to schedule a free consultation.
