MSAs: What to Know & How to Use Them

In today’s post, I discuss how to deploy MSAs with technology vendors and service providers to help grow and scale your company’s business, how they’re different from Consulting Agreements, and when to use each. 

MSAs v. Consulting Agreements

One question I’ve been asked is this: Should my company sign an MSA or Consulting Agreement? The answer is: it depends on the type of relationship the company envisions with this vendor. Long-term relationships between companies often benefit from an MSA, where discrete projects are signed on over a period of time via SOW. The MSA outlines the general terms of the relationship, while each SOW handles the specifics of each project, such as start and end date, compensation, and milestones. 

Consulting agreements, on the other hand, are often more appropriate for one-off or short term projects with a service provider, such as a business consultant, or more often, a software developer (individual or agency). However, note that it’s customary for individual software developers providing coding work for a company to sign consulting agreements, even when the work is ongoing and longer-term, with payment on an hourly or milestone basis.

Key Common Terms in MSAs

Here are key common terms to include in MSAs, which should inform your discussions as you engage with service providers: 

• Scope of the services. What services are being provided? A general description is usually sufficient for the master agreement, with more detail provided in each SOW. 
• Deliverables and acceptance. If deliverables are being created, we’ll need additional terms to cover them, including the process for the customer to review, criteria for acceptance, and the acceptance time window. You’ll also need to include a section on correction or remediation of deliverables that don’t conform to specifications. 
• IP ownership of deliverables. For any deliverables created, the customer will need to own them; thus IP assignment language is a must.
• Payment. How will payment be remitted? Often, it’s on a milestone basis, where payment is made in installments after each milestone is complete and approved by the customer, with each SOW describing the deadline and aspects of each milestone.
• SOW template. It’s best to include a template of the SOW that’ll be used for future projects, to ensure both companies understand the level of detail required for each project.

MSAs come in many variations to cover numerous scenarios and relationships, and include numerous other terms not listed above. It’s best to consult with a commercial attorney when considering a vendor for services, as he or she can best advise as to the type of agreement to use (MSA v. Consulting Agreement) and how to draft it to cover the scope of relationship you envision.

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