Master Service Agreement

What is a master service agreement?

A master service agreement (MSA) is a legally binding contract that establishes the general terms and conditions governing an ongoing business relationship between a service provider and a client. Rather than negotiating a new contract for every project or task, the parties agree on core legal terms in advance, with specific work later defined in separate Statements of Work (SOWs) or work orders.

Many UK businesses and service providers choose to sign a standard master service agreement to set a solid legal framework for the protection of confidentiality, intellectual property rights and dispute resolution provisions.

A master service agreement is particularly useful where there is an ongoing commercial relationship, repeat work, or long-term service provision. It is commonly used for consultancy arrangements, outsourced services, IT support, software development, marketing services, and professional business services.

What should be included in this master services agreement template?

General Payment Clause

The text of a master service agreement does not directly define the exact fees the client is supposed to pay. All the fees are usually defined in a separate statement of work for each specific project or task. Instead of this, a master service agreement outlines:

• when invoices should be issued;
• timeline for paying invoices;
• how the price for services is being formed;
• suspension of services in case of non-payment.

Data Protection Clause

In the course of provision of services under the master service agreement, the parties process personal information of each other and of their employees, contractors and staff. In this regard, is it important to agree in the text of this document on how such personal information shall be protected.

The data protection clause shall be written in accordance with the General Data Protection Regulation 2016/679 and the Data Protection Act 2018, which provides the following obligations for both parties:

• immediate deletion of any personal data upon each party’s written request;
• no transborder transfer of personal information without prior written approval of another party;
• encryption and depersonalisation of personal data;
• compliance with the UK data protection laws.

Statement of Work (SOW)

Assignment of new projects and tasks under the master services agreement is done throughout the statement of works. This is a detailed description of each new project, including key milestones and key dates, that is being attached to the main agreement as an addendum.

The master service agreement may have an unlimited number of statements of work. That allows parties to quickly assign the new task without renegotiating all legal terms of cooperation from scratch again.

Termination Provisions

Each master service agreement template shall outline when and how the contract can be terminated. As a general rule, a contract is being terminated upon its full completion and payment of all fees. However, termination is also possible:

• Material Breach. If either party commits a material breach of this agreement that is not being remedied within 21 days of such a breach;
• Immediate Termination. Either party should be able to terminate this agreement at any time by sending a prior written notice to the other party. Immediate termination is also possible in case of a moratorium under the Insolvency Act 1986.
• Mutual Agreement. Termination of this contract is also possible upon mutual agreement of both parties. In such a case, parties should execute an additional addendum to this agreement confirming the termination.

Difference between Master Service Agreement and General Service Contract

At first glance both documents may appear very similar, as both of them deal with the provision of certain types of services by a service provider to the client. However, the situations in which these two documents are being used practically differ significantly.

Master Level Agreement

Imagine John runs a reputable IT developer and consulting company in London. He engages lots of clients because John is able to offer a wide variety of services, from developing mobile apps to implementing IT security measures, 24/7 IT maintenance and support, etc. John chooses to sign a master service agreement with his clients because clients may order different blocks of services along the road. Therefore, instead of signing the new contract again and again, John prefers to set all terms and conditions for the provision of services in one document. Each new assignment or project is being added as a separate State of Work (SOW) to the main agreement.

All in all, a master service agreement template:

• allow repeating work or engaging in a new project within the same legal framework;
• suitable for long-term cooperation;
• creates a solid framework for ongoing cooperation.

General Service Agreement

Daniel is a freelance accountant who offers bookkeeping services to small companies and businesses across the UK related to filing tax returns to HM Revenue & Customs. He has lots of clients who regularly approach him when the help is needed. Daniel prefers to engage his clients via a general services contract that defines key dates and final deliverables for each client.

A general service contract:

• usually covers one project or task;
• has a specific milestone, deadlines or key dates; and
• has a fixed price.

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