Difference between MSA and SLA

Last Updated at: November 04, 2019
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Differences between MSA and SLA

Master Service Agreement(MSA)

A Master Service Agreement (or MSA) is a typical contract between two parties that lists out the terms that govern all of their future transactions or future agreements. It lays down the basic requirements and conditions posed by either parties to make it easier for them to negotiate any terms that are specific to the future agreements and would not necessarily need to look into the basic deal once again. These agreements consist of information regarding specific generic terms like payment terms, product warranties, intellectual property ownership, dispute resolution, etc. The MSAs must not be rigid and must be modifiable considering the changes that may occur in the future. The termination clause must also not be specific or demanding.  

Objective of having MSA:

    1. Risk allocation – The MSA provides for a reality check by allowing the business to implement a comprehensive risk allocation strategy. The parties must look into the MSA carefully to avoid any interference of terms of the MSA with other contracts, especially the insurance contracts. The contract also includes terms to be obliged by the contractors and the employees during the duration of the project.
    2. Indemnification – It is a type of contract where one party promises to provide security for the losses of another party. These contracts come in handy when there is an unexpected situation that cannot be handled because not all events of a business can be predicted. The indemnifying party is liable for paying for any damages whatsoever incurred by the other party.

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Why do we need MSA?

It is a more detailed style of contract with high technicality and more complex in terms of the terms and conditions involved. These contracts provide for the backbone of any future transactions or agreements because of the legal oversight involved while drafting it. The norms provided in every MSA helps in sustaining revenue and therefore increases the value of the business.

Some terms predominantly required for an MSA are as follows:

  1.   Terms of agreement
  2.   Proprietary rights
  3.   Intellectual property rights
  4.   Insurance
  5.   Taxes
  6.   Limitation of liabilities
  7.   Termination of the agreement, etc.

Service Level Agreement (SLA)

On the other hand, a Service Level Agreement (or SLA) is an agreement specifically between the service provider and a client / a service user. The SLA puts forth the particular requirements of the service being provided and also what the user is expected to do.

A good example for the SLA would be the terms and conditions being specified by the internet service providers and the telcos. These contracts include everything right from defining the type of service being provided to the termination of the agreement.  Such service level agreements are specific to some service providers such as the Web Service Level Agreement (WSLA), Cloud Computing, Outsourcing, etc.

Types of SLAs

  1. Customer-based SLA is an agreement with an individual customer group including all the services that they use.
  2. Service-based SLA is a wider agreement between the service provider and all the customers using the services.
  3. Multilevel SLA covers for a more variable level consisting of ;corporate-level (issues specific to every customer throughout the organization), customer-level ( issues relevant to particular customer group) and service-level (issues related to specific services related to the specific group of customers)

Components of SLA

A typical SLA must specify the following terms in detail for the benefit of the customer as well as the service provider:

  1.  Types of service provided must be specified along with any other relevant details.
  2.  The reliability of the company is what makes them face lesser disruptions and their spontaneous responses to the demands of the customers can also make the customer experience better. So the reliability and desired performance levels need to be included in the agreement.
  3.  The customer satisfaction and their usage are supposed to be monitored regularly. These components are measured through statistics and the terms of the monitoring and reporting process must be mentioned.
  4.  Once there is an issue faced by the customer or the service users, they must be informed of the contact details of whom and how to report. This contract will also specify the limitation of time to resolve the problem and get it fixed.
  5.  When in case the service provider did not fix the problem being reported upto the expected level, the customer is free to terminate the contract or ask for a refund for losses incurred.
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Difference between MSA and SLA

7730

Master Service Agreement(MSA)

A Master Service Agreement (or MSA) is a typical contract between two parties that lists out the terms that govern all of their future transactions or future agreements. It lays down the basic requirements and conditions posed by either parties to make it easier for them to negotiate any terms that are specific to the future agreements and would not necessarily need to look into the basic deal once again. These agreements consist of information regarding specific generic terms like payment terms, product warranties, intellectual property ownership, dispute resolution, etc. The MSAs must not be rigid and must be modifiable considering the changes that may occur in the future. The termination clause must also not be specific or demanding.  

Objective of having MSA:

    1. Risk allocation – The MSA provides for a reality check by allowing the business to implement a comprehensive risk allocation strategy. The parties must look into the MSA carefully to avoid any interference of terms of the MSA with other contracts, especially the insurance contracts. The contract also includes terms to be obliged by the contractors and the employees during the duration of the project.
    2. Indemnification – It is a type of contract where one party promises to provide security for the losses of another party. These contracts come in handy when there is an unexpected situation that cannot be handled because not all events of a business can be predicted. The indemnifying party is liable for paying for any damages whatsoever incurred by the other party.

Get Your Legal Documents Prepared

Why do we need MSA?

It is a more detailed style of contract with high technicality and more complex in terms of the terms and conditions involved. These contracts provide for the backbone of any future transactions or agreements because of the legal oversight involved while drafting it. The norms provided in every MSA helps in sustaining revenue and therefore increases the value of the business.

Some terms predominantly required for an MSA are as follows:

  1.   Terms of agreement
  2.   Proprietary rights
  3.   Intellectual property rights
  4.   Insurance
  5.   Taxes
  6.   Limitation of liabilities
  7.   Termination of the agreement, etc.

Service Level Agreement (SLA)

On the other hand, a Service Level Agreement (or SLA) is an agreement specifically between the service provider and a client / a service user. The SLA puts forth the particular requirements of the service being provided and also what the user is expected to do.

A good example for the SLA would be the terms and conditions being specified by the internet service providers and the telcos. These contracts include everything right from defining the type of service being provided to the termination of the agreement.  Such service level agreements are specific to some service providers such as the Web Service Level Agreement (WSLA), Cloud Computing, Outsourcing, etc.

Types of SLAs

  1. Customer-based SLA is an agreement with an individual customer group including all the services that they use.
  2. Service-based SLA is a wider agreement between the service provider and all the customers using the services.
  3. Multilevel SLA covers for a more variable level consisting of ;corporate-level (issues specific to every customer throughout the organization), customer-level ( issues relevant to particular customer group) and service-level (issues related to specific services related to the specific group of customers)

Components of SLA

A typical SLA must specify the following terms in detail for the benefit of the customer as well as the service provider:

  1.  Types of service provided must be specified along with any other relevant details.
  2.  The reliability of the company is what makes them face lesser disruptions and their spontaneous responses to the demands of the customers can also make the customer experience better. So the reliability and desired performance levels need to be included in the agreement.
  3.  The customer satisfaction and their usage are supposed to be monitored regularly. These components are measured through statistics and the terms of the monitoring and reporting process must be mentioned.
  4.  Once there is an issue faced by the customer or the service users, they must be informed of the contact details of whom and how to report. This contract will also specify the limitation of time to resolve the problem and get it fixed.
  5.  When in case the service provider did not fix the problem being reported upto the expected level, the customer is free to terminate the contract or ask for a refund for losses incurred.
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