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Master Service Agreement

How to Create a Master Service Agreement: A Comprehensive Guide

A Master Service Agreement document is a crucial one. Read more to know a comprehensive guide about the same

How to Create a Master Service Agreement: A master service agreement is ideally an agreement that is a contract between 2 parties. Parties entered this agreement during any service transaction. The agreement features all the expectations of both parties. 

Basics About The Master Service Agreement

Before you create a Master service agreement, you must know the basics about the master service agreement. It is an agreement between two parties to settle their expectations and details. This agreement also states the role of each party and how they will honor it during the end of the term. The service application is also mentioned in this agreement. The main objective of the master service agreement is to simplify the contract process. It must make future contract agreements seamless. Service level agreement is another term used for the master service agreement.

A Master Service Agreement Features The Following:

These are the features on needs to keep in mind when one want to create a Master Service Agreement:

  1. Confidentiality: Here both parties agree that they would not share the introductory details are the company’s secrets beyond a level.
  2. Delivery Requirement: The company decides who will deliver the services and when.
  3. Dispute Resolution: Both parties agree on what the employees will do in the job.
  4. Intellectual Property Right: The parties here decide how to handle the ownership and regulation regarding the patent. The client can access all the IPs in some of the conditions. In other terms, the vendor will provide the perpetual right besides keeping the patent.
  5. Limitations Regarding Liability: It will also make points clear about who is responsible in any event of the lawsuit.
  6. The Payment Term: This term shows the estimated expense and the scheduled payment.
  7. Law of Venue: It will identify where the legal resolution will take place. It can also include specific state arbitration or the federal court.
  8. Warranties: The groups are likely to agree on the scope of the warranty coverage.
  9. Work Standard: This part of the agreement defines all the parties regarding good work. There will be disputes if a party does not meet the work standards. The agreement can cover network business ethics, social responsibilities, and property access. The major goal is to be clear about as many details regarding the broad strokes. When corporations enter this agreement, they don’t have to waste much time or money in the negotiation.

The Purpose Of The Master Service Agreement

Below given is the purpose to create a master service agreement:

Companies use the service agreement to make the contract negotiation seamless. The agreement allowed both companies to spend their time discussing the deal terms. They can then start the work which is mentioned in the agreement. The customers and the company can still work through different issues even if the company does not have a master service agreement.  But there are some challenges that the parties have to deal with in the contract. You can focus on your specific contractual issues when you have a master service agreement. It is ideally intricate.

There is no specific contract discussed here, but companies do not have to deal with any pressure as such. This way, they can figure out and also tackle all the issues. Once a company gets into the master service agreement, it can easily understand the negotiation process and different types of issues that can pop up.

It is a benefit as the company will know what problems in the future would arise and how they can address them whenever they draft the potential master service agreement. This agreement can be used when there is an arrangement that is long-term, like two parties involved, and they have to avoid the negotiation rates whenever a new work order is generated.

The organizations can easily move ahead and complete the task instead of having to slow down the progress or halt negotiating the new terms and conditions. It will not only save time but also money for both parties.

Is A Master Service Agreement Important?

Most small companies use cut-and-paste terms and conditions or contractual templates whenever they have to move quickly from one part to another. There may be some opportunity for a partnership that might occur or a potential client who wants to see the nonstandard service instantly.

When the companies want to create a master service agreement, they don’t have to deal with any issues from the contracts that are not constructed well. It means that the master service agreements help the companies reduce the chance of litigation and avoid all contractual disputes.

As the operating technology environment, besides the market changing constantly, organizations must maintain the master service agreement and make the necessary amendments with time. Whenever companies make any deal, one party has to take responsibility, and there should be no responsibility for the mistakes of the other one.

The agreement will guarantee that if any of the parties screw up, it will be liable for all the financial loss that is caused due to the mistake. On the flip side, the other party would be free of all the financial obligations as it would not be at fault.

Indemnification is the legal term used here. In most cases, one of the parties will have to take all the responsibilities. Whenever the parties sign the agreement, they take complete responsibility for all the mistakes, even if the other party makes them. This party will ensure that they pay the legal fees for the partner.

It agrees not to see another partner. It would help if you also considered other factors which have to be considered.

Insurance agreements are important. The agreement generally protects the parties by outlining the risk that all the companies take today. It also includes some of the group responsibilities during the project’s lifetime.

The parties already know the terms and conditions. This agreement plays a crucial role. There are several advantages of a service agreement that one needs to understand. You can consider this guide and the terms and conditions mentioned to create perfect master service agreements.


Before finalizing any deal with a supplier for the first time, it is the need of the hour to prepare an MSA in accordance with both parties. This helps in keeping both parties secure from any legal issues in the long run. Also, if you need any help regarding the creation of an MSA in India, get in touch with the experts of Vakilsearch today. 

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