Business AgreementsLegal Advice

Master Service Agreement vs Contract

An agreement in which two parties participate in a service transaction is MSA, but a contract is a legal obligation. Read here to know the master service agreement vs contract difference.

Introduction

A Master Service Agreement, often known as an MSA, is a standard agreement between two parties that specifies the rules that will apply to all of their future dealings or contracts. It outlines the fundamental demands and conditions put forth by both parties to make it simpler for them to discuss any provisions that are particular to future agreements and would not necessarily require them to revisit the fundamental agreement once more. Information about specific generic terms like payment conditions, product guarantees, intellectual property ownership, dispute resolution, etc., is included in these agreements. The Master Service Agreements must be flexible and adaptable in order to account for potential future developments. Additionally, the termination clause must not be rigid or demanding. Master Sevice Agreement vs contract is a significant topic to understand to gain proper insights regarding the difference between these two important aspects. 

A contract is an agreement that is enforceable in the eyes of the law and governed by the Indian Contract Act,1872. A proposal or offer made by one party must be accepted by the other in order for a contract to be formed. This typically entails a negotiating process in which the parties use their creative thinking to make an offer, accept it, and then draught a contract.

Why Do We Need A Master Service Agreement?

It is a more intricate contract with highly technical language and more complicated terms and conditions. Due to the careful consideration given to legal issues during the drafting process, these contracts serve as the foundation for all subsequent transactions and agreements. Every Master Service Agreement includes rules that aid in sustaining revenue, which raises the worth of the company.

 

Objective OF Having A Master Service Agreement

  • Allocation of risk 

By enabling the organization to establish a thorough risk allocation strategy, the Master Service Agreement offers a reality check. To prevent any conflicts between the terms of the Master Service Agreement and other contracts, particularly insurance contracts, the parties must carefully review the Master Service Agreement. The contract also specifies obligations for the life of the project for the contractors and employees.

  • Indemnity

A pledge to provide security for the losses of another party is made in this kind of contract. Because not all business occurrences can be forecast, these contracts are useful when there is an unforeseen circumstance that cannot be handled. Any damages of any kind sustained by the other party must be covered by the party providing the indemnification.

The types of agreements governed by a Master Service Agreement can include:

  • The ownership of property which is in a development
  • Royalties associated with new inventions or discoveries
  • How new information can be released while maintaining confidentiality agreements
  • Purchase orders and pricing variations are based on economic factors like materials cost, cost of living, etc.

    Service Agreement

What is a Contract?

The term contract is defined as an agreement between two or more parties that has a binding nature; in essence, the agreement with legal enforceability is said to be a contract. It creates and defines the duties and obligations of the parties involved.

Essentials of a Contract

  • Offer 

When one party shows his willingness to another to do or abstains from doing something, it is known as the offer.

  • Acceptance

When a party to whom the offer is made agrees to do or abstains from doing in respect of that offer, it is known as acceptance.

  • Consideration

Consideration is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.

  • Free Consent

When two or more persons agree upon the same thing in the same sense is said to be free consent.

  • Lawful Object

An object which is valid in the eyes of the law is said to be a lawful object.

Difference Between Master Service Agreement and Contract

  1. The contract is defined under legislative statute and has its rules mentioned under Indian Contract Act, 1872, whereas Master Service Agreement does not have any particular statute and is completely governed by the Mutual Agreement of the Parties. 
  2. A contract can either be void or voidable at the option of the parties when any of the requirements get breached. At the same time, a master service agreement can directly become void and not voidable.
  3. A contract can be made between anyone defining various relations, whereas a master service agreement is preferably made for defining the business deal to work for each other between 2 parties only.

Conclusion

This Article highlights upon Master Service Agreement and Master Service Agreement Vs Contract difference. A Master Service Agreement, often known as an MSA, is a standard agreement between two parties that specifies the rules that will apply to all of their future dealings or contracts. To prevent any conflicts between the terms of the Master Service Agreement and other contracts, particularly insurance contracts, the parties must carefully review the Master Service Agreement. A Master Service Agreement completely works upon the willingness of both parties. Hence there must be a mutual agreement between the parties for Better work efficiency.

FAQ

  • What is a Master Service Agreement?

It’s an agreement made for the long-term purpose where parties are engaged in the long-term business, and different contracts need to be drafted again and again. Hence, it is established.

  • Whether Master Service Agreement can only be done in large projects, or it can be done in small enterprises as well?

It is not essential that always for large projects, master service agreements work.

  • Is a Master Service Agreement better than having a contract?

No. But it will save the time of the parties in a type of work where new contracts need to be entered upon after intervals of time.

  • Where can one seek remedy if a Master Services Agreement is breached?

Aggrieved Party will be eligible to go to the court to seek redressal just like any other agreement or contract breach.

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