A master consulting service agreement is entered into when a large number of services are being hired from the same vendor. It is typically used for hiring recruiting services, housekeeping services, etc. A separate statement of work documents under such an agreement is usually executed in order to have broad as well as specific contracts in place.
What is Master Consulting Services Agreement?
When the scope of services between two parties remains the same for different purposes, a master services agreement may be entered into. For example, A agrees to provide cab services to B company and also agrees to supply drivers and self-driving cars for other purposes. As the scope of work is considerably related, instead of entering into multiple contracts, it is advisable to enter into one master services agreement.
A master services agreement serves as a contractual foundation for future transactions between the signing parties. It spells out the performance objectives and most but not all of the terms between the parties. When two or more parties mutually agree to draw up a contract which governs and also provides a broad framework of responsibilities and risk allocation regarding the future transactions between them.
Purpose of Master Consulting Services Agreement
The main purpose of a master consulting services agreement is to make contract negotiation simple. Such a contract enables contracting parties to focus on specific contractual concerns like price and time frame when the contract actually arises.
Another purpose of a master services agreement is that when contracts are repeatedly entered into, by two or more parties, the parties can save time by entering into a master services agreement.
Key Terms of Master Consulting Services Agreement
The Key terms contained in a master consulting services agreement include the following:
- Scope of work: This section is very important as it outlines the services being provided. Typically, all the services which are sought to be hired should be mentioned under this head.
- Confidential Information: This is an important clause as it seeks to maintain the confidentiality of the information shared with the service provider.
- Data protection: Make sure to make this clause in line with the applicable law. Here, not only Indian law but also global laws will need to be taken into account.
- Intellectual Property: This clause should be given if any intellectual property is being shared with the service provider.
Drafting a Master Consulting Services Agreement
The following guidelines should be followed while drafting a master services agreement:
- The scope of work should be as broad as possible. It should include minute details such as the conduct, method of performance, scheduling, reporting, place of work, future services, etc.
- Whether the agreement is a fixed term agreement or an open-ended one, should be mentioned clearly.
- Curable defaults, defaults for which immediate termination is warranted should be included.
- It is pertinent to include a clause for maintaining confidentiality.
- It is pertinent that a legal person reviews the clauses to ensure that all relevant clauses are being added.
- Simple language should be used.
Master Consulting Service Agreement Checklist
A Master Consulting Service Agreement should be well-drafted in order to effectively balance the risk allocation among the contracting parties. Following are the key agreement provisions from both- the service provider as well as the customer’s vantage point which identify risks and consequences of such provisions:
- Introduction: which covers the agreement date, name of the parties, and definitions of legal terms
- Scope of Services: Statement of work
- Terms of Business
- Billing and Payment
- Limitation of Liability
- Force Majeure
- Intellectual Property
- Confidential Information
- Data Protection
- Dispute resolution
Master Service Agreement for IT Services
A master service agreement (MSA) for IT services is a contract between the customer and IT service provider and spells out the terms of contracts for all current and future transactions. It is beneficial for the customers who require or anticipate future work from IT service providers without having to negotiate the terms each time service is provided. In such transactions, while the service specifics may change, service guarantees remain the same and thus MSA allows the parties to cover multiple transactions.
Scope of Services
An MSA contains a provision known as “statement of work” (SOW). A statement of work is a formal document that captures the work activities, deliverables and timeline a vendor must execute in performance of specified work for a client.
Generally, a SOW contains the purpose, scope, and location of work, period of performance, special requirements, payment schedule, etc. A customer can order new services by executing a SOW. It serves as an order form that is legally binding on the parties to the contract.
Thus, one MSA is drafted to establish the broad legal terms between the parties and then one or more SOWs to agree on project-specific services and payment terms. Each SOW is then attached to and governed by the MSA.
Advantages of a Master Consulting Services Agreement
The following are the advantages of a consultant services master agreement:
- Make the contract process faster and simpler. In such a contract, two parties agree to the main points of a contract thus it speeds up the negotiation process, making it much faster than standard contract negotiation.
- It is the guiding document for a specific contract. It allows companies to focus on specifics while the broad terms and conditions are taken care of in the master services contract.
- Allows a company to understand what problems may arise in the future and allows them to address the same.
- Used when there is an arrangement that is long term, to avoid negotiations each time.
A master consulting services agreement takes care of broader aspects of contractual arrangements. It is typically used when a bulk of services are being hired from third-party service providers. Detailed remedies and dispute resolution methods are outlined in the agreement. It is preferred to go for alternative dispute resolution methods over traditional litigation dispute resolution methods in the event of a dispute. It is also advised to have a separate scope of work documents under the umbrella of a single master services agreement.
Sample for Master Consulting Service Agreement
A consultant services master agreement template can be downloaded from below.