Master Service Agreement
What is a Master Service Agreement?
An MSA is a contract between two or more parties that outlines the terms and conditions under which the businesses will work together in future. It's commonly used in long-term business relationships, especially in sectors like IT services, consulting, construction, manufacturing, and outsourcing.
Let’s consider an example: A marketing agency wants to build a website and a mobile app with a technology service provider. Instead of drafting a separate contract for each project, both parties enter into a Master Services Agreement (MSA). The MSA defines the common terms and conditions, such as confidentiality, the duties and responsibilities of both parties, intellectual property (IP) rights, dispute resolution, non-compete, non-solicitation, , warranties and other generally applicable clauses
For each specific project, such as the website or the mobile app—a separate document known as a Statement of Work (SOW) is created. The SOW details the project’s scope (including in-scope and out-of-scope items), timelines, deliverables, duration, and payment terms. It serves as a project-specific agreement that operates under the MSA.
For any future projects, new SOWs can simply be added as annexures to the MSA. Each SOW is governed by the terms and conditions of the MSA unless certain provisions are explicitly modified and mutually agreed upon in writing within that particular SOW
Why is a Master Service Agreement important?
An MSA (Master Services Agreement) is important for enterprises and companies engaged in long-term relationships with vendors. Imagine this: your startup has invested months of research and effort into a new project and engages an existing tech vendor to bring your vision to life. However, instead of getting straight to work, you spend days negotiating the legal contract for the new project. This delays your timeline, which is especially critical in the fast-paced tech industry. With each new project or iteration, renegotiating the same terms wastes time and increases costs.
An MSA solves this by establishing a long-term framework that defines the key terms and conditions upfront. Once the MSA is in place, you no longer need to revisit these terms with every new project. Instead, you can focus on the specific details of each project through a Statement of Work (SOW), which streamlines the process, speeds up delivery, and eliminates repetitive negotiations.
With an MSA in place, you create a stable and efficient foundation for ongoing collaboration, saving time and money while fostering a productive, long-term partnership with your vendor.
With an MSA:
- Saves time by using predefined terms and conditions for long term relationship with vendors
- Protects both parties on how to handle delays, confidentiality, and disputes.
- Improves collaboration by clearly outlining the rights and responsibilities of each party.
- Reduces time spent on negotiations and contract drafting, leading to lower costs and faster project completion
Who needs a Master Service Agreement?
An MSA is essential for:
1. Service providers and businesses handling multiple projects with the same client, such as IT services, consulting firms, construction companies, manufacturers, outsourcing agencies, design studios, and marketing agencies.
2. Clients who regularly work with the long-term vendors & require clarity on standard clauses, terms, and conditions to prevent misunderstandings.
3. Organizations aiming to streamline negotiations by avoiding repetitive discussions on common terms for each new project.
4. Parties in long-term partnerships who want to establish clear expectations and minimize the risk of workload-related conflicts.
Why do you need a Master Service Agreement?
An MSA (Master Services Agreement) is a foundational contract that sets the stage for a long-term partnership between enterprises and their vendors. By establishing clear terms and conditions upfront, an MSA streamlines future engagements, ensuring consistency and efficiency across projects.
Key Benefits of an MSA:
1. Saves Time and Money: An MSA sets the basic terms from the start, so you don’t have to repeat the same negotiations for every new project. This means faster project kick-offs, less paperwork, and lower legal costs.
2. Reduces Risks: The MSA clearly explains what each side is responsible for and what to do if problems come up—like payment delays, missed deadlines, or confidentiality issues. This helps avoid misunderstandings and makes sure everyone knows how to handle issues fairly.
3. Improves Teamwork: By laying out roles, expectations, and goals, both sides work together more smoothly. Everyone stays on the same page, which makes projects run better and helps avoid delays.
4. Clear Payment and Privacy Rules: The MSA spells out exactly what work will be done, how much will be paid, and when. It also protects sensitive information and ensures both sides follow the law, building trust for long-term work.
5. Quick Problem Solving: If there’s a dispute, the MSA includes a clear process to solve it quickly and without expensive legal fights. This gives peace of mind and keeps things moving forward.
In summary, an MSA not only simplifies the contracting process but also strengthens the foundation for a productive and long-lasting partnership with the vendor.
When should you use a Master Service Agreement?
1. You plan to work on multiple projects with the same vendor over an extended period.
2. Your business requires ongoing services from the same providers.
3. You want to avoid repetitive negotiations for similar scopes of work or terms.
4. Multiple teams or departments within your organization interact with the same external partners.
5. You need to standardize terms and conditions to ensure consistency across all engagements.
6. You want to minimize legal and administrative overhead for future projects.
7. You aim to build long-term partnerships with clear roles, responsibilities, and dispute resolution mechanisms
Types of Master Service Agreements
Master Service Agreements (MSAs) can vary based on industry, usage, and the specific services they cover. Below are common types of MSAs with relevant examples:
1. IT & Software MSA
This agreement is used in the technology industry when a company hires an IT service provider for software development, maintenance, cloud services, or cybersecurity. It defines ownership of intellectual property, data protection protocols, and expected service levels.
Example: A startup hires an IT company to build a website. The MSA specifies who owns the code, how data will be protected, and the clauses that apply in case of termination.
2. Consulting MSA
This agreement is used in the consulting industry when businesses such as corporations, SMEs, or startups hire experts for legal, financial, or strategic advice. It outlines the consultant’s duties, confidentiality obligations, and payment terms.
Example: A company hires a legal consultant to review contracts. The MSA defines the consultant’s responsibilities and how sensitive information will be protected.
3. Construction MSA
This agreement is used in the real estate and infrastructure sectors by developers, builders, and government agencies. It defines the scope of work, project timelines, safety regulations, and penalties for delays, ensuring smooth and compliant execution.
Example: A builder agrees to construct an office building. The MSA includes timelines, safety standards, and penalties for late delivery.
4. Marketing & Advertising MSA
This agreement is used in the marketing and advertising industry when companies engage agencies for branding, promotional campaigns, or digital marketing. It details the project scope, deadlines, ownership of creative materials, and performance metrics.
Example: A brand partners with an ad agency for a social media campaign. The MSA outlines content ownership, timelines, and how campaign success will be measured.
5. Staff Augmentation MSA
This agreement is used in the staffing and outsourcing industry by businesses that temporarily hire external professionals or freelancers. It includes the nature of work, duration, compensation, and confidentiality or non-compete terms.
Example: A company brings in software developers for a 3-month project. The MSA outlines their roles, pay, and rules around data confidentiality and competitor restrictions.
6. Vendor MSA
This agreement is used in the retail, hospitality, and logistics industries when businesses regularly purchase goods or services from a vendor. It defines pricing, delivery schedules, quality standards, warranties, and procedures for resolving issues.
Example: A café orders coffee beans weekly from the same vendor. The MSA covers pricing, delivery timelines, and what happens if the beans are delayed or below quality standards.
Master Service Agreement (MSA): Key Inclusions and Structure
1. Parties Involved
This section defines the parties bound by the MSA:
- Service Provider: Any individual or company offering services to a client in exchange for payment. This may include corporations, small businesses, freelancers, or independent consultants, offering services such as IT support, marketing, consulting, construction, or maintenance.
- Client (Service Recipient): The individual, business, or organization that hires the service provider and pays for their services. Clients can range from individuals to large corporations. Both parties agree on the scope of work, timelines, and payment terms before commencing the services.
2. Scope of Services
This section outlines the general framework for the services to be provided, including:
- Key Deliverables
- Responsibilities of Each Party
- Service Timelines and Expectations
3. Confidentiality & Data Protection
This clause defines what information is considered confidential and how it must be protected. It may include, but is not limited to:
- Business strategies and financial records
- Client details and trade secrets
- Proprietary or sensitive data
The receiving party must not disclose or misuse confidential information and is required to comply with data protection laws and company policies.
4. Intellectual Property Rights
This clause defines ownership and protection of:
- Copyrights, patents, trademarks, and trade secrets
- Moral rights and any other intellectual property created under this agreement
It specifies whether the client or service provider retains rights to the developed work or if rights are transferred upon completion of the work.
5. Representation and Warranties
This section includes statements by both parties regarding their authority and ability to enter the agreement and fulfill obligations. Common representations and warranties include:
- Authority: Both parties confirm they have the legal right and authority to enter into the MSA.
- No Conflicts: The execution of the MSA does not conflict with any existing agreements or obligations.
- Compliance: Both parties agree to comply with relevant laws, including data protection and intellectual property laws.
- No Infringement: Each party warrants that its services or deliverables do not infringe on any third-party intellectual property rights.
6. Data Privacy
This clause outlines the handling of personal data and confidential information, particularly in compliance with privacy laws (e.g., GDPR, CCPA). It should cover:
- How the service provider will protect personal data
- The responsibilities of both parties in handling such data
- The process for data storage, transfer, and disposal
- Compliance with applicable data protection laws
7. Payment Terms and Billing Cycles
Specifies:
- Service Fees: The agreed pricing model and payment terms (e.g., fixed fee, hourly rate).
- Invoice Cycle: The invoicing schedule (monthly, quarterly, upon completion of milestones, etc.).
- Payment Period: The period within which the client must clear the invoice (e.g., 30 days from the invoice date).
- Late Payment Interest: Charges if payment is overdue, commonly 1.5% per month on unpaid amounts.
- Approval for Expenditures: If the service provider spends money on third-party services or materials, written approval must be obtained from the client in advance.
8. Non-Compete Clause
Restricts the service provider (or employee) from working with direct competitors or starting a similar business for a defined period and within a specific geographic area after the contract ends or upon leaving the company.
9. Non-Solicitation Clause
This clause prevents employees from directly or indirectly contacting company clients, customers, or other employees for business purposes during and after the agreement term.
10. Force Majeure Clause
Protects both parties in case of unforeseeable events (e.g., natural disasters, pandemics, regulatory changes) that make it impossible to fulfill contractual obligations. This clause ensures that neither party is held accountable for failure to meet agreement terms due to such events.
11. Indemnification and Limitation of Liability
This clause:
- Requires the responsible party to compensate for losses or damages caused by breach or negligence.
- Limits the total liability each party can bear under the agreement.
12. Subcontracting
Subcontracting allows a company to hire another business or individual to complete specific tasks or services on its behalf. This approach helps businesses manage larger projects by outsourcing specialized work, improving efficiency, and ensuring expert handling of tasks.
13. Duration and Termination
This clause specifies:
- The start and end date of the agreement.
- Conditions under which either party may terminate the agreement (e.g., breach, mutual consent, non-performance).
- Renewal terms, if applicable.
14. Dispute Resolution & Governing Law
This clause sets out the procedure in case of disagreement, including:
- Method of Resolution: Mediation, arbitration, or legal proceedings.
- Applicable Governing Law: The relevant laws (e.g., Indian Contract Act, 1872).
- Jurisdiction: The courts or arbitration bodies where disputes will be resolved.
15. Amendments & Modifications
Defines the process for making changes to the MSA. Typically, changes must be made in writing and signed by both parties.
16. Statement of Work and Deliverables
The Scope of Work & Deliverables is considered a core clause in the MSA. It outlines the services to be provided, key objectives, and responsibilities of both parties.
Checklist for a Master Service Agreement (MSA) in India
Below is the practical checklist to ensure your Master Service Agreement (MSA) is legally sound, compliant with legal standards, and capable of safeguarding the interests of both parties involved.
Keep Multiple Copies
Action: Maintain two signed physical copies—one for each party.
Tip: Keep a digital copy for easy access and backup.
Expert Insight: Store digital copies in cloud storage services like Google Drive or Dropbox for safekeeping. This ensures easy retrieval and access in case of emergencies or audits.
Use Digital Signatures
Action: Use legally valid digital signatures in India.
Tip: Tools like Digilawyer E-sign and Aadhaar e-Sign are commonly accepted.
Expert Insight: Use tools that offer multi-factor authentication (MFA) to enhance security and prevent fraud, especially when dealing with high-value agreements.
Check State Stamp Duty
Action: Ensure the MSA is stamped according to your state's stamp duty regulations.
Tip: Stamp duty typically ranges from ₹100 to ₹500. You can check and pay online through DigiLawyer or your state's official portal.
Expert Insight: Ensure timely stamping, as failure to comply can invalidate the agreement, making it hard to enforce in case of disputes.
Include Clear Payment Terms
Action: Define payment amounts, terms, invoicing schedule, and late fees.
Tip: Specify the payment currency, method, and any applicable taxes.
Expert Insight: Add a clause for milestone-based payments to ensure that both parties are aligned on deliverables before payment is made. This can prevent payment delays and disputes.
Specify Confidentiality & IP
Action: Clearly outline confidentiality clauses and define intellectual property ownership.
Tip: Specify whether IP will be assigned or licensed, and include clauses on data protection (e.g., GDPR compliance).
Expert Insight: Include “non-compete” or “non-solicitation” clauses to further protect your business, especially if the agreement involves sharing proprietary technology or sensitive client data.
Define Roles and Responsibilities
Action: Clearly specify the roles, deliverables, timelines, and obligations for both parties.
Tip: Use milestones and detailed task lists for clarity.
Expert Insight: Include a "change order" clause that outlines how modifications or scope changes to the project will be managed, ensuring both parties are on the same page.
Set Duration and Termination Clauses
Action: Define the agreement's duration, renewal conditions, and the terms for termination by either party.
Tip: Include exit strategies for both voluntary and involuntary termination.
Expert Insight: Add a “termination for convenience” clause that allows either party to end the agreement with notice, ensuring flexibility without penalties.
Include Dispute Resolution Methods
Action: Include clauses for dispute resolution, such as arbitration or mediation, and specify the jurisdiction.
Tip: Prefer arbitration over litigation for faster, more efficient resolution.
Expert Insight: Specify a local jurisdiction or arbitration center that both parties trust, to avoid complications when disputes arise, especially if the parties are from different regions.
Force Majeure Clause
Action: Address situations beyond control (e.g., natural disasters, strikes) and their impact on the contract's performance.
Tip: List specific events covered under force majeure and provide remedies.
Expert Insight: The force majeure clause should also consider “pandemics” or “epidemics,” as these unforeseen events can severely impact business continuity.
Incorporate Indemnification Clauses
Action: Define liability and indemnification processes in case of loss, damage, or breach of contract.
Tip: Ensure both parties are aware of their responsibilities regarding indemnification.
Expert Insight: Make indemnification clauses mutual, especially in high-risk contracts, so both parties are equally responsible for risks and liabilities.
Seek Legal Review
Action: Always get a legal professional’s review to ensure compliance with Indian laws.
Tip: A legal expert can also help identify potential areas for risk mitigation.
Expert Insight: A quick review by a lawyer can save significant costs later, especially when they catch details that may otherwise go unnoticed.
Ensure Compliance with Local Laws
Action: Ensure the agreement aligns with the Indian Contract Act, 1872, and other applicable local laws.
Tip: Periodically review the MSA to stay updated with changing regulations.
Expert Insight: Stay informed about recent amendments to the Indian Contract Act or other industry-specific laws, as legal changes could impact the validity or enforceability of the MSA.
Important Indian Laws Related to Master Service Agreement
Indian Contract Act, 1872
In India, the validity of Service Agreement is governed by the Indian Contract Act, 1872 (Sections 10, 14, 23, 27 and 73). Service Agreement must be lawful and voluntary. Reasonable restrictions on trade to protect confidentiality are allowed under Section 27.
Consequences of Breach
GST Implications
Governing Laws
Indian Contract Act, 1872
If any party breaks the Service Agreement by not providing the services, another party can take action under the Indian Contract Act, 1872. Consequences may include:
- Legal Action - The aggrieved party can approach the court to enforce the agreement and recover losses caused by the breach.
- Compensation - The defaulting vendor may be held liable to pay monetary damages for any financial or business loss suffered by the client.
- Termination of Agreement – The aggrieved party can choose to terminate the contract immediately without further obligations.
- Impact on Professional Reputation - A breach can harm the vendor’s credibility in the industry, affecting future projects, client trust, and long-term business prospects.
Goods and Services Tax (GST) Act, 2017
As per the Goods and Services Tax (GST) Act, 2017, services rendered under the agreement are subject to GST. The service provider must charge and remit GST at the applicable rate. Both parties should clarify whether the prices mentioned are inclusive or exclusive of GST.
Arbitration and Conciliation Act, 1996
Under the Arbitration and Conciliation Act, 1996, disputes can be resolved through arbitration, offering faster, confidential, and fair resolution. Section 7 mandates arbitration if included in the Master Service Agreement, while Section 8 allows courts to refer disputes to arbitration
An arbitration clause in your agreement ensures benefits like:
- Faster Resolutions: Avoids lengthy legal battles.
- Scope of Services: The description of services provided by the parties.
- Confidential Proceedings: Keeps sensitive business information private.
- Fair Dispute Resolution: A neutral arbitrator decides the case.
Common mistakes to avoid in MSA
Here's a side-by-side comparison of the DOs and DON'Ts for creating a Master Service Agreement (MSA):
✅ Dos | ❌ Don'ts | Expert Tip |
Define Scope Clearly: Specify services, deliverables, timelines, and exclusions to avoid misunderstandings. | Use Generic Templates: Always customize the MSA for each specific relationship or project. | Tailor every MSA to the unique needs of each project to prevent legal loopholes. |
Establish Payment Terms: Outline amounts, due dates, late fees, and interest charges to ensure timely payments. | Omit Risk Management Provisions: Address potential risks and their mitigation strategies in the agreement. | Add penalties for delayed payments and procedures for invoicing. |
Include Termination Clauses: Clearly define conditions under which the agreement can be terminated. | Start Work Without a Signed Agreement – Never begin work based on verbal assurance. | Always get signatures before the project kicks off—even for small gigs. |
Specify Governing Law and Jurisdiction: Indicate the applicable laws and dispute resolution methods to avoid ambiguity. | Leave IP Ownership Vague – Clearly state who owns deliverables and code. | Clearly define ownership for each type of work product—custom vs. standard tools. |
Protect Confidentiality and IP: Ensure sensitive information and intellectual property are safeguarded. | Ignore Invoice Dispute Process – Don’t skip terms for handling payment conflicts. | Add timelines for clients to raise disputes (e.g., within 7 days of invoice). |
Set Force Majeure Provisions: Address unforeseen events like natural disasters that may affect contract performance. | Forget to Review MSAs Regularly – Legal terms may get outdated over time. | Schedule a legal review every 6-12 months or before major deals. |
For Clients / Buyers of Services
✅ Dos | ❌ Don'ts | Expert Tip |
Clarify Deliverables – Ask for a detailed list of what’s included and what’s not. | Assume Scope is Obvious – Never assume the vendor knows your exact needs. | Ask for examples or samples if scope language seems vague. |
Negotiate Payment Triggers – Set milestones or deliverables tied to payment. | Rely on Verbal Commitments – Avoid undocumented promises or timelines. | Get everything in writing to enforce it later, if needed. |
Check Termination Rights – Ensure you can exit the agreement if service is poor. | Accept Open-Ended Terms – Avoid auto-renewal or indefinite periods without clarity. | Add a "termination for convenience" clause with 30-day notice. |
Verify Jurisdiction – Make sure the legal venue is favorable or neutral. | Skip Ownership Clauses – Don’t assume you own the output or code by default. | Include a clause stating “Client retains full ownership of deliverables.” |
Insist on Data Protection – Ensure the vendor won’t misuse your business data. | Ignore Non-Compete or Confidentiality – Don’t risk sensitive data getting leaked. | Include clear non-compete and confidentiality terms to protect your business edge. |
Ask for Force Majeure Clause – Protects you if the vendor delays due to uncontrollable events. | Overlook the Review Cycle – Don’t let outdated MSAs govern long-term projects. | Set calendar reminders to review the agreement annually. |
Why DigiLawyer?
DigiLawyer simplifies the process of drafting legally verified Master Service Agreements (MSAs) to ensure smooth and secure business relationships. Whether you're entering into long-term service engagements, outsourcing work, or onboarding vendors, our MSAs clearly define responsibilities, timelines, deliverables, and payment terms—protecting both parties throughout the engagement.
We ensure every MSA complies with the Indian Contract Act, 1872, and the Arbitration and Conciliation Act, 1996, giving your agreement a strong legal foundation. Whether you Need standard or customized template for MSA DigiLawyer lets you tailor your MSA to your exact business needs.
With DigiLawyer, you can create your MSA in minutes—simple, fast, and legally sound.
With options for notarization, expert consultations, and 24/7 support, your business is fully protected. Ready to safeguard your information? Let DigiLawyer help you draft your Master Service Agreement today!
Why Choose DigiLawyer for Your MSA?
Legally Approved Agreements - Drafted by legal experts, following all Indian laws.
Fast & Easy Process - Get your agreement online without any hassle.
E-Stamping & Registration Help - We take care of all legal formalities for you.
Customizable Agreements - Modify terms as per your business or personal needs.
Affordable & Transparent Pricing - No hidden charges, just clear and fair costs.
Secure Online Storage - Access your agreements anytime, anywhere.
Expert Legal Support - Our team is always available for legal guidance and dispute resolution.
FAQs Related to Master Service Agreement
Yes, an MSA can be enforceable internationally if it clearly defines the governing law, jurisdiction, and complies with relevant international and local legal standards. If there is concern from either party about choosing the other’s country's laws, both parties can agree to a neutral jurisdiction.
No, a Master Service Agreement does not typically need to be notarized to be legally valid, as long as it is signed by authorized representatives of both partis and contains all elements of a valid contract.
If one party breaches the MSA, the other party can take legal action based on the agreement’s terms. This may include termination, claims for damages, or invoking a dispute resolution method such as arbitration, if specified.
Typically, an MSA does not require two witnesses to be valid, unless required by the specific jurisdiction or internal policies of either party. Most commercial agreements are valid with the signatures of authorized representatives.
Yes, an MSA becomes legally binding once it is signed by both parties and includes all necessary elements of a valid contract—such as the scope of work, background, payment terms, acceptance, and consideration.
An MSA outlines the overarching terms for a long-term relationship between two businesses, allowing future projects to proceed with minimal renegotiation. For each new project, a brief add-on—called a Statement of Work (SOW)—is created under the MSA.
In contrast, a traditional contract is usually project-specific and created a new one each time.
An MSA saves time and reduces negotiation efforts for every new project. It speeds up execution by requiring only short, project-specific SOWs instead of renegotiating terms from scratch.
Usually, the service provider drafts the initial version of the MSA, but either party can initiate it. The legal teams from both sides typically review and negotiate the terms.
Yes, most MSAs include termination clauses that allow either party to end the agreement under certain conditions—such as breach of contract, mutual consent, or by providing prior notice as specified.
A comprehensive MSA should include:
Scope of work
Payment terms
Intellectual property (IP) rights
Confidentiality clauses
Liability and indemnity provisions
Dispute resolution mechanisms
Termination conditions
An MSA defines the general terms of the business relationship—covering areas like payment, confidentiality, warranties, and dispute resolution.
An SLA (Service Level Agreement), on the other hand, specifies the exact service expectations—such as response time, uptime guarantees, and performance metrics.
Think of the MSA as the rulebook, and the SLA as the scorecard for service delivery.
Absolutely. You can tailor an MSA to suit your business needs—adjusting details like work scope, payment schedules, risk coverage, and exit clauses.
With DigiLawyer, we help you create or refine your MSA so it's clear, fair, and protective—without confusing legal jargon.
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