Master Service Agreement (MSA)

Definition

A Master Service Agreement (MSA), also called a framework agreement, sets the standard terms for future contracts between parties. It allows new agreements to be executed quickly by referencing the MSA for general terms and only negotiating transaction-specific details. MSAs are common in industries like IT and contract research.

Purpose of MSAs

Here are the main reasons for using MSAs:

• Provide indemnity: One party agrees to cover losses or legal costs for the other. A party that undertakes to indemnify is known as an indemnifying party.
• Distribute risks: Utilizes sophisticated techniques to recognize potential risks and develop a plan to reduce them. It also establishes a clear foundation for agreements, avoiding the need to renegotiate terms for every transaction.
• Enable modifications: Define terms and conditions, allow future modifications, and serve as a reference for disputes.