A Master Service Agreement (MSA) is a contract between parties that establishes the terms that will govern future transactions or agreements. They are generally used when the parties repeatedly contract for the same services. An MSA can save parties time and money since most of its terms remain the same over time. MSAs are common in such diverse sectors as information technology, professional services, union and government contracts and are very prevalent in the marine and oilfield services industry.
Master Service Agreements’ Establish Terms
Master Service Agreements often establish payment terms, delivery requirements, warranties, limitations, dispute resolution procedures, confidentiality stipulations, work standards, and safety requirements. A critical component of an MSA is the indemnification provision which allocates the risks between parties and well as potential risks in working with third parties.
Master Service Agreements Commonly Supplemented by “Short Forms”
MSA’s are commonly supplemented by service orders, work orders, repair orders, purchase orders, rental orders, equipment orders, or service agreements for individual projects. An MSA is often coupled with a statement of work or work order, both of which are commonly referred to as “short forms.” The MSA contains the general legal framework, while the short form gives the parties the autonomy to negotiate more specific terms (usually pricing) on a case-by-case basis.
MSAs Use in Marine and Oilfield Sectors
In the marine and oilfield services sectors, an MSA is a fundamental contract for any vessel owner/operator working with a shore based service company, shore based owner/operator or service company. It is the framework by which all work is performed, and it establishes which party will assume the risk for any loss or injury to people and/or property. Since some MSA’s are maritime in nature and others are not, the contract should be consistent with applicable federal and state laws.