How to Review a Master Services Agreement (MSA)

When the master terms and a SOW conflict, which one wins? A well-drafted MSA answers this with an order-of-precedence clause. The conventional default is that the MSA controls except where a SOW expressly states it is amending a specific numbered clause of the MSA for that engagement only. This protects both sides from a salesperson slipping a liability waiver into a SOW that nobody's legal team reviewed.

Watch the direction of precedence carefully. A clause reading "in the event of conflict, the terms of the applicable SOW shall prevail over this Agreement" flips the usual protection and means every SOW can silently rewrite your negotiated master terms. Prefer language such as "the MSA governs unless a SOW expressly references and amends a specific section, in which case the amendment applies only to that SOW."

The MSA should define how scope is set and how it changes. Loose scope language ("and related services as reasonably required") invites scope creep that the supplier bills for or the customer expects for free. A change-control procedure fixes this: changes to scope, fees, or timeline must be documented in a signed written change order before work proceeds. Confirm that neither party can unilaterally expand or vary the work, and that pricing for changes is either pre-agreed or tied to a rate card in a schedule.

Confirm whether fees are exclusive of tax and whether expenses are billable. If expenses are billable, require pre-approval above a threshold and reasonable, receipted, actually-incurred costs, not a percentage uplift. Late-payment interest is normal, but check the rate and note that in some jurisdictions statutory interest applies by default; an unusually high contractual rate may be challengeable as a penalty in some legal systems, so treat the number as jurisdiction-sensitive.

For multi-year deals, look at how prices can rise on renewal. "Good" is a cap tied to an inflation index or a fixed percentage with prior notice; "push back" is an uncapped right to increase fees at the supplier's discretion. Customers sometimes seek a most-favoured-customer clause (a promise that pricing is no worse than comparable customers get), but these are hard to police and suppliers resist them; if included, define the comparator narrowly so it is actually verifiable.

Certain liabilities are conventionally carved out of the cap so they are either uncapped or subject to a much higher super-cap. Confirm the carve-outs are mutual and complete.

For custom work, customers usually expect to own the deliverables created specifically for them, with assignment taking effect on creation or on payment. Suppliers usually retain their pre-existing tools, templates, know-how, and any generic components (their "background IP") and grant the customer a licence to use them to the extent embedded in the deliverables. Confirm three things: that ownership of bespoke deliverables actually transfers (and is not merely licensed), that any licence to background IP is broad enough to actually use and maintain the deliverable (perpetual, irrevocable, and sublicensable where needed), and that the supplier keeps a fair licence back to reuse its own generic know-how so it is not accidentally handing you its whole toolkit. Watch for "supplier owns everything, customer gets a licence" drafting where a customer paid for bespoke development, and for silence on residual rights to general skills and knowledge.

Expect a workmanlike-services warranty ("Services will be performed in a professional and workmanlike manner in accordance with the SOW and applicable industry standards"), an authority warranty, and, for software, a warranty that deliverables will materially conform to the agreed specification for a stated period. Suppliers then disclaim implied warranties such as merchantability and fitness for a particular purpose. That disclaimer is normal, but check the express warranty still has teeth and a real remedy (re-perform, repair, or refund), rather than being disclaimed into nothing.

For managed or hosted services, service levels (uptime, response and resolution times) sit in an SLA schedule, and breach triggers service credits, a defined discount on the fees. The single most important question is whether service credits are the sole and exclusive remedy for missed service levels. If they are, and the credits are small, the customer effectively has no meaningful recourse for chronic underperformance. "Good" makes credits a first remedy but preserves a right to terminate for persistent or material SLA failure and to claim other remedies for serious breach; "push back" where credits are capped low and declared the only remedy. Also check how uptime is measured, what maintenance windows are excluded, and how a customer actually claims a credit, since credits that must be requested within a short window often go unclaimed.

Check the initial term and, critically, the renewal mechanism. Auto-renewal is the classic trap: a clause that renews the term automatically unless a party gives notice a long way out (say 90 days before expiry) can lock a customer into another full term simply because a diary date slipped. "Good" is a short, clearly stated non-renewal notice window, ideally with a reminder obligation; "push back" on long lookbacks combined with automatic multi-year renewals and uncapped price increases on renewal.

Expect a right to terminate for material breach that is uncured after a cure period (commonly 30 days), and for insolvency events. Termination for convenience (ending without cause on notice) is valuable but often one-sided; check whether both parties have it, the notice length, and any early-termination or wind-down fees. Also confirm the effect of termination: fees for work done, return or deletion of confidential information and data, handover and transition assistance, and the fate of licences granted.

A survival clause lists the obligations that continue after the contract ends. At minimum it should include confidentiality, IP ownership and assignments, accrued payment obligations, limitation of liability, indemnities, dispute resolution and governing law, and any data-return or deletion duties. Check that survival is not accidentally narrow, because a liability cap or confidentiality duty that dies at termination offers little protection when disputes usually surface afterwards.

Assignment clauses govern who can transfer the contract. A common position is no assignment without consent, with a carve-out allowing assignment to an affiliate or to a buyer of substantially all the business. Consider whether a change of control of the other party should trigger a right to consent or terminate, especially if you would not want the contract, or your data, ending up with a competitor.

Check whether the supplier can subcontract freely and, if so, that it remains fully liable for subcontractors' acts and omissions and binds them to equivalent confidentiality and data terms. On insurance, confirm the supplier carries appropriate cover (professional indemnity, cyber, and general liability as relevant) at levels proportionate to the risk, and that the requirement is a real covenant, not aspirational.

Governing law and jurisdiction (or an arbitration clause with seat and rules) determine where and how disputes are resolved, and litigating far from home is costly, so treat these as commercial terms, not afterthoughts. Then read the quiet boilerplate that bites: entire-agreement clauses (which can exclude reliance on pre-contract promises), notice provisions (which decide whether an email counts), "time is of the essence," force majeure scope, no-waiver, severability, and any unilateral right to amend terms by posting an updated policy. Non-solicitation and exclusivity clauses also hide here and can restrict your business well beyond the deal itself.