Your company's next Master Services Agreement (MSA)

Your company will most likely be required to sign a MSA when purchasing its network and communications services.  You may be asking: i) is it worth our time to negotiate the service provider’s MSA, or ii) if you have a time sensitive need for the services, is it be better to just accept the MSA as-is (essentially “sign and drive”)?

Some on-demand services (e.g. hosting) are available for immediate purchase and use, where your company will be required to accept the provider’s “standard” (i.e.: non-negotiable) terms and conditions.  For other services, such as data center colocation, cloud-based voice and data, etc., it is recommended that your company consider a deliberate and methodical approach to negotiating its MSA. 

Most service providers’ MSAs are written to address these two points: 1) sell your company the most services for the longest length of time, and 2) limit/protect the service provider’s liability to you in the event there are service-related issues.  There will be some protections afforded to the customer, but has your company reviewed the MSA to ensure it provides all the protections needed for your business?

As the purchaser of the services, your company should have an advocate helping you to analyze and negotiate the terms of the MSA – and if needed, the terms of the accompanying service level agreement (SLA).  Let’s consider one typical provision that is frequently negotiated in a MSA: term/termination.  Does your MSA clearly state the length of term?  How does your MSA renew? If your MSA automatically renews, what is the notice period to cancel before auto-renewal is triggered?  What happens if you “miss” the notice period – is your company now liable for the whole renewal term (“locked in”)?

The analysis of questions for the term/termination questions should be asked/answered for all of the provisions of the MSA.  By giving the MSA a thorough up-front review and negotiation, this “ounce of prevention” can help save your company significant time and expenses on the backend when a matter arises.

This first step – a “second set of eyes” review – is to help make sure you are comfortable with what the MSA actually says in its off-the-shelf form.  What it “says” may be, ahhh, overly complex and confusing.  We know - we are often retained to draft these agreements. 

After you have a firmer grasp on what the “form” MSA says, you can use that knowledge to better manage expectations, reduce business risk, discuss MSA changes with your service provider, or seek out competing vendors. 

The one truly bad course of action is inaction – to toss the MSA in the virtual trash can, assume it is a form that says what you expect it to say, and that it is fair to all sides.  As you know, most commercial contracts have a clause that essentially says “anything we said on our brochure, website or through our salesperson is hereby amended and replaced with this contract and nothing prior is binding….”  You need to understand the actual terms and conditions that made it into your MSA as well as your legally binding risks and obligations.

We know this stuff – We can help!

Make it a great week!

RHT3

Rob Turner is a partner at 360 Venture Law (Shmalo Turner), LLP, an Atlanta-based law firm with a broad range of commercial experience.  360 Venture Law (Shmalo Turner), LLP serves businesses and individuals as their "on-demand legal department" in a host of business and commercial real estate matters.  www.360vlaw.com

LAWYERLY DISCLAIMER:  this post should not be construed as legal advice; this is an advertisement.