Time to Refresh Your MSA Agreement
A Master Service Agreement are also referred to as “MSA Agreements.” Companies will often use a standardized MSA Agreement for many years without substantial change. This is not unreasonable because MSAs are complex agreements and labor intensive to create. However, it is a good idea to revisit them from time to time for several very good reasons.
Reasons to Revise MSA Agreements
First, most businesses are constantly evolving. The way you did business three years ago and the way you do business now has probably changed to some extent. And your customers are probably also making changes to their business from year to year and will also have changing needs. Often times this results in similar changes to the MSA being negotiated over and over. If there are certain aspects of the standard MSA that always seem to be negotiated out, it may be time to change the MSA to better reflect the needs of the market.
MSAs Evolve over Time
Additionally, applying lessons learned from relationships and projects that may not have worked out well in the past, can pay dividends in the future. We have seen dispute resolution language that is fairly typical across multiple industries that makes sense from a litigation perspective but utterly fails when the parties would rather salvage the relationship. Dispute resolution terms should never require termination of the agreement and should offer flexibility to complete the project through reduced scope or modification of deadlines when the parties run into technical or financial difficulty. If it is the type of project that has no value until 100% complete, you can almost guaranty an expensive law suit when the project is terminated.
Changes in the Law Affect MSA Agreements
Finally, the relevant law—and the courts’ interpretation of the relevant law—changes over time. For example, for a long time, many attorneys assumed that Section 38.001 of the Texas Civil Practice and Remedies Code (allowing the recovery of attorney’s fees for a breach of contract) applied equally to corporations, partnerships, and LLCs. However, over the last five years, more courts have held that this portion of the code does not apply to partnerships or LLCs. Even though many LLCs had been hit with attorney’s fee judgments in the past, courts will no longer enforce this section against partnerships or LLCs in contract disputes.
For more detail, please see our previous post on this subject entitled What are the basics of a Master Service Agreement? and 5 Tips for Drafting a MSA Contract. In our Legal FAQs Section, you can find a sample Master Service Agreement Template.
You may also be interested in:
Sign up for and explore our content and thought leadership here.
About the Firm:
Klemchuk LLP is a litigation, intellectual property, transactional, and international business law firm dedicated to protecting innovation. The firm provides tailored legal solutions to industries including software, technology, retail, real estate, consumer goods, ecommerce, telecommunications, restaurant, energy, media, and professional services. The firm focuses on serving mid-market companies seeking long-term, value-added relationships with a law firm. Learn more about experiencing law practiced differently and our local counsel practice.
The firm publishes Intellectual Property Trends (latest developments in IP law), Conversations with Innovators (interviews with thought leaders), Leaders in Law (insights from law leaders), Culture Counts (thoughts on law firm culture and business), and Legal Insights (in-depth analysis of IP, litigation, and transactional law).