A Master Services Agreement (MSA) sits underneath every Statement of Work, Order Form, or Engagement Letter that follows. Sign the MSA and you’ve agreed the legal framework — payment terms, IP, liability, termination — for every project that will be executed under it. The individual SOWs only specify scope, schedule, and price; the legal terms come from the MSA.
This makes the MSA review disproportionately important. A weak SOW can be amended for the next project. The MSA usually can’t.
The clauses that matter most
- Order of precedence. When the SOW conflicts with the MSA, which prevails? Most MSAs say MSA prevails — but commercially the SOW often contains the negotiated commercial terms. Check the precedence clause carefully.
- Payment terms. Net 30, Net 60, milestone-based? Penalty interest on late payments (typically 10–12% per annum). Right to suspend services for non-payment. Set-off rights.
- Acceptance criteria. How does the customer accept deliverables? Deemed acceptance after X days? Detailed acceptance testing protocols? Provider’s exposure ends at acceptance — vague criteria mean indefinite exposure.
- Change control. Process for varying scope, schedule, or price mid-project. Without a defined process, scope creep is uncompensated.
- IP ownership. Who owns deliverables — customer, provider, or shared? Background IP carve-outs (provider’s pre-existing IP used to deliver). Licence-back obligations. For software development, source code escrow.
- Warranties and remedies. Service warranties (typically 30–90 days), workmanship warranties, fitness for purpose. Sole and exclusive remedy clauses limiting customer recourse to re-performance only.
- Limitation of liability. Cap typically expressed as 12 months of fees paid, or annual contract value. Carve-outs for confidentiality breach, IP indemnity, gross negligence, fraud — these usually shouldn’t be capped.
- Indemnities. IP infringement indemnity from provider to customer (standard). Customer indemnity to provider for materials customer supplies. Mutual indemnity for confidentiality breach.
- Termination. For convenience (with notice), for cause (uncured material breach), insolvency. Treatment of fees on termination — pro-rata refund? Outstanding work-in-progress payment?
- Non-solicitation of staff. Both parties typically agree not to solicit each other’s employees during and 12 months after the engagement. Reasonable for the period of active engagement; usually negotiable post-engagement.
Common red flags (customer perspective)
- Provider acceptance deemed after 5 business days with no actual testing window
- Sole remedy clauses limiting customer to re-performance even for total failure
- Liability caps below 12 months of fees
- Provider IP retention on deliverables you’ve paid full development cost for
- Annual price increase clauses with no cap
Common red flags (provider perspective)
- Liquidated damages on delay exceeding the contract value
- Customer right to terminate for any reason with no fee on termination
- Indemnification of customer for losses caused by customer-supplied materials
- Most favoured customer clauses requiring you to extend better terms given to other customers
- Audit rights over your business records beyond project-specific records
What Claim Done’s contract review delivers
Upload the MSA and any standard SOW template. The AI returns a 15-minute A4 PDF flagging precedence issues, IP ownership ambiguity, liability cap exposure, and acceptance criteria gaps — tailored to whether you’re the customer or provider. Specific suggested redrafts. Flat $79, 24/7.
When to take it to a lawyer
For MSAs underpinning multi-million dollar engagements, MSAs with ASX-listed customers (additional disclosure and risk-allocation expectations), MSAs involving regulated services (financial services, healthcare, government), or MSAs with international elements — engage a commercial lawyer with technology or services experience. The MSA you sign once will govern dozens of SOWs.
The acceptance-criteria gap
Across hundreds of MSA disputes, the single most common point of failure is acceptance criteria — the moment at which the customer formally accepts a deliverable, ending the provider’s exposure on that work. Vague acceptance language (“the customer will accept the deliverable when satisfied”) leaves the provider exposed indefinitely. Strict acceptance language (“deemed accepted unless rejected in writing within 5 business days”) leaves the customer exposed to defects discovered later. The right balance: a defined acceptance testing window (typically 15-30 business days), specific acceptance criteria tied to the SOW, deemed acceptance if no rejection within the window, and a separate warranty period after acceptance for latent defects. Both parties win when the acceptance process is clear; both lose when it’s not.