Master services agreement: what it covers
An MSA holds the standing terms for a client's projects. A section-by-section outline, a conflict rule to pick, sample clauses and an email to propose one.
A master services agreement (MSA) holds the standing legal terms for projects you take on under it with one client. They cover how projects get added, payment defaults, ownership, confidentiality, liability, insurance, ending the relationship and governing law. Each project's scope, dates and fee go in a short statement of work (SOW) signed under it, and the MSA says which one wins a conflict.
When do you need an MSA instead of a single agreement?
An MSA pays off when you expect repeat projects with one client. Common Paper's default term runs until 12 months after the latest SOW ends. Within that window, its notes say, the parties "can instead continue to issue SOWs" without a new contract.
| Your situation | What fits |
|---|---|
| One project, or a small first job | One freelance service agreement holding terms and scope |
| A client you expect to hire you again | Your MSA, plus an SOW for each project |
| The client wants its MSA signed before any work | Their MSA plus your first SOW; check their MSA first |
Signing an MSA alone may not commit anyone to a project. In Common Paper's form, you perform the services "as detailed in an applicable SOW" (§1.1). Some duties can start with the MSA itself: "things like confidentiality obligations start on the Effective Date."
What sections should an MSA have?
The outline below, for a small services business, is checked against Common Paper's Professional Services Agreement (PSA) 1.1 and Bonterms' PSA 1.2, both free under CC BY 4.0. Choosing a standard contract covers using them. Statement of work vs MSA covers what each SOW holds and compares the forms on term and termination.
| Section | What to propose | What to watch |
|---|---|---|
| Parties and affiliates | Both legal entities, and whether client affiliates may sign SOWs | In both forms, an affiliate's SOW is a separate agreement with that affiliate (Common Paper §1.1; Bonterms §9) |
| How projects start | Work only under a numbered SOW that both sign and that names the MSA | Starting before it's signed |
| Order of precedence | One rule for conflicts (next section) | A rule that covers SOWs but is silent on purchase orders and quotes |
| Term | Covers every SOW signed under it, plus any gap you want between projects | An MSA that ends with its first SOW, so the next project needs an extension, renewal or new MSA |
| Ending early | For cause: an unfixed breach or insolvency. For convenience: notice, effective once fees and expenses to date are paid, as in Bonterms §11.2(b) | Ending an SOW at once, with work in progress unpaid |
| Payment defaults | Days to pay, which an SOW can replace, and a late charge, which stays unless the SOW names that section | Common Paper "intentionally does not include fines for late payments." Bonterms: 1.5% a month or the legal maximum, whichever is less (§10.3); fees invoiced over 120 days after they were incurred needn't be paid (§10.4) |
| Ownership | Deliverables pass once paid for (a Common Paper SOW option); list the tools you keep, licensed | For Assigned Deliverables, Bonterms assigns without waiting for payment and adds "work made for hire" wording (§6.3(a)–(b)); transfer on payment needs an express change. Common Paper avoids work made for hire, which "can create unintended employment relationships in some states" |
| Confidentiality | Mutual duties, with the usual exclusions | A one-way clause (only you keep their secrets) leaves your own information unprotected |
| Warranty and fixes | Work that meets the SOW; you redo it, then refund | Common Paper: notice within 45 days of discovery, re-performance within 45 days of enough detail, then the client may end the SOW for a prorated refund of prepaid fees (§6.4). Bonterms: reasonable efforts to fix within 30 days of a report made within 30 days of delivery; if not fixed, either side may end the SOW, with a refund for that work and prepaid unused fees, and no further SOW fees (§7.2(b)) |
| Liability and indemnity | A cap tied to fees; indemnities only for outsiders' claims | Bonterms caps at amounts "paid or payable" in the 12 months before the first incident (§12.1, §12.5). Common Paper's cover page pre-ticks a multiple of 12 months' fees before the claim; fill in the multiple. |
| Subcontractors | Approval for your regular collaborators, named in the SOW | Both forms require the client's prior approval (Common Paper §1.5; Bonterms §3.5); Common Paper exempts the provider's own affiliates |
| Insurance | Only cover you carry, by type and amount | Left blank, Common Paper's minimums mean none. Bonterms' default asks for "adequate" insurance of the kinds required by law or common for similar providers (§17.9(b)) |
| Independent contractor | You decide how the work is done | A written contract is only one factor: for federal tax, the IRS weighs the whole relationship, and "no one factor stands alone" |
| Law, courts and changes | One state's law and courts; changes in writing, signed | Changes agreed on a call may not count; both forms require them in writing (Common Paper §12.2; Bonterms §17.6) |
Which document wins when they disagree?
An order-of-precedence clause decides which document controls in a conflict. There are three ways to write it.
| Rule | Suits you when | The risk |
|---|---|---|
| The SOW wins | Each project needs its own terms | A careless SOW line, such as a dollar cap, overrides the MSA |
| The MSA wins unless the SOW names the term it changes | You want the MSA to hold, with deliberate exceptions | An SOW that changes a term without naming it may not change it |
| The MSA always wins | Your MSA terms suit every project | Every exception needs a signed MSA amendment |
Common Paper's SOW form takes the first rule and Bonterms the second (§17.5). Bonterms still lets an SOW set rights in a deliverable directly (§6.1). If you want standing terms to hold, the second rule makes a stray SOW override less likely.
Purchase orders and quotes can carry printed terms. Under Common Paper, the provider "expressly rejects" purchase order terms (§12.1). In Bonterms, terms in "business forms, purchase orders or quotes" used by either side don't amend the agreement (§17.4). That includes your own quotes, so put what you need in the signed SOW.
What might a client ask to change?
A client may ask to end any SOW at will, bar publicity, approve subcontractors or keep assignment rights to itself. What to check in a client's MSA covers the risk clauses. If you might sell your business, ask for mutual rights: Bonterms lets either side assign on a merger or a transfer of substantially all assets (§17.1).
What do the key clauses look like?
Fictional clauses for a small studio's MSA follow; bracketed figures are examples.
“Statements of Work. Studio will perform services only under a statement of work ("SOW") that both parties sign, that has its own number and that states it is made under this Agreement. An "Affiliate" is an entity that controls, is controlled by or is under common control with Client. An Affiliate may sign its own SOW, which incorporates this Agreement with that Affiliate in place of Client and forms a separate agreement. Only that Affiliate owes its fees, unless Client agrees in writing to pay them. Order of Precedence. An SOW may set its own fees, payment schedule and payment period, which replace only the matching defaults in this Agreement for that SOW; the late charge still applies unless the SOW names that section. Otherwise, this Agreement controls over any SOW, except for a section of this Agreement that the SOW identifies by number as changed, and then for that SOW only. A change order binds only once it identifies the SOW it changes and authorized representatives of both parties sign it; it may change this Agreement only in the same way as an SOW. Terms in purchase orders, quotes, invoices or supplier portals do not change this Agreement or any SOW.”
“Term. This Agreement starts on the date of the last signature and continues until [12] months after the latest SOW ends. Either party may end this Agreement by written notice when no SOW is in effect; an SOW that is signed but not yet started, or paused, counts as in effect. This right adds to the other termination rights in this Agreement, and sections that survive termination continue to apply.”
How do you propose an MSA to a repeat client?
Propose an MSA once a second project is in view, and send your draft with that project's SOW.
“Hi [Name], Since we're starting another project together, could we put the standing terms into one master services agreement? It would hold the terms that stay the same: payment, ownership, confidentiality, liability and ending the work. Each new project would then need only a short statement of work with the scope, dates and fee, so later reviews can focus on those and any exceptions. I've attached a draft MSA and SOW No. 1 for [project name]. If you'd rather use your own supplier MSA, send it over and I'll review it. Best, [Your name]”
What mistakes are common?
Two mistakes are easy to make with a new MSA.
- Changing the MSA when you meant one project. In Common Paper's form, changes on an SOW apply "to this particular SOW only," but changes in the Key Terms reach "the Agreement and all SOWs." Put a one-project exception in that project's SOW.
- Billing the wrong company. Under both forms, an affiliate that signs an SOW is your client for that work; invoice it.
What should you check before you send your MSA?
- Work starts only under a signed, numbered SOW that names the MSA.
- One precedence rule covers SOWs, change orders, purchase orders and quotes.
- The term covers every SOW signed under it, with any gap you want between projects.
- Payment defaults, a late charge and ownership on payment are set, and the tools you keep are listed.
- Insurance lists only cover you carry, and portfolio use is agreed.
When should you get a lawyer?
An MSA's terms carry into each SOW signed under it, so a lawyer's review goes further. Get one when:
- The client's MSA replaces yours and has terms you can't accept, such as uncapped liability.
- The work under it is large for you, such as several months of revenue.
- The client, or the law the MSA chooses, is outside your state or the US.
- You'll work much like an employee, on their schedule for months; ask about state rules as well as the IRS's.
When does running MSAs by hand stop working?
One MSA with a few SOWs fits a folder and a spreadsheet. It slips when several clients each have their own MSA, with different precedence rules, caps and payment defaults. It slips again when change orders pile up or a client edits your draft. That's when it's worth having a tool draft from your own terms and flag the risks in each version they return.
DealMate is an AI contract assistant that takes a deal from first draft to final: describe the deal in a sentence and get a draft built from your templates and clauses; when they send their template, review it from your side and see what's risky; when their redlines come back, compare the versions and see every change and the risk it carries.
Sources
- Professional Services Agreement Standard Terms, Version 1.1 — Common Paper
- Professional Services Agreement: Cover Page and annotations (Standard Terms v1.1) — Common Paper
- Professional Services Agreement, Version 1.2 — Bonterms
- Independent contractor (self-employed) or employee? — Internal Revenue Service
This is general information, not legal advice. For high-stakes or unusual terms, talk to a lawyer.
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