If you have spent time any amount of time working in the construction industry as a subcontractor, vendor or material supplier you have likely come into contact with general contractor who provides their standard contract to perform work for the company. Or if you are a general contractor you likely use a standard contract with some of your most trusted and repeat subcontractors. This agreement is usually some form of a Master Service Agreement (“MSA”). An MSA is essentially a contract between two parties in which both parties agree to most of the general terms of a future agreement, job, or project. An MSA is used when the parties intend to keep a consistent and streamline work relationship with each other. Instead of playing the negotiate game over standard terms, parties will enter into an MSA to shortcut the process. While the terms of each project can vary from project to project typical payment terms and conditions, safety provisions and notice requirements enforced by a general contractor will likely not change.
While an MSA is generally proposed by the general contractor, all sides can benefit from such an agreement being in place. Parties entering into an MSA benefit from an MSA depending on the terms contained within the agreement itself. Contractors and subcontractors can benefit from an MSA when the nature of their work is one of emergency or requires quick turn-around time to begin work. Homeowners Associations also can benefit from having such an agreement in place. In the event that a common interest community needs repair and/or maintenance work performed at the community, an executed MSA with a contractor/subcontractor can expedite repairs and prevent disputes over ambiguous terms and conditions not negotiated before the need arises to obtain labor, services and/or materials. An Association will also benefit from an MSA because such an agreement can and will prevent certain risks associated with running a community and contracting with contractors/subcontractors for various services.
A typical MSA will include generic, yet important, terms and provisions including: dispute resolution provisions, choice of venue, warranties and indemnity provisions, insurance obligations, payment terms, added/changed work procedures, general terms and conditions, notice requirements and termination terms. This list is not exhaustive and an MSA can include a variety of terms and provisions to expedite negotiations between the parties and prevent wasted time and costly overhead. This is exponentially important in the common interest community context because associations must be diligent and conservative with costs and expenses.
An MSA is a valuable, cost and time efficient legal document. If you regularly hire a particular contractor or subcontractor to perform labor, provided services and/or materials then an MSA can expedite the work (i.e. mobilization to the site when time frames are tight) and prevent the need for renegotiation of repeated terms for each transaction or agreement.
There are many benefits to having an MSA which include risk allocation and indemnity. The MSA is a playbook and will be looked to in the event of a dispute under a particular project or transaction. A good MSA will outline the potential risks and obligations of the parties who enter into it. Further, parties will be aware of their obligations to defend and hold harmless the other party in the event of disputes. The MSA might also extinguish indemnity obligations so this will need to be analyzed before entering into such an agreement with another party.
The information contained on this blog is intended to be general information only and not legal advice. Laws change frequently and the information on this website may not be up to date, nor is the information intended to be fully comprehensive. For these reasons, we suggest you seek a licensed attorney to help you determine if an MSA is right for you.