Master service agreements are used in business-to-business transactions where services are provided in accordance with a work account. For example, a master service contract defines the framework in which a customer can place an order with an IT service provider without having to renegotiate a new contract in depth each time. On the other hand, a service provider may be an SME that includes a much larger business through a reseller or other relationship to provide licensed services or materials as part of a transaction. Often, the service provider does not have the leverage or practical ability to impose its negotiated terms on a much larger company than it does, and in some cases it will not even be able to bring them to the table to discuss problems. In some cases, a transaction structure may be necessary for the customer to be directly linked to the third-party supplier and, in some cases, customers may already have a framework contract with the third party, which can be used as a platform to manage that part of the structure. Timing can also be an important factor. Control service agreements and work declarations can be quickly implemented when the parties set up their negotiating teams and the details of the agreement are known. However, in the case of larger or more strategic operations or those involving regulated services or sectors, the process can take much longer, as many stakeholders are often involved. Many companies have stakeholders from different departments, each responsible for approving different aspects of the potential relationship and associated conditions.
Accelerating trade negotiations is not always easy. But getting the right master service contract could help you speed up discussions and allay any concerns so you can speed up the sales process and re-administer your business. But how do you make sure you get your master`s contract correctly the first time? And what should you include to protect yourself from nasty surprises on the street? Here`s our guide to master service agreements and what you need to know to move forward. Ultimately, the form of the agreement often depends on the leverage, the size of the agreement and the negotiating position of the parties. If the service provider is large and the customer or the size of the agreement is small, the service provider has a better chance of using its “paper.” If the agreement is large and the service provider is small, there is a better chance that the form of the customer`s master service contract will be used as a starting point.