How to Write a Better Service Provider Agreement (MSA/SLA)

Writing a Better Cloud (Hosting/SaaS) Service Provider Agreement (MSA/SLA)

The Master Service Agreement or Master Agreement or Service Level Agreement – call it what you will – is the (usually quite hefty) contract used to govern the future business, transactions and agreements between two companies.

So to say I’ve seen a few Master Service Agreements (MSA) is a bit of an understatement.

I estimate I’ve seen over 1,000 master contracts from various companies around the globe.  These companies include all the bleeding edge Software as a Service (SaaS) companies from Salesforce, Google, Microsoft, etc… to Fortune 100s consuming those services.  I would include Fpweb.net in the group of SaaS providers as we provide our own MSA when possible to simplify the process.

However, what drove me to write this blog was a recent MSA I received from a very large company (we’ll call it Mega Co) wanting to do business with Fpweb.net.  I cringed as I opened the document… Most 800 pound gorilla companies have teams of attorneys writing their documents in a “my way or the highway” style.  But, I was pleasantly surprised to see Mega Co’s MSA approach.

The following are things in the MSA of Mega Co which I seldom see on the shopping lists of large companies seeking to do business with Cloud vendors such as Fpweb.net:

Mega Co. MSA

  • It was fair.  Every issue expressed 1) what is reasonable for both parties and 2) what applies to one party applies to both.
  • It was thorough.  They covered everything and I mean everything in a 70 page document. From escrow of software if the SaaS provider goes belly up, to price increases at CPI and security breach processes and party responsibilities. Everything.
  • It was easily understandable.  Huh?  You don’t need 500 contracts review experience or your JD? Perfect.

Yep, I was completely blown away, and I now have a completely different view of the company. I’ve even become a loyal customer myself as a result. But it’s more than that. I’m taking what I’ve learned from Mega Co. and applying it in two ways:

1) I’m rewriting the Fpweb.net MSA (20 pages) so our customers spend less time reviewing it.  Of course, this adds more language to an already extensive MSA.  So the challenge is to simplify it.  We’re working on the simplification piece now.

2) I want to share the framework of this MSA with you now.  It can serve as a checklist for you.  Of course, I can’t list all the details on Mega Co’s MSA, but I can give you the blueprint of what your MSA should cover.  I guarantee that yours or the vendor you are chatting with is missing some important areas.  Use this framework to make sure your master contract covers you:

A Better MSA Framework

ARTICLE 1.                            SCOPE OF SERVICES

ARTICLE 2.                            STATEMENTS OF WORK

ARTICLE 3.                            PROJECT MANAGEMENT

ARTICLE 4.                            DELIVERY AND INSTALLATION

ARTICLE 5.                            DOCUMENTATION AND TRAINING

ARTICLE 6.                            ACCEPTANCE

ARTICLE 7.                            LICENSE GRANT AND PROPRIETARY RIGHTS

ARTICLE 8.                            ESCROW

ARTICLE 9.                            INCIDENT RESPONSE AND CHANGES

ARTICLE 10.                          CHARGES AND TERMS OF PAYMENT

ARTICLE 11.                          TAXES

ARTICLE 12.                          WARRANTIES

ARTICLE 13.                          TERM AND TERMINATION

ARTICLE 14.                          ENCRYPTION EXPORT

ARTICLE 15.                          LIMITATION OF LIABILITY

ARTICLE 16.                          INDEMNIFICATION CONFIDENTIAL INFORMATION

ARTICLE 17.                          INSURANCE

ARTICLE 18.                          AUDIT AND EXAMINATION

ARTICLE 19.                          SECURITY 

ARTICLE 20.                          ADVERTISING AND PUBLICITY

ARTICLE 21.                          DIVESTITURE

ARTICLE 22.                          ASSIGNMENT

ARTICLE 23.                          BACKGROUND CHECKS

ARTICLE 24.                          NOTICES

ARTICLE 25.                          OVERALL AGREEMENT

ARTICLE 26.                          SEVERABILITY

ARTICLE 27.                          HEADINGS

ARTICLE 28.                          SURVIVAL

ARTICLE 29.                          FORCE MAJEURE

ARTICLE 30.                          CRISIS PREPAREDNESS PLANNING

ARTICLE 31.                          GOVERNING LAW AND VENUE

ARTICLE 32.                          DISPUTE RESOLUTION

ARTICLE 33.                          FOREIGN CORRUPT PRACTICES ACT REQUIREMENTS

ARTICLE 34.                          THIRD PARTY BENEFICIARIES

ARTICLE 35.                          RELATIONSHIP OF THE PARTIES

ARTICLE 36.                          COUNTERPARTS

ARTICLE 37.                          INTERPRETATION

ARTICLE 38.                          ATTACHMENTS


 

The following are attached hereto and incorporated herein by this reference:

Exhibit 1 Form of SOW
  • Attachment A
Service Levels
  • Attachment B
Taxing Jurisdictions
  • Attachment C
Hosted System Encryption Information
  • Attachment D
Crisis Preparedness Planning (Optional)
  • Attachment E
  • Attachment F
Open Source Use RequirementsCustom Services
Exhibit 2 Information Protection Contract Requirements
Exhibit 3 Insurance
Exhibit 4 Dispute Resolution
Exhibit 5 Foreign Corrupt Practices Act Requirements

 

2012-10-08T09:49:49+00:00 October 8th, 2012|

3 Comments

  1. D. Ellis November 21, 2012 at 6:20 am - Reply

    I was so happy to see this post! I feel the same way. I wish I could read the MSA that you describe in this post, it sounds amazing. Im actually finishing up an MSA for a company that wants to do business with me, but they had sent me a Vendor Agreement that basically wanted me to sign my life away, put all liability on me, and allowed me no protection or confidentiality for the software I created. In creating the MSA I made sure that everything was fair and noted in the opening that “This MSA has been constructed to benefit and protect both parties and will govern any and all future services between Company and Client.”, just so that when they read it, they would know how inappropriate it is to send a one sided agreement. thanks so much for the outline and your thoughts, they are refreshing:)

  2. Randy12 November 14, 2013 at 12:54 am - Reply

    Hi

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