Comparing a Master Service Agreement (MSA) vs Statement of Work (SOW) is relatively straightforward. The MSA is a comprehensive, overarching contract, while the SOW is far more detailed. Although each contract is unique, the MSA and SOW fit together to complete an agreement between two businesses. By leveraging an AI contract review platform, a corporate legal department can ensure complementary agreements that avoid contradictory terms.
Approaching MSAs and SOWs as though they are contradistinctive agreements can be a mistake because the two documents should work together seamlessly to ensure contract expectations are met without variation.
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The MSA provides an overarching contract. It governs the expectations and agreements for the life of a business relationship so that a unique contract is not required for each new job. Typical clauses in an MSA include:
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The SOW is more granular. It will cover the specific aspects of a job, and terms will only cover that working relationship. Essentially, SOWs encompass the details that an MSA does not. Common clauses include:
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When executed correctly, the MSA simplifies the business relationship while the SOW offers job-specific details. However, because the two contracts are unique, duplicate clauses that can create contradictions are possible.
While some overlap may exist between an MSA and an SOW, both documents should isolate terms to avoid contradictions. For example, the MSA may establish a payment schedule as 30 days after invoice remittance. Meanwhile, the SOW may state that payment is due on remittance. A contradiction like this can create unnecessary conflict that parties could have avoided by relying on one document to set the specific payment terms.
In the event of such a discrepancy, the MSA usually takes precedence, as it governs the entire relationship. However, this can create problems for the company contracting the service since the MSA is typically less detailed and can introduce more ambiguity. Ensuring accuracy in the initial MSA while using the SOW to negotiate can present the best approach to managing these documents effectively.
The MSA is a long-term contract that requires accuracy. As the MSA establishes terms that govern the lifetime of the relationship, these agreements may demand significant contract negotiation. Executing MSA agreements may require multiple rounds of attorney review and negotiation to ensure the most equitable arrangement. LexCheck’s AI-based legal technology can help ensure accuracy while accelerating the transition from negotiation to contract execution.
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LexCheck’s AI can use data garnered from the business and its prior contracts to suggest revisions to the MSA and ensure a more accurate long-term arrangement. It can redline certain areas and warn the reviewer of clauses that may be unenforceable or damaging to the business. For example, it may note that the contract expiration date is excessive compared to opt-out provisions for the client. An AI contract platform could also suggest alternative dates or opt-out clauses. |
When drafting and negotiating Master Service Agreements vs Statements of Work, approach them as complementary agreements. The MSA establishes the relationship while the SOW guides the job. By leveraging the power of AI, companies can streamline and accelerate the review and negotiation process of these agreements to ensure equitable agreements for the long term. Whether LexCheck’s AI is reviewing agreements for contradictions, ensuring MSA accuracy, or guiding SOW negotiations, complete markups are completed in minutes.
When reviewing and negotiating a Master Service Agreement, LexCheck's AI-powered platform automates and accelerates the process, saving legal departments valuable time and resources. To experience the technology, request a demo, or connect with us at sales@lexcheck.com to learn more.