Your MSA governs every project that follows. Get it right.
IP ownership, indemnification, and termination rights in your MSA apply to every SOW signed under it. One unfavourable term multiplies across every project, every year.
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What MSA agreements hide in plain sight
The most common red flags we catch in this contract type.
Work-for-hire wording that hands over deliverables the moment you make them — paid or not.
Uncapped indemnity that can dwarf the value of the entire engagement.
Every active project can be pulled with two weeks warning and nothing owed for wind-down.
One-sided caps that expose you to open-ended damages while limiting yours to fees paid.
The three things that decide whether your MSA holds up
An MSA is a force multiplier. Every clause in it applies to every SOW signed under it — so one bad term repeats across every project for the life of the relationship. The clauses that decide whether the MSA is fair are IP ownership, indemnification scope, the liability cap, termination rights, and the change-order process.
IP ownership is the flashpoint for service providers. A default work-for-hire clause transfers everything, including the methodologies, tools, and frameworks that the provider brings to every engagement. The fix is a clean split: pre-existing IP stays with the provider (with a licence to the client for the deliverables that use it), and only the bespoke deliverables transfer on full payment.
Termination for convenience is the second flashpoint. If a client can cancel every active SOW on 14 days notice with no kill fee, the provider is carrying all the delivery risk without any of the upside. A kill fee covering work-to-date plus a 25-50% cancellation fee and a 30-day notice period restores balance.
What ContractScan AI analyzes in your MSA
A dedicated playbook — built for this contract type only.
- IP ownership
Whether deliverables transfer on payment, and pre-existing IP carve-outs.
- Indemnification scope
What triggers it, what's excluded, and whether it's mutual.
- Liability cap
Mutual cap, super-caps for IP/data, and exclusions for gross negligence only.
- Termination rights
Notice period, kill fee for in-flight work, and effect on SOWs.
- Payment terms
Net days, late-payment interest, and dispute process.
- Change order process
Formal mechanism for scope and price changes.
- Non-solicitation
Restrictions on hiring each other's staff after the engagement ends.
- Survival clauses
Which obligations live on after termination — and for how long.
Red flags we see in real MSAs
Specific patterns to check for before you sign — with the fix for each.
Never sign this without a pre-existing-IP schedule and licence-back for anything the client actually needs.
Even a modest project can generate a claim that dwarfs total fees. Cap it inside the overall liability cap.
Add 30 days notice minimum and a kill fee covering work-in-progress plus a percentage of remaining SOW value.
For services work, Net 30 is the ceiling. Net 60+ is a financing arrangement dressed as payment terms.
How to negotiate a MSA
The concrete asks we recommend, in the order to raise them.
- 1Split IP: pre-existing stays with provider, deliverables transfer on full payment, licence-back for reuse
- 2Cap liability at 12 months of fees under the affected SOW, mutual
- 3Add 30-day termination notice and a kill fee = work-to-date + 25-50% of remaining SOW
- 4Tighten indemnity scope to third-party claims arising from the provider's negligence only
- 5Move payment to Net 30 with 1.5% monthly late-payment interest
- 6Insert a formal change-order process before any out-of-scope work begins
Here's what your report looks like
Plain English. No legal jargon. Action you can take today.
Work-for-hire wording that hands over deliverables the moment you make them — paid or not.
Uncapped indemnity that can dwarf the value of the entire engagement.
Every active project can be pulled with two weeks warning and nothing owed for wind-down.
A bad MSA doesn't hurt on day one — it compounds. By SOW number six, the IP you built the tooling with belongs to a client you no longer work with, the indemnity you signed is being invoked by their end customer, and the termination clause you didn't push back on has just been used to end the relationship without a kill fee. Every SOW under a bad MSA carries the same defects.
Who uses this
One MSA term, repeated across every SOW for years.
Lock down liability and IP before scoping work.
Understand the framework before agreeing to the first project.
Frequently asked questions
What's the difference between MSA and SOW?
MSA sets the legal framework — IP, liability, confidentiality. SOW defines specific work and price. The MSA governs all SOWs under it.
Who should own the IP in an MSA?
Custom work often goes to the client. Pre-existing tools and frameworks should remain yours with a license granted for the client's use.
Is unlimited indemnification normal?
No. Mutual and capped indemnification is the standard to negotiate toward. Always challenge one-sided unlimited indemnification.
Ready to check your MSA?
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