Aug 20, 2015

Understanding Master Service Agreements: Don't Sink Your Own Ship

Master Service Agreements are documents that generally define a relationship between two companies.  The MSA can be used as a framework between the parties that establish expectations and minimize disconnects.  The best uses for an MSA include:

  • A common worksite where multiple companies and their employees are working
  • When determining post-accident liability would be costly

The devil is in the details.  MSAs anticipate work orders, purchase orders, delivery tickets and invoices.  The fine print of these documents can have a huge impact.  Make sure your MSA contains language that it controls in the case of contrary work order terms. Your MSA should designate who can/cannot agree to make changes that impact risk.

Using MSAs to protect against Indemnity

To protect against indemnity within your MSA document, one party contractually agrees to be responsible for the liability of the other party.  The aim of this is to reduce liability and expenses done so through indemnity provisions and insurance.  Careful attention should be paid to the provisions within the MSA pertaining to indemnity and insurance.

Insurance Requirements

MSAs usually require insurance that supports its indemnity obligations.  Another requirements is that the indemnitee give notice upon cancellation of the insurance.  It is important to note that additional insured status can overcome an invalid indemnity obligation.

For further information on MSAs, please contact our Admiralty and Energy team.

written by:
Walter P. Maestri

Paul D. Hale

Kari M. Rosamond