Whether you are using a generic template or managing complex vendor relationships, avoiding these common MSA pitfalls is essential for protecting your margins and your intellectual property.
So without further ado, here are five areas where MSAs often fall short and how to fix them.
1. Starting with a Generic "One-Size-Fits-All" Template
A common starting point that often leads to trouble is using a generic MSA template without further customization. Generic templates are built for "average" businesses, which means they often include clauses that don't apply to your specific workflow—while missing the ones that do.
- The Fix: Treat your MSA as a living document. Before signing any "standard" form, run it through a Master Service Agreement Checklist to ensure your specific operational needs, like insurance requirements and tax responsibilities, are actually present.
2. Overlooking the Gap Between Indemnity and Liability
Another area where MSAs tend to fall short is in the relationship between Indemnity (who pays for third-party lawsuits) and Limitation of Liability (the total cap on how much you owe the client).
- The Risk: If your liability cap isn't clearly connected to your indemnification obligations, a third-party claim could accidentally bypass your "cap" and expose your company to significant financial loss.
- The Fix: Clearly separate these clauses. Ensure your liability cap is a "hard ceiling" that applies to all claims under the agreement, unless specifically carved out for things like gross negligence.
3. Vague Acceptance Criteria for Deliverables
It is also common to see agreements where the criteria for "Acceptance" are left undefined. If a client can reject your work simply because they "don't like it," it creates an unpredictable cash flow problem.
- The Risk: Vague terms lead to "infinite revisions" where the definition of "complete" remains a moving target.
- The Fix: Tie acceptance to measurable, objective standards. Define a specific window (e.g., 5 business days) for the client to provide written feedback, after which the work is "deemed accepted."
4. Limited Flexibility for Evolving Business Needs
Business needs change, but rigid MSAs can sometimes fail to allow for easy modifications. As your relationship with a client grows, you may need to adjust how you handle data or manage "Change Orders."
- The Risk: Without a defined process for modifications, you may end up relying on "handshake deals" that aren't legally binding, leaving both parties unprotected.
- The Fix: Build a "Change Control" mechanism into the MSA. This ensures any deviation from the original scope is documented in a signed SOW or amendment.
5. Missing the Intellectual Property (IP) Triggers
Finally, even seasoned teams occasionally miss the specific triggers for Intellectual Property (IP) transfer. They may agree to "Work Made for Hire" terms without clearly protecting their underlying "know-how."
- The Risk: You could accidentally give away the rights to the tools and templates you use to serve all your clients.
- The Fix: Distinguish between Background IP (your pre-existing tools) and Foreground IP (the new work). Explicitly state that ownership only transfers after the final invoice is paid.
The Bottom Line
Identifying these pitfalls is the first step toward a more professional contract process.
One recommendation we would make is to bake your "safe" language directly into a Master Service Agreement Playbook. This moves your team away from risky, one-off decisions and toward a standardized system that protects your business automatically.
So, if you're ready to stop second-guessing your contracts, try our free MSA Playbook Generator today.