I recently wrote about an RFP that I declined because it foretold of significant challenges should my company have won the bid. But even when you accept the RFP and win the business, you must take care. The next step, most likely, is the Master Service Agreement (MSA). Emotionally, you may want to sign the paperwork and have the deal done. This is not, however, the time to stop thinking strategically. Take your time and sign a document you can abide by. Don’t be stuck with something you did in haste.
It’s essential that you and your legal team thoroughly read and understand the MSA. If the MSAs I’ve been reading are any indication of what’s out there, many are difficult to navigate and heavily weighted in favor of their creators. People too often can be intimidated by the magnitude of the document, lack the finances for legal advice and, instead of doing due diligence, sign on faith and hope for the best.
This is a clause see all the time. Be on the lookout for it:
Termination for Convenience. COMPANY X shall have the absolute and unconditional right, in its sole judgment and discretion, to terminate this Agreement for any reason or no reason, by providing thirty (30) days’ written notice to Provider. Upon such termination, Provider shall recover, as its sole remedy, payment for work satisfactorily completed and not previously paid as of the effective date of termination. Provider waives and forfeits all other claims for payment and damages including without limitation, anticipated profits or revenue or other economic loss arising out of or resulting from such termination.
This means the agreement can be canceled at any time for any reason by the company for whom you are working. It means you could have staffed up for the new business, been completing the work beyond all expectations and still have the contract canceled. I suggest you have your legal team insert language about termination for cause. I’d also explore being able to cancel should Company X give you cause.
Another clause to look out for:
Provider warrants that it is familiar with the United States Foreign Corrupt Practices Act and without limiting the generality of the other provisions of this Agreement, the Provider agrees that it will not, and will ensure that its employees, directors, officers, agents or other persons acting on its behalf (the “Related Parties”) do not make any payment or give anything of value, either directly or indirectly, to an official of any government or government agency for the purpose of influencing an act or decision of the official in his or her official capacity or inducing the official to use his or her influence to assist the Provider in obtaining or maintaining business or in obtaining or paying for favorable treatment or any other special concession.
Chances are you are NOT familiar with this act. It’s a recipe for disaster. It’s virtually impossible for you to be responsible for every person associated with your event knowing about this act. Remember, contracts are legally binding whether you’re ever been asked if you understand this act or not. If it’s in a contract you sign, you’re guaranteeing everyone with your event will comply with something they don’t even know exists.
MSAs are the last step before finalizing a relationship with a new client. They’re also the first step into that relationship. Make sure you put your best foot forward and want to walk down the path the MSA sends you on.
Have you had successes and/or failures with your MSAs? Please share your experiences and comments in the space below.