The Correct Way to Use SOWs and MSAs in Maryland
If you are a Maryland business owner, it can benefit your business to use SOWs and MSAs. However, to take advantage of all benefits the use of these business forms offers, you must use them correctly. A Maryland business attorney can help you draft a standard SOW and MSA tailored to your business needs.
What are MSAs and SOWs?
An MSA is a Master Service Agreement used by your business that creates a legal relationship between the parties by setting forth the legal terms agreed to by both parties. A SOW is a Statement of Work. SOWs are specific to a job or a client. The SOW establishes the payment terms and project-specific terms for that particular client. The SOW is attached to and governed by the terms of your standard MSA.
How Should You Use MSAs and SOWs in Your Maryland Business?
First, you need to draft standard MSA and SOW templates for your business. You can create the template yourself or with the assistance of a Maryland business attorney. Important factors and issues you need to remember when drafting and using your MSAs and SOWs include:
Make a reference in both documents to the other document. The MSA should reference the use of SOWs and SOWs need to reference the specific MSA that governs the SOW.
The MSA should state clearly within the document the term of the MSA. You can add an automatic extension clause that extends the term of the MSA if you have outstanding SOWs that are not complete, or you can include specific renewal options and instructions for renewal of the MSA beyond its terms.
An MSA must clearly define all relevant legal agreements between the parties. For instance, your MSA should always include payment terms; the term of the MSA; default provisions; extension or renewal provisions; non-disclosure statements, and ownership rights for intellectual property used or created. SOWs should also include detailed information related to payment, services, delivery, and other obligations of each party.
When attaching SOWs to an MSA, number each SOW. You may use a unique numbering system or use a sequential numbering system.
Include a statement in both documents defining which document will be the controlling document if a conflict in terms between the documents arises.
Include a statement related to terminating the MSA or specific SOWs. Sometimes, you may want to allow a party to terminate one SOW without terminating the MSA or other SOWs.
Benefits of Using MSAs and SOWs for Your Business
Maryland business owners benefit from using MSAs and SOWs in several ways. For instance, you can use an MSA with a customer or client for years so you need not renegotiate terms each time you enter into another SOW. Negotiating SOWs are quicker and easier because the MSA covers the basic terms and agreements between the parties. As discussed above, if you include a provision for terminating individual SOWs, it can make it much easier to work on multiple, independent projects for clients and customers.
Do You Need Additional Information About SOWs and MSAs?
A Maryland business attorney can provide additional information about drafting and using MSAs and SOWs. Contact Thienel Law today to get tailored business designed to provide your company with the highest level of legal protection. Maryland business attorney Steve Thienel is dedicated to assisting clients in Maryland, Virginia, and throughout the DC Metro area.