Mark Pestronk
Mark Pestronk

Q: Our agency has won a couple of corporate accounts lately, and in both cases, the procurement person at the corporation has sent us a 25- or 30-page contract called a Master Services Agreement, which he calls an MSA. The procurement person then asks us to suggest any changes we might want. These MSAs are extremely complicated and seem to have lots of clauses that have nothing to do with corporate travel management. Conversely, they seem to be missing a lot of other provisions that we would want in a travel management contract. Do you have any tips on how to go about suggesting changes to these MSAs?

A: MSAs seem to have spread to nearly every large company that procures travel services. Unfortunately, the MSA phenomenon creates lots of extra work for agency owners and managers and has no discernable benefits.

The basic concept is that the parties have a contract that contains all the legal boilerplate corporate lawyers can think of, and the contract stays in place throughout the parties' relationship. Then, specific projects get described in a Statement of Work (SOW) or Work Order that contains the business terms agreed upon for each project; each SOW is an addendum to the MSA.

The MSA/SOW structure does not fit well with travel management services for a couple of reasons. First, as you point out, the MSA contains lots of irrelevant clauses, and second, there is typically no series of projects in travel management, so only one SOW is really ever needed.

To review and revise the MSA, you should ignore the irrelevant clauses and focus on changing or deleting those that would harm you if they stayed in the agreement. One example of the latter is the clauses covering invoicing and payment.

A typical MSA requires you to send a monthly invoice in a format prescribed by the corporation and wait up to 60 days to get paid. Even then, the company has to pay only undisputed portions of the invoice.

If, like most agencies, you require point-of-sale payment by credit card for both tickets and fees, you should either delete the MSA's payment clauses entirely or make sure that the SOW spells out your payment terms and clearly states that it supersedes the payment terms in the MSA.

Another typical MSA clause requires that your fees be no higher than the fees you charge to the client who pays the lowest fees. Since each client's requirements are different, these kinds of clauses should probably be deleted.

Many MSAs also require you to offer a discount for prompt payment and even a rebate of a portion of your fees. Needless to say, such clauses are inappropriate for travel management contracts today.

Aside from payment-related clauses, many MSAs allow the client to terminate without cause on short notice, such as 15 days. Ideally, the account should be able to terminate only for your breach, but if the client insists on the right to terminate without cause, try to lengthen the required notice to 60 or even 90 days.

Once you are satisfied with your deletions, your next task is to add clauses that protect you. These can be added in the MSA itself or the SOW.

Good examples of clauses that benefit you and that you will never find in an MSA unless you put them there are a commitment to use your agency exclusively, indemnification against debit memos caused by fraudulent reservations or credit cards chargebacks, a commitment to refrain from hiring any of your staff and a disclaimer for the acts or omissions of suppliers.

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