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What if you invest in a managed service provider (MSP) deal but later struggle with delays in critical deliverables or have important elements left out altogether? The frustration of vague terms and undefined SLAs can strain even the most promising collaborations, leaving both sides scrambling to resolve disputes. So what's the solution? MSP contracts.
With the managed services market expanding and projections indicating growth from $297.20 billion in 2024 to $878.71 billion by 2032, establishing clear and structured agreements between MSPs and clients can set the tone for fruitful collaborations and business success. In this article, you will learn about the different parts of an MSP contract, important clauses, and a free contract template you can use.
What are MSP Contracts?
An MSP contract is an official document that depicts the services to be offered by the provider to the client, as well as the conditions agreed between the two parties within a business venture involving IT or business services.
MSP contracts are effective in IT management, cloud services, cybersecurity, and other industries where constant support and maintenance are very important. The benefits of such agreements include
- Defining responsibilities to avoid misunderstandings
- Reducing risks and potential disputes and
- Ensuring compliance with legal and regulatory requirements.
Sample Managed Services Provider (MSP) Contract Template
1. Parties Involved : This Agreement ("Agreement") is entered into as of [Date] by and between:
- Services Provider: [Legal Name], located at [Address], and reachable at [Contact Information].
- Client: [Client Legal Name], located at [Address], and reachable at [Contact Information].
2. Scope of Services The service provider agrees to provide the following services:
- IT Management: Oversight and maintenance of IT infrastructure.
- Cybersecurity: Implementation and monitoring of security measures.
- Cloud Services: Provision and management of cloud-based solutions.
3. Payment Terms
- Payment Structure: Monthly or Annual or One-off
- Billing Schedule: Frequency of billing
4. Duration and Termination
- Duration: This Agreement will remain in effect from [Start Date] to [End Date]. We will extend the dates subject to mutual agreement.
- Termination: Either party may terminate this Agreement by providing 30 day(s) written notice.
5. Confidentiality and Security
- Data Protection: Both parties agree to adhere to applicable data protection regulations.
- Non-Disclosure Agreement (NDA): Employees and contractors of both parties shall sign NDAs to protect sensitive information.
6. Liability and Indemnity
- Responsibility: The service provider assumes the responsibility for service delivery as outlined, excluding circumstances beyond reasonable control.
- Indemnity Clauses: The client agrees to indemnify the service provider against damages caused by third-party software.
7. Service Level Agreement (SLA) Metrics and Penalties
- Response Time: The service provider shall respond to client issues within 2 hours.
- System Availability: Guaranteed uptime of 99.9%..
8. Intellectual Property Ownership
- Ownership Rights: Any intellectual property developed during this Agreement will be owned by [Specify, e.g., the client, MSP, or jointly].
- Usage Rights: The MSP grants the client a [Specify, e.g., non-exclusive, perpetual] license to use such intellectual property.
9. Dispute Resolution Methods
- Resolution Mechanisms: Any disputes shall first be attempted to be resolved through mediation. If unresolved, arbitration or legal proceedings in the jurisdiction of [Location] will follow.
- Governing Law: This Agreement is governed by the laws of [State/Country].
Signatures By signing below, both parties agree to the terms and conditions of this Agreement.
Managed Services Provider (MSP): [Name]
[Title]
[Signature]
[Date]
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What Should MSP Contracts Include?
The following critical components should be clearly described under an MSP contract to provide for a practical and win-win contract.
Parties Involved: Mention who the MSP and its client are, both their legal names and ways to contact them.
Scope of Services: Explain all of the services that will be offered, including IT management, cybersecurity, and cloud services.
Payment Terms: Make it clear whether there is a once-only payment or a regular, monthly, annual fee or fee based on usage. Provide specific billing schedules, payment methods, and deadlines.
Duration and Termination: Include the contract duration and possibility for the duration’s extension. Explain aspects like the circumstances for ending the contract, including breach of contract and mutual consent and the periods of notice.
Confidentiality and Security: Specific measures to involve are the inclusion of data protection clauses to meet the regulation of privacy. Include NDAs to shield delicate information from employees.
Liability and Indemnity: Make it clear who’s going to be responsible for what when it comes to the MSP and the client. Add some specific exceptions, called indemnity clauses, to protect against being held financially or legally liable for certain occurrences.
Service Level Agreement (SLA) Metrics and Penalties: Specify goals about response times, system/line availability, and time taken to provide a resolution. State actions that both parties agree should be taken if the MSP fails to provide service delivery at these agreed service levels.
Intellectual Property Ownership: State ownership rights for intellectual property developed during the contract period. Clarify whether the client or MSP retains ownership or if rights are shared.
Data Privacy and Compliance Requirements: Include clauses ensuring adherence to data protection laws like GDPR, HIPAA, or local regulations. Specify how data will be stored, accessed, and secured.
Dispute Resolution Methods: Define mechanisms for resolving disputes, such as mediation, arbitration, or legal proceedings. Specify the governing law and jurisdiction for the contract.
Why Cone Is The Best Software For Creating MSP Contracts?
Although you can manually draft contracts, it is always better to use good software to do that work for you. One such solution is Cone Proposal Software, which is designed to help with contract generation and organization. It assists businesses in creating appealing contracts that are legally compliant without much effort.
Best Features
Easy-to-Use Proposal Editor: It has a basic drag-and-drop mechanism that ensures you can easily nestle text, images, price tables, and even your logo to ensure proposals are immersive and professional.
Customisable Templates: Profession-specific proposal templates are helpful and make the documents more professional.
Automated Billing and Invoicing: Once a contract or proposal is approved, invoice automation handles invoicing based on payment conditions, streamlining payment tracking and management.
Client Collaboration: Clients can review and interact with contracts in real time, leaving feedback, requesting adjustments, or approving terms directly within the platform.
E-Signatures: Integrated e-signatures allow for quick and secure approvals, accelerating the finalisation process and enabling faster project or service kick-offs.
Tracking And Analytics: Analytics give insights into client interactions, such as when the contract was opened and how much time was spent on each area, allowing you to better understand the customer's interests and objectives.
Pricing
Essentials: £6.50 or $8 (billed annually) or £9 or $11 (billed monthly).
Growth: £9 or $11 (billed annually) or £12 or $15 (billed monthly).
Sign up for free now!
The Key to Stronger MSP Partnerships
A well-crafted MSP contract is the backbone of a successful partnership. As you draft or customize your MSP contract, remember that no two agreements are alike. Tailor the details to reflect the unique dynamics of your business and your client’s needs.
Don’t let an unclear contract jeopardise your business relationships. Start with our free template, and for an even simpler solution, explore Cone Proposal Software. Its customisable templates, e-signatures, and real-time collaboration tools streamline the process, saving you time and effort. Get it right—your business relationships depend on it.
Try Cone for free today!
FAQs
- What are the SLAs in an MSP contract?
SLAs (Service Level Agreements) provide performance measures such as uptime, response times, and resolution deadlines, providing accountability for service quality.
- What happens if an MSP fails to satisfy contractual obligations?
The contract should include fines or remedies for nonperformance, as well as escalation and dispute resolution mechanisms.
- Can MSP contracts include several services?
Yes, a single MSP contract may include a wide range of services, including IT support, cybersecurity, and cloud management, as long as the scope is explicitly stated.