How do I handle a Master Services Agreement that conflicts with our terms?

Pick your top 3 non-negotiables (liability cap, IP indemnity, term length). On those, don't move. On everything else, find middle ground. If MSA conflicts fundamentally (they want 100% cap on fees, you can't absorb that), escalate to your counsel + buyer, don't negotiate solo.

MSA Conflicts: The Negotiation Framework

Every enterprise MSA has conflicts. The ones you let slide become expensive problems. The ones you fight become deal killers. Know the difference.

YOUR NON-NEGOTIABLES (decide these now, not in negotiation):

1. Liability Cap (example: max liability = 12 months of fees)

• Why: You can't insure unlimited liability
• Floor: Never agree to "unlimited liability"
• Negotiable: Is it 6 months of fees or 12? That's a conversation

1. IP Indemnity (example: you warrant code is original, you indemnify for infringement)

• Why: Third-party IP claims are expensive
• Floor: You indemnify for *known* infringement; not speculative claims
• Negotiable: Scope (what's covered) and caps (limits on indemnity)

1. Term + Renewal (example: 12-month initial, auto-renews, 30-day notice to cancel)

• Why: You need revenue predictability
• Floor: At least 12-month commitment, not month-to-month
• Negotiable: Auto-renewal mechanics, notice period

EVERYTHING ELSE: Negotiable

THE NEGOTIATION MOVES (in order):

1. Identify conflicts (week 2-3)

• Procurement sends their MSA template
• Your counsel reviews, flags conflicts
• Bucket them: non-negotiables vs. negotiable vs. nice-to-haves

1. Send your marked-up version (within 24-48 hours)

• Don't sit on it. The longer negotiations take, the slower the deal
• Accept 60% of their requests (shows good faith)
• Reject 20% with explanation (non-negotiables)
• Counter on 20% (negotiable; offer compromise)

1. Example response email:

``` "Thanks for the MSA. We've reviewed and support most of your terms. Here are our thoughts:

✅ AGREED: Data residency (EU), audit rights (quarterly), payment terms (Net-45)

⚠️ ADJUST NEEDED:

• Liability cap: You requested unlimited. We can do 24 months of fees.
• Insurance: You requested $5M E&O. We carry $2M. Can we cap indemnity at insurance limits?
• Payment terms: Net-60. Can we do Net-45 for 2% discount (saves you $X)?

👍 NEED YOUR INPUT:

• Auto-renewal language: You have 30-day notice. Can we align to match procurement cycle?

My counsel (cc'd) will loop in with detailed redline. Happy to discuss specifics." ```

1. Loop in your counsel + buyer

• Rep should not negotiate alone
• Counsel handles legal language
• Buyer (CFO) can override if needed ("we'll pay for higher insurance")

1. Escalate if stuck (week 4-5)

• If you can't agree on non-negotiables, escalate to your counsel + buyer
• Example: "They won't cap liability. Cost us to add insurance would be $X/month. CFO: do we eat that or walk?"
• Buyer decides, not you

RED LINES (never agree):

• Unlimited liability (bankruptcy risk)
• One-way confidentiality (unfair power dynamic)
• Indemnify for their negligence (not your fault)
• IP indemnity for work they customized (they modified it, they own that)
• Auto-renewal into perpetuity (you can't exit)

WHAT USUALLY WORKS:

• Liability cap: Mutual liability = 12 months of fees; aggregate liability = 24 months
• Payment terms: Net-45 (not their Net-60, not your Net-30)
• Auto-renewal: 12-month initial, auto-renews for 12-month terms unless cancelled 30 days before expiry
• Insurance: Their E&O requirement = highest of what you carry or industry standard (get a quote)
• IP indemnity: You indemnify for third-party claims related to unmodified product; they indemnify for their modifications

TIMELINE: MSA negotiation should take 2-3 weeks max if both sides cooperate. If > 4 weeks, someone is delaying intentionally (break the stall by escalating to buyer).

TAGS: msa-negotiation, legal-terms, vendor-management, contract-strategy, risk-management