A ransomware hit locks your files. Phones light up. Now what? Your contract decides response times, data recovery, liability, and who pays. A managed IT service contract governs the relationship, typically structured as an MSA, SLA, and SOW working together.
The Contract Stack: MSA, SLA, SOW, And More
- Master Services Agreement (MSA). This is the umbrella for legal terms, risk allocation, payment rules, renewals, and termination. It connects with SLAs and SOWs.
- Service Level Agreement (SLA). This establishes operational expectations, including maintenance periods, response and resolution goals, priority, and credits for misses. Arguments are saved by a clear response as opposed to a resolution.
- Statements of Work (SOW). Each SOW defines project deliverables, schedule, acceptance criteria, and pricing. It prevents scope creep by isolating one project from another.
Add-ons. Expect a Data Processing Addendum for personal data, security schedules, and vendor pass-through cloud terms. GDPR Article 28 outlines what DPAs must cover, including subprocessors and controller instructions.
Core Clauses Every Managed IT Service Contract Should Include
Scope Of Services And Exclusions
Spell out covered users, devices, sites, and business hours. List what is out of scope: bespoke development, on-prem upgrades, or unsupported hardware. A clear scope avoids surprise invoices and protects both sides from scope creep.
Service Levels And Performance Metrics
For multi-site or 24/7 operations, the cost of having your own team can be beaten by a fixed charge for always-on support. Rapid incident handling helps to reduce downtime and restart productivity quicker with protection of rDefine ticket priorities, target response and resolution times, uptime goals, escalation paths, and planned maintenance windows. Example targets are 30-minute response, 4-hour resolution during business hours, and different rules are applied after hours. Track and report the compliance in QBRs.
Data Protection, Compliance, And Security
Demand backups, recovery testing, Access controls, MFA, encryption, vulnerability, and incident response. Assign framework requirements to maps: Incident response lifecycle provided by NIST, HIPAA Security Rule protection, and GDPR Article 28 to protectors as a processor. Add breach notification procedures and audit privileges.
Roles, Responsibilities, And Client Obligations
Stated what the MSP is, what you should provide: access to the administration, Windows patching, correct asset lists, and policy enforcement. If you refuse recommended controls, record risk acceptance. This alignment prevents finger-pointing during incidents.
Fees, Pricing Models, And Billing Rules
Explain per-user or per-device pricing, including hours, project versus recurring work, travel, overtime, and overages. Detail price-increase mechanisms and indexing. Include late fees, invoicing cadence, and suspension rights for nonpayment.
Term, Renewal, Termination, And Exit Assistance
Set initial term length, auto-renewal behavior, notice periods, and early termination rights or fees. Reference “click-to-cancel” style expectations in jurisdictions regulating negative option renewals. Specify handover of credentials, documentation, and data on exit.
Liability, Indemnity, And Dispute Resolution
Cap liability at a multiple of fees, with carve-outs for willful misconduct, IP infringement, and data protection breaches. Define indemnities, governing law, venue, and mediation or arbitration before litigation. Use cyber insurance and require vendor insurance certificates.
Walking Through A Managed IT Services Agreement Template (Section By Section)
- Parties And Definitions. Name legal entities and define terms like “Incident,” “Outage,” and “Personal Data.”
- Services And SLAs. Insert the service catalog and attach SLA tables for priorities, targets, credits, and maintenance.
- Security And Compliance. Reference your security controls, audits, DPA, HIPAA applicability, and breach notification timelines.
- Support Process. Describe ticket intake, triage, remote versus onsite rules, and escalation.
- Change Requests. Use CRs to alter scope, pricing, or timelines without rewriting the MSA.
- Subcontractors. Require disclosure and controller authorization for subprocessors, with flow-down obligations.
- Audits And Logs. Permit reasonable audits or independent attestations, and define log retention.
- Insurance. State required coverages: professional liability, cyber, and workers’ compensation.
- Boilerplate. Add assignment limits, force majeure, confidentiality, and severability.
How To Review And Negotiate Your MSP Contract
Follow a simple workflow:
- Business review. Confirm outcomes, reporting, renewal dates, and exit process.
- Technical review. Validate scope, SLAs, security controls, and disaster recovery.
- Legal review. Check liability caps, indemnities, governing law, and DPA terms.
Use negotiation levers: narrow or expand scope, tune SLAs, swap credits for fee reductions, add QBR reporting, and include flexibility for mergers or headcount swings. Document assumptions and create a living service schedule.
Common Red Flags And Deal-Breakers
Beware vague “best effort” SLAs, aggressive evergreen renewals, one-sided liability caps, weak security language, and expensive exit fees. Missed renewal dates can trigger automatic renewals that you cannot easily escape. Track key dates to keep leverage.
Using Free Agreement Templates Safely
Templates speed drafting, but can miss industry requirements. Always adapt DPA terms to Article 28, and map security to your sector. Health providers must satisfy HIPAA safeguards. Keep version control and store signed copies in a contract system with alerts for renewals and reviews.
Stress-Test Your MSP Contract—Before Reality Does
Contracts decide outcomes under stress. Use a clear scope, measurable SLAs, strong security, fair liability, clean renewals, and a tested exit plan. Then review regularly and track dates. Your future outage will thank you. Get a quick expert review and eliminate hidden risks.
FAQs
What is the difference between response and resolution?
Do I always need a DPA?
Why highlight auto-renewal?
Renewal traps can lock you into terms. Recent FTC actions push simpler cancellation and clearer notices, so they require fair renewal terms.
