- Negotiate market language in the master agreement. Being aware of what is “market” in terms of service agreements for the particular industry is very helpful in negotiating an agreement and understanding your options. Your attorney should be able to advise you as to market standards. However, those are just standards which the vendor may or may not adhere to, so certain flexibility in this regard is indispensable.
- Do not assume that the terms are nonnegotiable. You should review the standard terms and conditions carefully and bring up clauses that are excessively onerous, ambiguous or that conflict with your company's capabilities. You may be able to resolve the issues to your advantage if the vendor is able to understand your company’s position.
- Know what to expect from standard terms. It is important to understand all of the standard terms and conditions of the agreement, as they will affect the future dealings between the parties.
- Even if you are not able to change the standard terms, you may be able to obtain better rates or better conditions for those terms that you are able to negotiate. Service providers frequently bake their positions into the standard terms and base the rates they charge on the limits that their nonnegotiable terms impose. You may be able to obtain certain concessions on the items that you are actually able to negotiate.
- Negotiate schedules with the master terms in mind. When negotiating schedules attached to existing master services agreements (such renewal agreements), you should always refer back to the standard terms and clarify any ambiguities created by the addition of the schedules.
- Work with your outside counsel to develop a uniform playbook to review and address issues. A proper playbook would include the rationale for the business positions and would facilitate negotiations both by allowing you to understand the implications of the contract provisions and to explain your company’s position to the vendor.
Service agreements should not be taken lightly. While they may appear to be standard or unimportant, they need to be carefully considered as they can impose significant costs and liabilities and even potential litigation.
© 2025 BARNES & THORNBURG LLP
National Law Review, Volume XIII, Number 296