Masters Services Agreements contain many traps for the unwary. A common trap is the provision for attorneys’ fees. At first blush, a fee shifing provision is enticing. No one wants to have to pay for attorneys’ fees if a breach of a MSA occurs. This provision is usually lumped into most of the boiler plate or miscellaneous terms of an agreement and often is overlooked by the parties. Nevertheless, even the miscellaneous terms need a careful review.
The first question to consider is which party is most likely to breach the terms of the agreement. On balance, if the majority of the obligations are on one of the parties, then that party should push back on a fee shifting provision in the agreement. Often times, the party with fewer obligations will push back on striking this provisiion. A middle ground could be to include a cure provision that will delay the effect of a fee shifing term. Another middle ground may be to include a forum selection clause that is unfavorable to the party with fewer obligations under the agreement.
The economics of the deal will mostly likely dictate any fee shifting provision. Nevertheless, this is not a provision to be taken lightly and something any party to a Master Service Agreement should carefully consider.