Service Contract
Service contract and MSA review
Service contracts and MSAs govern timelines, liability, and scope changes. Pinnacle reviews the full agreement for missing caps, one-sided termination, and unclear deliverable standards.
Analyze your service contract free →Who should review a service contract?
Vendor MSAs, contractor agreements, and service contracts govern everything from software implementation to cleaning services. Before you sign — or before your company signs — check liability caps, SLAs, and what happens when scope changes. These terms determine who pays when something goes wrong.
Common red flags we catch
- ⚠No limitation of liability cap for direct or consequential damages
- ⚠Unilateral right to suspend service without cure period
- ⚠Vague service levels with no measurable remedies
- ⚠Change orders required in writing but no pricing mechanism
Key clauses explained
Scope and acceptance criteria
Deliverables should be defined with objective acceptance criteria. "Completion to client's satisfaction" gives the client unlimited rejection power. Milestone acceptance with a defined review period protects both parties.
Change order process
Scope changes happen. The contract should require written change orders with pricing before extra work begins. Verbal approvals followed by billing disputes are preventable with clear change control language.
Limitation of liability
Caps on direct damages and exclusions of consequential damages (lost profits, business interruption) are standard in B2B service contracts. Missing caps expose the service provider to uncapped risk — or the buyer to inadequate remedies.
Termination for convenience
Can either party end the contract without cause? Termination fees, payment for work-in-progress, and transition assistance should be defined. One-sided termination rights favor whoever holds them.
What we review in your service contract
- Scope, deliverables, and acceptance criteria
- SLA metrics and service credits
- Limitation of liability and indemnification
- Termination for cause and convenience with fee treatment
Pre-sign checklist
- ✓Are deliverables and acceptance criteria objectively defined?
- ✓Is there a written change-order process with pricing?
- ✓Is liability capped and are consequential damages excluded?
- ✓What are the termination notice periods and fees?
- ✓Are SLAs measurable with defined remedies?
Negotiation tip
Add a mutual liability cap (e.g., fees paid in the prior 12 months) and a written change-order process with pricing within five business days.
Frequently asked questions
What's the difference between an MSA and a SOW?
The master service agreement (MSA) sets general terms — liability, IP, payment, termination — that apply across projects. The statement of work (SOW) defines specific deliverables, timeline, and fees for each engagement under the MSA.
Should service contracts cap liability?
Almost always. Uncapped liability is unusual in commercial service contracts except for carve-outs like confidentiality breaches or willful misconduct. Typical caps range from fees paid under the contract to 12 months of fees.
What happens if a vendor misses an SLA?
Depends on the contract. Strong SLAs include service credits or fee reductions for missed targets. Weak SLAs offer no remedy beyond termination — which may not help if you're mid-project.
Related guides
Other contract types
Not legal advice. Read our disclaimer.