MSA vs SOW: Which One To Use When

Key takeaways:

• Establish an MSA first when starting a long-term vendor relationship to create a reusable legal framework that covers general terms like confidentiality, intellectual property rights, dispute resolution, and payment methods, eliminating the need to renegotiate these foundational terms for each subsequent project.
• Use SOWs to define the specific deliverables, timelines, milestones, costs, and acceptance criteria for individual projects that operate within the broader MSA framework, ensuring clarity on project execution without revisiting overarching legal terms.
• Recognize that MSAs function as parent documents that can govern multiple SOWs simultaneously, and in cases of conflict between the two documents, the MSA terms will generally supersede the SOW terms unless specifically noted otherwise.
• Leverage the efficiency of MSAs to save time and reduce legal costs in ongoing relationships, as establishing this framework once allows you to execute multiple projects without renegotiating basic terms each time, though be prepared for the initial 50-day average execution timeline.

A Master Service Agreement (MSA) establishes the overarching legal framework for ongoing business relationships with vendors, contractors, and service providers, which is especially critical in high-risk sectors like construction, an industry with one of the highest rates of fatalities. A Statement of Work (SOW) defines the specific deliverables, timelines, and requirements for individual projects within that framework.

Understanding the difference between an MSA and an SOW helps you choose the right contract type for each business situation. Both documents play essential roles in contract management, but they serve different purposes in your vendor relationships.

Read on to understand the differences and similarities between a Master Service Agreement and a Statement of Work, and which one to use in specific transactions.

What is a master service agreement?

A Master Service Agreement (MSA) is a comprehensive contract that establishes the legal foundation for ongoing business relationships between service providers and clients. MSAs define general terms like payment methods, intellectual property rights, confidentiality requirements, and dispute resolution procedures.

The primary benefit of an MSA is efficiency. Once you establish this framework, you can execute multiple projects without renegotiating basic terms each time. This approach saves time and reduces legal costs for both parties. This efficiency is particularly vital given that MSAs take an average of 50 days to execute, according to The 2025 Contracting Benchmark Report.

This efficiency becomes particularly valuable when you’re building long-term business relationships rather than handling one-off transactions. An MSA contract helps both parties establish their rights and responsibilities upfront, eliminating the need to negotiate every contractual term in future transactions. It also gives companies the flexibility to adapt quickly as business needs change—with clear expectations already set, future transactions can move much faster.

The terms of a Master Service Agreement include:

• Confidentiality: Most service contracts require your company to share sensitive information with the contracting parties. The confidentiality clause protects parties from having information about them shared with unauthorized third parties
• Intellectual property rights: How parties will handle intellectual property rights matters, including who will own the IP rights on the deliverables, which is crucial as the statutory definition of “Works Made for Hire” under the Copyright Act frequently does not apply to deliverables created under a contract.
• Dispute resolution: Because conflicts are an integral part of doing business together, an MSA states how they will be resolved..
• Geography: An MSA should specify a particular location where employees will do the work. Where employees work from has implications for both state and federal taxes.
• Payment terms: This refers to how payments will be made and when they will become due; according to the American Bar Association, Net 30 payment terms are considered standard and reasonable in most business circumstances.
• Warranty: This means the specific warranties parties will give in the business relationship.
• Product delivery: An MSA states the details of product delivery and when it is due.
• Venue of law: This is the law that applies to the transaction and the court that will have jurisdiction over disputes.
• Limitations of liability: These terms outline who will be responsible for lawsuits and any liability in connection with the project; for example, a provider’s draft will often seek to limit the provider’s liability to the fees paid under the relevant SOW over the preceding 12 months.
• Work standards: These terms address what the parties will consider acceptable work and how they will resolve any issues concerning that work.

What is a statement of work?

A Statement of Work (SOW) is a detailed document that outlines the specific requirements for individual projects or services. SOWs specify exactly what work will be performed, when it will be completed, and how success will be measured.

SOWs serve dual purposes as both project management tools and legal contracts. They provide clear expectations for deliverables, timelines, and acceptance criteria.

Most businesses use SOWs when hiring independent contractors, agencies, or freelancers for specific projects. The SOW ensures everyone understands the project scope before work begins, clarifying the project goals, parties’ obligations and when they become due, and how the work should be performed. An SOW ensures there is no ambiguity.

SOW will have the following terms:

• Summary: An overview of the project, goals, and expectations
• Approval: The criteria that will be used to evaluate the project, who will approve the project, and if revisions can be requested
• Work breakdown structure: An outline of each task and phase and how those tasks will be completed
• Deliverable: The final product that will be delivered with specific details relevant to the project
• Schedule: How parties will perform the project—milestones, deadlines, and other important dates
• Cost: The estimated project cost, including how to reimburse the cost of the project
• Work requirements: Any tools, equipment, or skills required to complete the project

Similarities between a master service agreement and a statement of work

MSAs and SOWs work together to create complete contract coverage for service relationships. Most ongoing business relationships require both documents to function effectively.

Both contracts are legally binding agreements that define rights and obligations between parties. While they cover different aspects of your business relationship, both documents provide essential protection and clarity. This legal binding nature is worth emphasizing—although some people consider an SOW more of a project management tool than a legal document, it carries the same contractual weight as an MSA. The main difference is that an MSA will usually have more legalese than an SOW.

When disputes arise, you’ll typically reference both the MSA for general terms and the relevant SOW for project-specific details. This dual-document approach provides comprehensive coverage for complex business relationships.

An SOW makes it easy to hold everyone accountable and ensure commitment to the project’s specifics.

Differences between an MSA and an SOW

The fundamental difference between MSAs and SOWs is scope and purpose. MSAs establish the overarching legal framework for business relationships, while SOWs define specific project details within that framework.

MSAs work best for long-term partnerships where you’ll have multiple projects over time. They cover general terms that apply to all future work. SOWs handle individual transactions and specific project requirements that change from job to job.

Here’s how this plays out in practice: if your company engages a website design agency, your MSA contract will define the terms of the partnership—covering general terms like confidentiality, warranties, and limitation of liability, plus handling recurrent services like web hosting and website maintenance.

Your SOW, meanwhile, will regulate the specific transaction you contracted the agency for—in this case, building a website. If your company later wants to build another business website, you already have an MSA that establishes the framework of your partnership, but you’ll need to draw up another SOW to govern the new project.

MSAs and SOWs also provide different levels of detail about project execution. An MSA doesn’t provide specific details about how the service will be provided, but an SOW contract will define—often in painstaking detail—how the parties will work together on the project. For example, while your MSA may simply state that your company is partnering with the web design agency to build and maintain your company’s website, your SOW will fully describe the type of website that will be built and when it will be ready—covering details like the number of pages, specific features such as responsive design or e-commerce functionality, written content requirements, logo design, and image sourcing.

The relationship between these documents also differs structurally. An MSA may have several SOWs under it, but an SOW usually depends on a single MSA. In other words, an SOW is a child document to an MSA. If they conflict, the terms of an MSA will generally supersede that of an SOW, though state laws can affect this; for example, New York law specifies that general incorporation clauses only bind a subcontractor to provisions about the work itself, not to other terms like dispute resolution. Additionally, parties can terminate an SOW without affecting other SOWs or the overarching MSA.

There’s also a practical difference in who handles these contracts. Your legal team needs to be involved in creating and negotiating an MSA more than an SOW. This aligns with industry data showing that legal teams are involved in 85% of MSA lifecycles, as noted in the report. Other departments with proper guidance can create and negotiate an SOW with minimal or no input from legal.

Beyond external contracts, your company can also use an SOW internally as a project management tool to guide employees. SOWs are critical in the performance stage of contract management—you’ll need to reference them several times to ensure that both you and the contracting parties perform your obligations.

When to use an MSA vs. a SOW

Choose an MSA when you expect multiple projects with the same vendor over time. MSAs work best for ongoing relationships where you want to establish consistent terms upfront.

Use an SOW for individual projects with specific deliverables and deadlines. SOWs provide the detailed project requirements that MSAs don’t cover.

For most ongoing vendor relationships, you’ll use both documents together. The MSA handles general business terms while individual SOWs define each project’s specific requirements.

Use an MSA when: You’re starting a new relationship with a vendor or client that you expect will be long-term or involve multiple projects over time. Think of it as setting the “rules of engagement” once, so you don’t have to renegotiate the big legal stuff (like liability, confidentiality, and payment terms) for every single project. It’s your foundation.

Use an SOW when: You need to define a specific, individual project. The MSA is already in place, so now you just need to spell out the “what, when, and how” for this particular job. This is where you detail the exact deliverables, timelines, project-specific costs, and milestones. It’s the blueprint for a single piece of work.

For a simple, one-time project, you might just have a single contract that covers everything. But if there’s any chance you’ll work together again, setting up an MSA first will save you significant administrative hassle and legal review time later.

How MSAs and SOWs work together

Think of the relationship between an MSA and an SOW as a parent and child. The MSA is the parent document—it establishes the overarching framework and governs the entire relationship. The SOWs are the child documents that live under that MSA.

You can have one MSA with many SOWs attached to it over time. For example, you might sign one MSA with a marketing agency. Then, you’d create a separate SOW for each project: one for a website redesign, another for a Q3 social media campaign, and a third for creating a new set of sales brochures.

Here’s the important part: if there’s ever a conflict between the two documents, the terms of the MSA almost always win. The MSA is the higher-level agreement. Unless you specifically write in an SOW that its terms are meant to override a particular section of the MSA (which you should do carefully), the MSA is the final word. This hierarchy is what keeps the relationship stable and predictable, even as individual projects change.

Ironclad’s contract lifecycle management software helps businesses more efficiently create both MSAs and SOWs. To see how Ironclad can make your contract management more efficient, request a demo today.

Frequently asked questions about MSAs and SOWs

What comes first, MSA or SOW?

The MSA always comes first. You establish the master terms of the relationship before you define any specific projects. Once the MSA is signed, you can execute SOWs much more quickly because the foundational legal work is already done.

What’s the difference between MSA and SLA?

An MSA sets the overall legal terms for a relationship. A Service Level Agreement (SLA) defines specific, measurable performance standards for a service. SLAs are often included as part of an SOW to guarantee things like system uptime, support response times, or delivery targets. The MSA is the “what if” legal document; the SLA is the “how well” performance document.

Is MSA the same as SOW?

No, they are not the same. An MSA is a broad agreement that governs the entire business relationship. An SOW is a narrow agreement that details the specifics of a single project. You can’t have a project-specific SOW without the general terms of an MSA (or a similar contract) to support it.

Do I need both an MSA and SOW for every project?

Not necessarily. If you’re engaging in a very simple, one-off project with no expectation of future work, you might use a single, standalone contract that covers all the terms. However, for any ongoing or recurring business relationship, using an MSA followed by individual SOWs is the standard best practice. It saves time, reduces risk, and makes managing the relationship much cleaner.

---

Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.