In many industries, such as construction, extraction, oil production, trucking and farming, the same parties may work together repeatedly. Perhaps the service is needed on a specific type of equipment. Hiring someone every single time that the service is required means drafting contracts over and over, even though everyone involved understands and agrees to the terms. It quickly becomes tedious, it can slow down the service that is necessary and it is simply not the most efficient way to do things.
A master service agreement is a way to get around this issue. By using these agreements, the person who will be providing the service essentially has a long-standing contract that doesn’t have to be renegotiated every time that their services are needed. This is different than a business partnership or the corporation hiring the service provider as an official employee. But it still binds the two together and can be both beneficial and problematic, sometimes leading to disputes.
Why would a dispute happen?
One reason that a dispute could happen is if the person in question refuses to render the services under the agreement that was signed. Maybe they want to update the deal or they want a new contract. However, the company that needs those services simply needs them to be rendered quickly and in accordance with the paperwork that was already signed.
Another reason for a dispute may be if an outsider was hired to service the same systems. Maybe a trucking company brought in another mechanic, for instance. Is the master service agreement exclusive? Is it a violation of that service provider’s rights to bring in someone else to do the job? This could be especially problematic if they were used because it would cost the company less than their already-standing agreement.
How do you resolve these disputes?
Disputes can often be addressed through mediation, where both sides work together to find a solution. When this isn’t possible, a court ruling may be needed regarding the validity of the agreement and the conduct of both parties. Those who are working their way through this process must know exactly what legal options they have.
