Module 2 of 6 — MSAs for Indian Businesses

Scope of Services and Statements of Work

Reading module · approx 14 min

More MSA disputes arise from poorly drafted scope than from any other single clause. A scope of services that is clear on paper will be unclear in practice if it does not define what is out of scope, who decides what counts as a change, and what the process for managing changes is.

The scope of services clause in the MSA typically does two things: it describes the general category of services the provider will offer, and it incorporates by reference the specific SOW that governs each engagement. The clause itself should be deliberately broad — its function is to establish that the MSA governs all services, not to define what those services are. That definition belongs in the SOW.

SOW structure and mandatory contents

A well-drafted SOW must contain, at minimum:

Description of deliverables: what the provider is committing to deliver, in enough specificity to be tested against at completion
Timeline and milestones: start date, milestone dates, final delivery date; whether time is of the essence
Acceptance criteria: how the customer will evaluate whether each deliverable meets the standard required
Fees and payment schedule: total consideration, milestone payments or period billing, invoicing procedure
Key personnel: named individuals whose replacement requires notice or consent, where relevant
Customer dependencies: the inputs, approvals, access, and information the provider requires from the customer, and the timeline for receiving them

Change control: the most negotiated provision

Change control governs what happens when either party wants to alter the agreed scope after the SOW is signed. Without a change control clause, the parties must either agree informally (which creates ambiguity about whether the original scope has been varied) or treat every scope discussion as a potential contract dispute.

A functional change control process has three elements: a change request form (written, specifying the proposed change, impact on timeline, and additional fees); an evaluation period during which the provider assesses impact; and a signed change order before any out-of-scope work begins. The provider should not begin work on a change until the change order is signed. The customer should not expect scope changes to be absorbed into the original fee.

Practical note Email exchanges frequently substitute for signed change orders in practice. This is a risk for providers: emails confirming a scope change are often incomplete (no fee agreed, no timeline impact recorded) and may not be binding where the MSA requires amendments in writing. Providers should insist on signed change orders even when the relationship is informal. A brief exchange ratifying the scope change in writing is enough; a 10-page amendment is not necessary.

Acceptance criteria and what happens if acceptance is withheld

Acceptance criteria define when the customer is obligated to accept a deliverable. Without them, the customer can reject deliverables on subjective grounds and withhold payment indefinitely. Good acceptance criteria are objective and measurable: specifications the deliverable must meet, error rates it must not exceed, tests it must pass.

The MSA should also specify what happens if the customer fails to respond to a delivery within the acceptance period. The standard approach is deemed acceptance: if no written rejection is received within the acceptance period, the deliverable is treated as accepted. This protects the provider against a customer who simply ignores the delivery to delay payment.

Module 3 covers the provisions that most significantly affect commercial risk: liability caps, indemnity, and consequential loss exclusions.