What is the difference between an MSA and a statement of work?
Written by For Founders Law, a Toronto firm licensed by the Law Society of Ontario. About us
Short answer
A master services agreement (MSA) sets the legal terms that apply to every engagement with a customer or vendor: liability, IP, confidentiality, payment and termination. A statement of work (SOW) describes one specific project: deliverables, timeline, fees and acceptance. You sign the MSA once and add a new SOW, or an order form for subscriptions, for each piece of work.
Founders run into MSAs and SOWs from both sides: selling implementation or custom work to customers, and hiring agencies and consultants. The structure is the same either way.
What goes in each document?
| Master services agreement | Statement of work | Order form | |
|---|---|---|---|
| Used for | All work with this party | One project or phase | One subscription purchase |
| Covers | Liability, indemnities, IP, confidentiality, payment terms, termination, governing law | Scope, deliverables, milestones, fees, assumptions, acceptance criteria, named contacts | Products, seats, term, price, start date |
| Signed | Once | For each project | For each purchase or renewal |
| Changes | Rarely | Often, through change orders | At renewal |
For SaaS, the subscription is usually bought on an order form under the MSA, and any implementation or custom development on a SOW. See SaaS agreements.
Why split them?
So you negotiate the legal terms once. After the MSA is signed, each new project only needs a short SOW that the business teams can agree without reopening the limitation of liability or indemnity terms.
What happens if the SOW and MSA conflict?
The MSA should say which document wins. A common order of precedence is: the MSA governs, unless a SOW expressly says it overrides a specific MSA section for that project. Without a clear rule, a SOW drafted by a project manager can quietly change liability or IP terms.
Who owns custom work done under a SOW?
Whatever the contract says, and if it says nothing clearly, the default rules apply. Under the Copyright Act, the author of a work is generally its first owner, and an assignment is only valid in writing and signed. So:
- When you hire an agency or developer, the MSA should assign all deliverables to your company and include a moral rights waiver. See who owns code a contractor writes.
- When you build custom features for a customer, the MSA should say you keep ownership of your platform and reusable components, and say what the customer gets: ownership of specific deliverables, or a licence. See licence vs assignment.
What makes a SOW work?
- Specific deliverables, not “consulting services as required”.
- Assumptions and what is out of scope.
- Acceptance criteria and a deadline for the customer to accept or reject.
- Fixed fee, milestones or time and materials, with any cap.
- A change order process for new requests.
Vague scope is a common reason services projects end in a fee dispute.
What to do next
We draft SaaS and master services agreements with order form templates, prepare contractor agreements, and review MSAs you’re asked to sign as a contract review. Fees are on our fees page.
This guide is general information about Ontario and Canadian law, not legal advice for your situation. To talk through an MSA or SOW, book a free 15-minute consult.