An MSA sets the overarching terms governing ongoing services between parties, providing a foundation for future statements of work or projects. This playbook breaks down best practices for managing risk, defining scope, and balancing flexibility with legal protection.
Why This Matters: Audit rights and compliance obligations help identify and remedy non-compliance early, reducing regulatory and contractual risk.
Negotiation strategy
If you're the Company:
Ensure the clause specifies compliance with all applicable laws and industry standards. Include language that grants the right to audit or inspect records related to compliance.
If you're the Contractor:
Negotiate to limit the scope and frequency of audits to protect sensitive information. Ensure any remediation steps are reasonable and clearly defined.
Essential elements
1
Compliance Obligations
Adherence to laws and standards.
2
Audit Rights
Right to inspect compliance records.
3
Remediation Steps
Corrective actions for breaches.
Action framework
ACCEPT
Propose edits if the clause lacks specific compliance or audit provisions.
EDIT
Reject if the clause imposes unreasonable audit demands.
ADD
Add language for jurisdiction-specific compliance if not present.
PRO TIP
Always align compliance clauses with the company's risk management policies.
Example clauses
FAVORABLE
Preferred Compliance Clause
"The parties shall comply with all applicable laws and regulations. Each party grants the other the right to audit and inspect records related to compliance. In the event of non-compliance, the breaching party shall take immediate corrective actions as agreed upon by both parties."
NEUTRAL
Standard Compliance Clause
"The parties agree to comply with relevant laws and allow for periodic audits to ensure compliance. Any breaches shall be addressed through mutually agreed remediation steps."
UNFAVORABLE
Overly Broad Audit Rights
"Each party may conduct unlimited audits at any time without prior notice, accessing all records and systems."
Fallbacks
High-Risk Projects
In high-risk projects, ensure more frequent audits and stricter compliance checks to mitigate potential liabilities.
International Operations
For international operations, tailor compliance obligations to meet diverse regulatory requirements across jurisdictions.
Data Privacy Concerns
When handling sensitive data, include specific audit protocols to ensure data protection compliance.
FEATURED SOLUTIONS
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WEEK 1
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WEEK 2
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WEEK 3
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WEEK 4
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DocJuris is not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options,selection of forms or strategies.