Master Service Agreement (Kenya)
Framework Agreement for Ongoing Services under the Law of Contract Act Cap. 23
MASTER SERVICE AGREEMENT
Governed by the Law of Contract Act Cap. 23 (Kenya)
THIS MASTER SERVICE AGREEMENT is made on [Agreement Date]
BETWEEN:
(1) SERVICE PROVIDER: [Service Provider Name] (BRS: [Service Provider BRS], KRA PIN: [Service Provider KRA PIN]), of [Service Provider Address] (the "Service Provider"); and
(2) CLIENT: [Client Name] (BRS: [Client BRS], KRA PIN: [Client KRA PIN]), of [Client Address] (the "Client").
The Service Provider and the Client are together referred to as the "Parties".
1. TERM AND SCOPE
1.1 This Agreement commences on [Commencement Date] and continues for an initial term of [Initial Term].
1.2 Renewal: [Renewal Mechanism].
1.3 Either Party may terminate this Agreement for convenience by giving [Notice Period] written notice to the other Party.
1.4 General Scope of Services: [Service Description].
1.5 Each individual project shall be executed by attaching a signed Statement of Work (SOW) to this Agreement. In the event of conflict between this Agreement and an SOW, this Agreement prevails unless the SOW expressly states otherwise.
2. FEES, PAYMENT, AND TAX
2.1 Primary billing model: [Billing Model]. Project-specific pricing is stated in each SOW.
2.2 Payment Terms: Invoices are due within [Payment Terms] of the invoice date.
2.3 Late Payment: Unpaid invoices attract [Late Payment Penalty] from the due date until actual payment.
2.4 Currency: All amounts are payable in [Currency].
2.5 Withholding Tax: The Client, as withholding tax agent under Section 35 of the Income Tax Act Cap. 470, shall deduct applicable withholding tax from payments to the Service Provider, remit it to the Kenya Revenue Authority (KRA) via iTax by the 20th of the following month, and issue a withholding tax certificate to the Service Provider promptly after remittance.
2.6 VAT: [VAT Status] — where the Service Provider is VAT-registered, invoices shall include VAT at 16% under the Value Added Tax Act No. 35 of 2013, payable by the Client in addition to the agreed fees.
3. INTELLECTUAL PROPERTY
3.1 Background IP: Each Party retains ownership of its pre-existing intellectual property. Nothing in this Agreement transfers Background IP. Each Party grants the other a limited, non-exclusive licence to use its Background IP solely as necessary to perform under this Agreement.
3.2 Foreground IP (created under SOWs): [IP Ownership].
3.3 Where foreground IP is assigned to the Client, the Service Provider assigns to the Client all intellectual property rights — including copyright under the Copyright Act Cap. 130 administered by the Kenya Copyright Board (KECOBO) — in deliverables created under SOWs, effective from the date of creation and subject to full payment.
3.4 Where the Service Provider retains foreground IP, the Client receives a perpetual, royalty-free, non-exclusive licence to use the deliverables for the purposes set out in the relevant SOW.
4. CONFIDENTIALITY AND DATA PROTECTION
4.1 Each Party shall keep the other's confidential information strictly confidential and shall not disclose or use it except as necessary to perform under this Agreement. This obligation survives termination for [Confidentiality Term].
4.2 Permitted disclosures: to professional advisers bound by confidentiality, to regulators, or as required by law or court order.
4.3 Data Protection: [Data Processing]. Where the Service Provider processes personal data on behalf of the Client, the Parties shall execute a Data Processing Agreement compliant with Section 43 of the Data Protection Act No. 24 of 2019 and the Data Protection (General) Regulations 2021 administered by the Office of the Data Protection Commissioner (ODPC). The Client is the data controller; the Service Provider is the data processor.
5. INDEMNITY, LIABILITY CAP, AND DISPUTE RESOLUTION
5.1 Each Party shall indemnify and hold harmless the other from third-party claims arising from its own breach, negligence, or infringement of intellectual property rights.
5.2 Aggregate Liability Cap: The total liability of either Party for all claims under this Agreement shall not exceed [Liability Cap]. This cap does not apply to liability for death, personal injury caused by negligence, fraud, wilful default, or data protection penalties imposed by the ODPC.
6. GOVERNING LAW AND DISPUTE RESOLUTION
6.1 This Agreement is governed by the laws of Kenya and the Law of Contract Act Cap. 23.
6.2 Disputes shall be resolved by: [Dispute Resolution] under the Arbitration Act No. 4 of 1995.
IN WITNESS WHEREOF, the Parties have signed this Agreement on the date first written above.
Authorised Signatory (Service Provider)
________________
Signature
Authorised Signatory (Client)
________________
Signature
Witness
________________
Signature
What Is a Master Service Agreement (Kenya)?
A Master Service Agreement in Kenya defines the scope of work, fees and deliverables governing the provider's services to the client.
A Master Service Agreement in Kenya differs from a single-engagement service contract. A single-engagement contract is complete once the specific service is delivered; the relationship ends on delivery or on the contract's end date. A Master Service Agreement, by contrast, is an umbrella agreement that governs the entire relationship between the parties. Each new project, assignment, or service engagement is then executed by attaching a SOW to the Master Service Agreement, which incorporates the Master Service Agreement's terms by reference. The SOW specifies only the project-specific details — deliverables, timelines, pricing, and any project-specific terms — while relying on the Master Service Agreement for dispute resolution, IP ownership, confidentiality, indemnity, and other general terms.
The Consumer Protection Act No. 46 of 2012, administered by the Competition Authority of Kenya (CAK), applies where the client under a Kenya Master Service Agreement is a consumer — defined as a person who enters into a consumer agreement for goods or services for personal, household, or family purposes. Business-to-business Master Service Agreements are primarily governed by the Law of Contract Act Cap. 23 and sector-specific regulation.
The Data Protection Act No. 24 of 2019, administered by the Office of the Data Protection Commissioner (ODPC), is critically relevant to Kenya Master Service Agreements in the technology, outsourcing, and cloud services sectors. Where a service provider processes personal data on behalf of the client under the Master Service Agreement, the Data Protection Act No. 24 of 2019 requires a Data Processing Agreement — which may be incorporated into the Master Service Agreement or appended as a schedule — imposing obligations consistent with the Data Protection (General) Regulations 2021.
The Income Tax Act Cap. 470, administered by the Kenya Revenue Authority (KRA), requires clients to withhold income tax on service fees paid to non-resident service providers at 20 per cent under Section 35 of the Income Tax Act Cap. 470. Service fees paid to resident service providers are subject to withholding tax at 5 per cent where the payer is a listed company, public body, or approved employer. The Value Added Tax Act No. 35 of 2013 requires VAT-registered service providers to charge VAT at 16 per cent on taxable services delivered under the Master Service Agreement.
The Copyright Act Cap. 130, administered by the Kenya Copyright Board (KECOBO), is material where the services delivered under the Master Service Agreement involve the creation of original works — software, marketing materials, architectural designs, or written content. The Act vests first ownership of copyright in the creator; a Master Service Agreement should expressly address whether intellectual property created under each SOW vests in the client (work-for-hire or assignment) or remains with the service provider (licensed use only), as the default rule under Section 30 of the Copyright Act Cap. 130 vests ownership in the employer or commissioner only in specific circumstances.
When Do You Need a Master Service Agreement (Kenya)?
A Master Service Agreement in Kenya under the Law of Contract Act Cap. 23 is required whenever a service provider and a client anticipate an ongoing commercial relationship involving multiple projects, engagements, or service deliveries over a period of time, and both parties wish to establish the legal framework once rather than renegotiate fundamental terms for every engagement.
A Master Service Agreement is needed when a Kenyan IT company contracted to provide software development, system integration, cybersecurity, or managed IT services to a corporate client across multiple projects over 12 months or more requires a single contractual framework that covers IP ownership, liability caps, data protection obligations under the Data Protection Act No. 24 of 2019, and escalation procedures, with each individual project governed by a SOW attached to the Master Service Agreement.
A Master Service Agreement is required when a marketing agency, public relations firm, or digital advertising company registered with the Business Registration Service (BRS) enters into a retainer arrangement with a client, providing ongoing campaign management, content creation, and social media services under separate monthly or campaign-specific SOWs that are executed under the umbrella of the Master Service Agreement.
A Master Service Agreement is needed when a professional services firm — an audit firm registered with the Institute of Certified Public Accountants of Kenya (ICPAK), a law firm enrolled under the Advocates Act Cap. 16, or a management consulting firm — provides recurring engagements to a major corporate client and requires a single governance framework for all engagements rather than separate engagement letters for each project.
A Master Service Agreement is required when a Kenyan company contracts with a foreign service provider to deliver outsourced services — such as back-office processing, customer support, or cloud hosting — and needs a governing agreement that specifies jurisdiction, withholding tax obligations under Section 35 of the Income Tax Act Cap. 470, data protection requirements under the Data Protection Act No. 24 of 2019, and dispute resolution before the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995.
A Master Service Agreement is needed when a public body or county government contracting for recurring professional or technical services under the Public Procurement and Asset Disposal Act No. 33 of 2015 requires a framework contract that permits multiple call-off orders without the administrative burden of conducting a separate tender process for each individual engagement, provided the framework contract was established following a compliant tender under the Public Procurement Regulations 2020.
What to Include in Your Master Service Agreement (Kenya)
A Kenya Master Service Agreement under the Law of Contract Act Cap. 23 must contain the following essential elements to provide a thorough and enforceable commercial framework.
Parties and Term: Full legal names, BRS registration numbers (for companies), KRA PIN numbers, and registered addresses of the service provider and the client; the commencement date of the Master Service Agreement; and the initial term, renewal mechanism (automatic renewal, notice-based renewal), and termination provisions.
Scope and Statements of Work: A clear description of the types of services to be provided; the mechanism for executing individual Statements of Work (SOWs), including the SOW template, approval process, and the requirement for mutual written consent before any SOW is binding; and the order of precedence between the Master Service Agreement and any SOW in the event of conflict.
Fees, Invoicing, and Payment: The billing model applicable to each SOW (time-and-materials, fixed fee, monthly retainer, or milestone-based); payment terms (e.g., net 30 days from invoice date); the late payment penalty; VAT obligations under the Value Added Tax Act No. 35 of 2013; withholding tax obligations under Section 35 of the Income Tax Act Cap. 470; and the currency of payment (Kenya Shillings or agreed foreign currency subject to Central Bank of Kenya foreign exchange regulations).
Intellectual Property Ownership: Clear allocation of ownership of pre-existing IP (background IP) retained by each party; ownership of IP created specifically for the client under a SOW (foreground IP) — whether assigned to the client or licensed; the scope of any licence granted; and compliance with the Copyright Act Cap. 130 administered by the Kenya Copyright Board (KECOBO).
Confidentiality: Definition of confidential information; the obligation of each party not to disclose or use the other's confidential information except as necessary to perform under the agreement; permitted disclosures (to regulators, courts, or professional advisers under the Advocates Act Cap. 16); and the survival of confidentiality obligations after termination.
Data Protection: Where personal data is processed, the data controller/processor relationship under the Data Protection Act No. 24 of 2019; the service provider's obligations as a data processor, including security measures, sub-processor restrictions, data subject rights assistance, breach notification, and data deletion on termination, consistent with the Data Protection (General) Regulations 2021 administered by the Office of the Data Protection Commissioner (ODPC).
Indemnity and Liability Cap: Each party's obligation to indemnify the other for third-party claims arising from their own breach, negligence, or IP infringement; the aggregate cap on liability under the agreement (typically a multiple of fees paid in the preceding 12 months); and exclusions from the liability cap (death, personal injury, fraud, wilful default, data protection breaches).
Dispute Resolution and Governing Law: Governed by the laws of Kenya and the Law of Contract Act Cap. 23; disputes to be resolved by arbitration before the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995, or before the High Court of Kenya Commercial Division. The forms-legal.com Kenya Master Service Agreement template includes 12 standard clauses, SOW template, and data processing addendum aligned with the Data Protection Act No. 24 of 2019 and the Law of Contract Act Cap. 23.
Additional compliance elements for a Master Service Agreement (Kenya) used in Kenya include: Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010. Forms-legal.com provides this template as a starting point for Kenya-compliant documentation.
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howpublished = {\url{https://forms-legal.com/kenya/business/contracts/master-service-agreement-kenya}},
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Frequently Asked Questions
A Master Service Agreement (MSA) in Kenya under the Law of Contract Act Cap. 23 is the overarching umbrella contract that establishes the legal framework — ownership of IP, confidentiality, indemnity, liability caps, payment terms, dispute resolution, and governing law — for the entire commercial relationship between the service provider and the client. A Statement of Work (SOW) is a project-specific document that is executed under the MSA and incorporates the MSA's terms by reference. The SOW contains only the engagement-specific details: the precise scope of services, deliverables, timelines, milestones, and the specific fee for that project. The SOW does not re-state the general terms already in the MSA. Where there is a conflict between the MSA and an SOW, the order of precedence clause in the MSA typically governs — usually the MSA prevails unless the SOW explicitly states that it overrides a specific MSA clause. This structure allows parties to move quickly from negotiation to engagement for each new project without reopening the entire legal framework, which is particularly valuable for long-term technology, consulting, or professional services relationships.
The Data Protection Act No. 24 of 2019, administered by the Office of the Data Protection Commissioner (ODPC), requires that where a service provider processes personal data on behalf of a client under a Kenya Master Service Agreement, the arrangement must be governed by a written Data Processing Agreement that complies with Section 43 of the Data Protection Act No. 24 of 2019 and the Data Protection (General) Regulations 2021. The Data Processing Agreement — which may be incorporated into the MSA or appended as a schedule — must specify: the subject matter, duration, and nature of the processing; the purpose and type of personal data involved; the obligations and rights of the data controller (client) and the data processor (service provider); security measures to be implemented; restrictions on sub-processors; procedures for handling data subject access requests; the data breach notification timeline (72 hours to the ODPC under the Data Protection Act No. 24 of 2019); and data deletion or return procedures on termination of the MSA. Service providers that fail to include compliant data processing provisions in their MSAs risk administrative penalties of up to KES 5,000,000 or 1% of annual global turnover under Section 64 of the Data Protection Act No. 24 of 2019.
Ownership of intellectual property created under a Kenya Master Service Agreement is determined by the agreement itself, not by any automatic statutory rule. Under the Copyright Act Cap. 130, administered by the Kenya Copyright Board (KECOBO), the author of a work is the first owner of copyright. Where the work is created by an employee in the course of employment, copyright vests in the employer under Section 30(1) of the Copyright Act Cap. 130. However, where a service provider creates works as an independent contractor (not an employee), the default rule is that copyright vests in the service provider, not the client — even if the client commissioned the work and paid for it. This means that without an express IP assignment or IP licence clause in the Master Service Agreement, a client who pays for custom software, marketing content, or design work does not automatically own the copyright in those deliverables. The MSA should therefore contain explicit provisions: either an assignment clause (transferring all IP created under SOWs to the client) or a licence clause (permitting the client to use the IP without transferring ownership). The IP clause should also address background IP (pre-existing tools and methodologies) owned by the service provider and confirm that the client receives only a licence (not ownership) in respect of background IP.
Withholding tax obligations under a Kenya Master Service Agreement depend on the tax status and residence of the service provider. Under Section 35 of the Income Tax Act Cap. 470, administered by the Kenya Revenue Authority (KRA): payments for management or professional fees to a resident individual service provider are subject to withholding tax at 5 per cent where the payer is a designated withholding tax agent (listed company, government body, or approved institution); payments to a non-resident service provider for management or professional fees are subject to withholding tax at 20 per cent (or a lower rate under an applicable Double Taxation Agreement). Service fees paid by a Kenyan company to a foreign service provider for services performed outside Kenya are generally subject to withholding tax at 20 per cent unless exempted by a Double Taxation Agreement — Kenya has entered into Double Taxation Agreements with the United Kingdom, Germany, India, Zambia, and other countries that may reduce the rate. The client is responsible for deducting and remitting withholding tax to the KRA via iTax by the 20th of the month following payment. Failure to withhold makes the client liable for the tax plus interest under Section 35(6) of the Income Tax Act Cap. 470.
A Kenya Master Service Agreement may include a liability cap clause limiting the aggregate liability of the service provider to the client for breach of contract, negligence, or other claims to a specified monetary amount — typically a multiple (e.g., 1× or 2×) of the total fees paid under all SOWs in the 12 months preceding the event giving rise to the claim. Liability cap clauses are enforceable under the Law of Contract Act Cap. 23 provided the cap is agreed freely between commercial parties. The Consumer Protection Act No. 46 of 2012, administered by the Competition Authority of Kenya (CAK), prohibits unreasonable limitation of liability in consumer contracts; however, business-to-business MSAs are not typically subject to consumer protection restrictions. Certain categories of liability cannot be capped or excluded under Kenyan law regardless of the agreement: liability for death or personal injury caused by negligence; liability for fraud or wilful default; liability for breach of data protection obligations under the Data Protection Act No. 24 of 2019 to the extent of regulatory penalties imposed by the ODPC; and liability for IP infringement claims under the Copyright Act Cap. 130. A well-drafted MSA identifies these carve-outs expressly to avoid ambiguity.
A Master Service Agreement executed in Kenya is subject to stamp duty under the Stamp Duty Act Cap. 480, administered by the Kenya Revenue Authority (KRA). A service contract of indefinite or long-term duration may attract nominal stamp duty of KES 200 as a contract for services. Where the Master Service Agreement includes a financing element, a security arrangement, or a guarantee, the relevant portion attracts stamp duty on a graduated scale under the First Schedule to the Stamp Duty Act Cap. 480. Stamp duty is paid via the KRA iTax portal, and the original agreement must be presented for stamping at the KRA stamp duty office or processed online before it can be tendered as evidence in civil proceedings under Section 19 of the Stamp Duty Act Cap. 480. Individual SOWs executed under the MSA generally do not attract separate stamp duty as they are instruments executed pursuant to the already-stamped MSA, but where a SOW has a value exceeding a prescribed threshold, additional stamp duty may be applicable. Parties should verify the current stamp duty requirements before executing the MSA to avoid penalties.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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