A Service Level Agreement (SLA) is entered into when one party is providing services to the other, in exchange for consideration. It is an important document that becomes the foundation of the business relation the parties have, and the recourse open to them in the event something goes wrong.
If you provide or receive any goods, products or services, odds are, you would need an SLA. To explain, let’s take an example: You have a business you built from scratch and have rendered excellent services to a firm, but they are questioning the quality of the service to refrain from paying you the consideration agreed upon. Now, imagine the converse. You are a startup that has outsourced tech / app development to a firm that is not delivering the app in a timely manner, or is delivering sub-standard work.
If you have an SLA, there would be clauses in there on the exact scope of services to be provided, the quality, quantity, the payment terms, and what happens in the event of a default. In the absence of an agreement, you would be left with very limited options.
Contents of an SLA – [SLA usually contains the following clauses]
- Name and details of the parties.
- The business relation between the parties and the services provided.
- The conditions and details associated with such service.
- The fees for such services and the payment schedule.
- Representations and warranties by the service provider and the service recipient.
- The damages for breaches of the agreement.
- The term of the agreement.
- Termination clause.
- Dispute resolution clause.
- Governing law of the agreement and governing law of the dispute resolution clause.
- Other general terms such as sever-ability, waiver, survival of clauses, etc.