A service level agreement defines the services you provide and the limitations on those services. It helps you define standards and create consistent relationships with different customers.
What Is a Service Level Agreement?
A service level agreement is a legal document that outlines the obligations a service provider and their client have to one another. It will usually outline key details about the service and a minimum quality of service the parties agree upon.
Other names for a service level agreement include:
- External service agreement
- Services contract
- Agreement of service availability
Is a Service Level Agreement Legally Binding?
Yes, a service-level agreement is legally binding. It is a legal contract between the service provider and the client when properly drafted and executed.
A binding contract contains the key details and unambiguous terms. It is also signed by all parties who are bound to the agreement. A service-level agreement template makes it easy to know you have the terms needed for an enforceable contract.
How To Write a Service-Level Agreement
When writing a service level agreement (SLA), you must include critical provisions protecting your legal rights. A template service level agreement makes it easy to include language like:
Step 1. Date and Jurisdiction
You should include the date you sign the SLA and where you sign it. Both of these details could be important in a breach of contract claim.
Step 2. Names of the Parties
The contact information for the parties is a key part of the SLA. It should include:
- Each party’s name, including business names
- Official titles of those who sign, if applicable
- Other contact information like phone number and email
Step 3. Description of Services
An SLA is designed to describe the services you offer. It should list important details like:
- Turnaround times
- Service definitions
- How services are delivered
- Maintenance and customer service limitations
- Hours of operation
- Technology needs and requirements
- How performance metrics are measured
- Security measures and IT protections
- Price and payment details for services
A service level agreement should be as detailed as possible. This puts a client on notice of what you offer and does not offer. The more evident it is, the more protection you get from the written contract.
Step 4. Standard Legal Protections
A template service-level agreement gives you standard legal clauses that help protect your business. These include:
- A security interest in products
- Confidentiality of information
- Assignment of contract
- Limitations on liability
- Warranties and waivers
- Ability to amend the contract
- Governing law and disputes
- Entire agreement clause
- Notices and a miscellaneous section
- Right to cancel
These legal provisions are significant. They are contractual provisions that protect your business and help a court interpret the agreement. It also helps to avoid disputes about whether agreements outside of the written contract have occurred.
Step 5. Signature Line for the Parties
The SLA should include a place for the parties to sign. This should include the client and service providers’ printed and signed names.
If either party is a business entity, it should identify the individual signing and their official title. Failure to include an official title could mean the court will interpret the signature as accepting personal liability. Include an official title after a signature to help avoid this problem.
Service Level Agreement Sample
This sample service level agreement can help you get started on drafting your document:
Why Is a Service Level Agreement Important?
All service providers should use a service level agreement with their customers and clients. IT providers, like other service providers, commonly use these contracts because of their critical legal protections.
Service level agreements provide important promises and protections like:
- Specifying the level of service quality you offer
- Documenting how much uptime you agree to
- Creating expectations about customer support
- Identifying products you sell and sales agreements for them
- Putting into place legal protections for both parties
- Ensuring that both parties understand the minimum level of service and limitations on service
A written agreement protects your legal rights as a business owner, employee, independent contractor, or client.