Importance of a Service Level Agreement (“SLA”)

service level agreement

In my time practicing, several clients have requested me to assist them in either (i) recovering funds that are rightfully due to them for services they have rendered; or (ii) enforce specific performance against a service provider who rendered defective services.  The common thread that continuously pops up is that the agreement between the client and the customer was concluded by a gentleman’s agreement, instead of a Service Level Agreement, signed between the parties.

Unfortunately, reliance on a gentleman’s agreement is a thing of the past, especially when it comes to business.  It would be unreasonable to assume that every person you do business with is trustworthy, especially when a gentleman’s agreement is underpinned by the values of integrity and trust rather than being legally binding. Recognizing the above, a better way to protect your business is to ensure that you have the appropriate SLA in place.

What is an SLA

An SLA is a formal written agreement entered into between the service provider and customer and comprises a commitment of reciprocal obligations between the parties pertaining to the service(s) required.  You can expect to see the following terms contained in an SLA, to name a few:

  • Scope of services and level of services the customer can expect to receive;
  • Fee associated with the services and terms of payment;
  • Duties and responsibilities of parties;
  • Duration of the SLA;
  • Turnaround time for the services;
  • Indemnities and liabilities;
  • Breach and termination provisions; and
  • Applicable laws and jurisdiction.

An SLA is primarily used in circumstances where customers outsource specific services. It can also be used on a project-by-project basis, or it can be reoccurring, dependent on the extent of services the customer requires.

WHO provides the SLA

In most cases, an SLA is provided by the service provider.  In certain instances, depending on the various levels of services that the service provider may offer, the service provider will have a suite of SLA’s available that reflect and align with the extent of services and pricing that the business offers.  The upside of having an SLA in place would be that the service provider’s prices are already reflected therein, which will be a good point of departure for negotiating with the customer.  The customer can also take comfort that the prices listed therein are already determined and not a thumb suck.

Why do I need an SLA

SLA’s are an integral part of any business. I consider this agreement to form part of the suite of essential documents that any company needs to do business.  The SLA will also lock in the customer for the contracted/outsourced services they require, including the duration/period for which the services are needed.

In addition to the above, the SLA will provide the parties with the necessary certainty they require regarding expectations concerning their respective obligations.  Remedies for non-performance will also be dealt with in the SLA so that a defaulting party will be hard placed, should it attempt to escape its obligations.


Whether you are a service provider or a customer, the importance of having an SLA in place should not be overlooked.  If you are looking to put an SLA in place for your business or simply require us to review one handed to you for signature, please do not hesitate to contact BBP Law Attorneys. We will gladly schedule a meeting and provide you with the necessary legal assistance and guidance required.


Brent Petersen
Senior Associate


Leave a Reply