Service Level Agreement (Standard)
Businesses often seek to procure the services of other businesses and may do so for a variety of reasons. In certain cases, a simple service agreement is all that is required – particularly where the services in question are to be provided over a short term. In other cases however, a long term relationship is required and inherent in the nature of such relationships is the need for consistency. Put another way, the client needs the service provider’s work to be a constant known quantity.
The data protection provisions in this document have been reviewed and updated for Brexit. References to data protection legislation have been updated with reference to the UK GDPR.
This Service Level Agreement provides for such situations. Not only does it address the provision of services by one party to another, but it also sets levels (or performance requirements) to which those services must be provided. In so doing, the service provider’s consistent provision of services in line with agreed levels is incentivised (and its failure to do so disincentivised by way of penalties). Furthermore, detailed provisions govern the monitoring of both the performance of the services and of the agreement as a whole, allowing for the adjustment and flexibility required in such a long-term relationship.
Much of this document is self-explanatory, however certain key points must be highlighted.
Two levels of meetings are specified for the monitoring of performance and of the agreement itself. These can be altered to suit the organisations involved. The default provisions of the agreement assume the appointment of employees (generally with detailed knowledge of the services) to discuss the provision of the services and performance reports and the appointment of management level employees (generally with the authority to make decisions on behalf of the respective parties) to discuss the contractual relationship itself and to follow up on matters raised in the first-level meetings.
In addition to the monitoring of performance, this template deals with the consequences of the service provider’s failure to meet the agreed service levels. These can be altered to suit the terms of your agreement. The default provisions assume two levels of penalty. The first requires the payment of a penalty fee and the second provides for a further penalty fee plus the client’s right to terminate the agreement. You may wish to insert additional levels of penalty in between. The penalty fees themselves should be detailed in Schedule 2.
When completing the Schedules, provide as much detail as possible. When complete, this Service Level Agreement should constitute a “manual” of sorts; that is – a complete reference for both parties which should provide the details necessary for both parties to fulfil their obligations.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
Clauses 6.8 and 6.9 are optional. These address the freedom of the parties to deal with third parties. You may wish to include one or both of these depending on the bias you wish the agreement to adopt. It should be understood that clause 6.9, whilst allowing the client to obtain similar services from a third party, should not harm the service provider’s interests under the agreement at hand as its provisions and binding effect upon the Client will remain unchanged. Clause 6.9 has the potential to limit the service provider’s freedom to deal with the client’s competitors. This should be used with care and the consent referred to in that clause should generally be given without hesitation, lest the restrictions in clause 6.9 be challenged on the grounds of restraint of trade. If you are the client and are considering withholding such consent, legal advice from a commercial law firm is strongly recommended.
When choosing an option for the intellectual property rights clause, be aware that the reference to sub-clause 10.1 in the second option will only be correct when the first option has been deleted.
This template contains the following clauses:
1.Definitions and Interpretation
2.Term of Agreement
3.Service Provider’s Obligations
5.Fees, Payment and Records
6.Provision of the Services
7.Service and Agreement Monitoring
8.Performance Management and Monitoring
10.Intellectual Property Rights
13.Liability and Indemnity
21.Assignment and Sub-Contracting
23.Relationship of the Parties
25.Third Party Rights
31.Law and Jurisdiction
and the following schedules:
2. Fees and Payment & Penalty Fees
3. Service Levels, Performance Monitoring and Performance Reports
4. Data Processing
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