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
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
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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