Service Level Agreement Remedies

1. Definitions

The following definitions apply to these IACCM Contracting Principles:

  • "Service Level Agreement" or "SLA" means the contractual quantitative standards set for service performance by the parties (e.g., response time, service quality, uptime).
  • "SLA Credit" means the credit provided by a supplier to a customer for an SLA Failure.
  • "SLA Failure" means the failure of supplier to meet its obligations under an SLA.
  • "Chronic SLA Failure" means repeated or persistent SLA Failures, the occurrence of which is agreed by the parties to justify a remedy or remedies in addition to the award of SLA Credit(s), such as termination of the impacted services.
2. General Concepts

These general concepts form the basis for the more detailed IACCM Contracting Principles that follow:

  • While suppliers intend to provide high quality services, SLA Failures can occur over time given the complex nature of technology services. SLA Failures should not be deemed to rise to the level of a breach of contract.
  • SLAs are intended to underscore supplier’s efforts to maintain the service, proactively identify potential problems, and quickly resolve any SLA Failures.
  • SLA targets and SLA Credits should be set at levels that drive high performance but do not create financial windfalls for customers or unreasonable financial exposure for suppliers.
  • SLA performance targets should be measurable and verifiable and should reflect minimum acceptable levels of supplier performance, focusing on critical service elements that are essential to the value of the service being provided.

3. IACCM Contracting Principles

  • Suppliers should make performance reports available on a regular basis.
  • SLAs should take into account both the complexity and the criticality of the services.
  • SLA Credits should be based on quantified performance standards set out in the contract.
  • It should be agreed by the parties that SLA Credits are not penalties, which are not enforceable in some jurisdictions.
  • SLA Credits should be the sole and exclusive remedy available to the customer for Service Level Failures, except for Chronic SLA Failures.
  • In the event of a Chronic SLA Failure, Customers should have the additional right to terminate the affected service without penalty, following executive escalation.
  • An SLA Failure should not be deemed to have occurred in situations where the failure is due to a customer-controlled issue or is otherwise out of the control of the supplier. Examples are when an SLA is not met due to:
    • a force majeure event;
    • acts or omissions on the part of customer or any other third party over which the supplier has no control;
    • scheduled maintenance by the customer or entities under the customer’s direction or control;
    • scheduled maintenance by the supplier or its subcontractors within maintenance windows;
    • lapses of service or performance issues related to non-supplier-provided and/or maintained equipment at a customer site;
    • customer’s use of the services in violation of the agreement, which violation caused the problem; and/or
    • customer’s use of non-standard products and services not approved for use by supplier.