What is a service level agreement?
A service level agreement, also known as an SLA, is a contract between a service provider and the end-user, defining the level of service expected from the service provider, together with the rights and obligations of the parties involved.
A service level agreement is a formal document which focuses on the performance and service quality expected by the business from the other party. It also includes what will be exchanged for those services. It may also cover specifics such as dates, equipment requirements and intellectual property.
A company director’s relationships with a business may also be included in a service level agreement. Where this is the case, legislation imposes various duties upon service agreements, such as:
- All service agreements longer than 2 years in length require shareholder consent
- The company must keep a copy of the service agreement at its registered office for at least one year following its expiry or termination
- A company must not make termination payments exceeding £200 without the permission from its shareholders
- Any terms which attempt to excuse a director from liability for default, negligence, breach of duty or breach of trust are void in law
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What should be considered in a service level agreement?
When drafting a service level agreement, the following areas are usually considered:
- Identification of services to be provided
- Price and payment
- Supplier obligations
- Customer obligations
- Failure of or delay in performance
- IP and third-party infringement
- Confidentiality/ non-disclosure
- Termination
- Timetable for delivery