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What is a SLA?
The term SLA comes from English and stands for “Service Level Agreement” and is translated into German as a service-quality agreement. These define the contractually binding obligations between a service provider and its customer over the duration of their contractual relationship. In particular, it includes clarification about when and what the provider delivers and when and how much payment is due from the customer.
The most important clauses in SLA
An SLA can look very different. In fact, its content depends on various factors, such as different industries, companies, customers or individual reasons. However, there are a few current contract clauses, which every SLA should have and have established itself as common.
Clause 1: Service: Definition of agreement
When defining the agreement, the actual agreement is defined clearly and comprehensibly. More specifically, the service/service that is agreed with this contract. This also includes the type of inspection — i.e. how it is measured that the owed service has been received by the customer in full and without errors.
The review, in turn, is very dependent on the type of service involved and should be described in detail on an individual basis. Above all, however, it is important to mention the scope of services, the speed of delivery and the response time in the event of problems.
Clause 2: Consideration
As in almost every contract, the consideration, which in the case of a service-quality agreement is the remuneration, must of course not be missing. It should be worked out in advance exactly how the service will be paid for. There are various options for this, such as either a lump sum payment or an hourly payment. It is always questionable which hours can be billed.
Clause 3: Delivery time and review
The contract should specify the delivery time and place of delivery. It is also advisable to schedule review appointments in order to reflect on the quality of the service and to be able to resolve any problems. In this way, a contracting party can be prevented from being dissatisfied over a longer period of time and the contractual relationship ultimately failing as a result.
Clause 4: Measurements
As already mentioned, measurement or reference values should be agreed on the basis of which it can be verified whether, to what extent and to what quality the service has been provided. This clause is particularly useful for services, as a simple service contract requires only “action” but no measurable value. However, this is exactly what the SLA wants to stand out from and incorporate the quality of service into the agreement.
However, in order to be able to evaluate a service, it must now be determined in advance which measurement values the recipient may use to do this. Here, too, this is very dependent on the product.
A very common example of an SLA is a cloud provider agreement and a typical measurement value here would be so-called uptime, i.e. the time in which it is possible to connect to and access the cloud. The uptime is normally above 97% and if it is lower, this would be a quality defect for which the recipient can demand compensation.
Clause 5: Compensation for non-compliance
Especially when it comes to services, it can happen that the originally presented or promised service is not or cannot be completed as announced.
In order, on the one hand, to motivate the service provider to perform properly and, on the other hand, to protect the service recipient from losses, should the provider not be able to perform its service as promised, there is a clause in every SLA that deals with compensation due to non-fulfilment. This compensation clause is comparable with a contractual penalty clause, as the failure or inadequate performance of the contract is also “punished” here.
