Service Level Agreement (SLA)

A service level agreement (often referred to as an “SLA”) is usually part of a master service agreement and defines the precise levels of service at a particular level.

The SLA is usually an agreement negotiated between the client and the supplier of the service. In practice, the term SLA usually refers to the specification of the time and/or manner of service performance.

The SLA usually defines the range of key service deliverables, as well as service priorities, liabilities and guarantees. The SLA may also specify the level of availability, flexibility, performance, efficiency and other attributes of the service, such as, for instance, payment.

In view of the above, the SLA is often used as shorthand for the “target” or the “minimum” level of service that the ordering party will expect from the supplier. Some agreements provide for penalties to be paid by the parties, if their conduct does not comply with the provisions of the SLA.