A Service Level Agreement formalises the minimum level of service that is expected by a client of a particular provider. A contract lawyer normally drafts these agreements, as the Agreement itself constitutes a legally binding contract between a customer and his or her service provider.

Who uses a Service Level Agreement?

There are many different industries where Service Level Agreements are commonly used. Take your Internet service provider as an example of where you might find a Service Level Agreement. The Agreement will outline the standards that the provider is required to meet.

When the service provider is unable to meet these standards, i.e. falls below the expected levels of service, the other party may be entitled to make a claim to be compensated or seek damages.

Another area where Service Level Agreements are very popular is in hosting. If your business is dependant on your website being constantly available to customers (for instance if you’re running an ecommerce company), it’s vital that your hosting provider agrees to 99.99% (or something close to it) uptime. Your Service Level Agreement will set this out.

When an IT solicitor drafts a Service Level Agreement effectively, it assesses the performance of the provider in meeting its Key Performance Indicators. If there are inconsistencies with performance and expectations, the parties can refer back to this Agreement to address these issues.

What are the advantages of using a Service Level Agreement?

There is a common misconception surrounding Service Level Agreements – being that they are only beneficial to the customer. However, Service Level Agreements can be beneficial to both parties for various reasons, including the following:

  • Prioritises the customers’ expectations;
  • Explains each party’s expectations of the other;
  • Creates a culture of high-quality services;
  • Formalises each party’s duties and rights;
  • Sets benchmarks that each party expects the other to achieve by certain dates;
  • Encourages the service provider to become more innovative;
  • Allows customers to compare the services of various competing service providers; and
  • Gives the customer an easy method for monitoring the performance levels of the service providers.


LegalVision has extensive experience in drafting and reviewing both Service Level Agreements and Software as a Service Agreements. If you are, or will be, a party to such an agreement, and require the technical and legal expertise of an IT solicitor, contact LegalVision’s team of IT solicitors to get the advice you need to give yourself adequate protection.

Lachlan McKnight
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