Service Level Agreement (SLA)

What This Clause Does

An SLA is the vendor's measurable commitment to reliability. It typically specifies a monthly uptime percentage (99.9% is common, which allows about 43 minutes of downtime per month), how uptime is calculated, and what remedies you get if the vendor misses the target.

The remedies are the key part. Many SLAs offer service credits — discounts on future invoices — when they miss targets. Service credits are often small (10-25% of one month's fee) and require you to file a claim within a narrow window. If your business depends on the service, credits may be insufficient — negotiate for the right to terminate if the vendor misses SLA targets repeatedly.

What This Looks Like in a Contract

"Vendor shall use commercially reasonable efforts to ensure the Service is available 99.9% of the time in any given calendar month, excluding scheduled maintenance. If Vendor fails to meet this commitment, Customer shall be entitled to a service credit of [10-25%] of the monthly fee."

Red Flags to Watch For

• Uptime measured from vendor's systems, not your actual experience
• Scheduled maintenance windows excluded and can be called at any time
• Credits require you to file a claim — outages are not automatically credited
• No right to terminate after repeated SLA failures

Negotiation Strategies