Defining and incentivizing high-quality performance is often key
to the structure of complex service or technology-oriented
agreements. In this class of agreements, merely having a
performance warranty that answers a yes or no question – in
breach or not in breach − just doesn't do the job. To
augment those performance warranties, a common approach is to use a
"service level agreement" (SLA). The SLA is a familiar
and essential feature in information technology-oriented
agreements, such as outsourcing, cloud computing,
software-as-a-service and the like. When properly structured and
negotiated, SLAs can be an effective tool for more nuanced vendor
management than a performance warranty alone could afford. This
article will catalog some of the best practices for structuring a
service level agreement, and discuss elements enterprise corporate
counsel can put to use in the IT and service contracts that come
across their desk.
