In any service relationship, expectations matter. Clients want confidence that services will be delivered reliably, consistently, and at an agreed level of quality. Service providers want clarity on what success looks like and how it will be measured.

A well drafted Service Level Agreement (SLA) bridges that gap by turning expectations into measurable, enforceable commitments. When done properly, an SLA creates transparency, accountability, and a shared understanding of success.

This article explains what SLAs are, why they matter, and how they create accountability and transparency for both parties.

What Is a Service Level Agreement?

A Service Level Agreement defines the level of service a provider commits to delivering. Rather than relying on vague assurances such as “timely support” or “high availability,” an SLA sets out specific, measurable targets that can be monitored, reported on, and enforced if necessary.

In short, SLAs answer three critical questions:

· What services are being provided?

· How will performance be measured?

· What happens if standards are not met?

Why Service Level Agreements Matter

1. Clarity and Alignment

SLAs reduce ambiguity by clearly defining service scope, responsibilities, and priorities. This shared understanding helps avoid disputes arising from differing expectations of acceptable performance.

2. Measurable Performance

By defining specific metrics, SLAs remove subjectivity from service delivery. Performance is no longer a matter of opinion and instead it can be tracked against agreed benchmarks.

3. Accountability and Trust

SLAs demonstrate a provider’s commitment to accountability. When performance is transparently measured and reported, trust increases and issues can be addressed proactively rather than reactively.

4. Risk Management

SLAs help manage operational and reputational risk. They set clear remedies for service failures and establish escalation processes before problems become critical.

Key Components of an Effective Service Level Agreement

While SLAs vary by industry and service type, effective agreements usually include:

· Service Scope and Description of the services covered by the SLA, and specifically those excluded.

· Performance Metrics (KPIs) that are specific and define how service delivery can be measured.

· Service Levels and Targets for each KPO which specify the agreed performance targets.

· Monitoring and Reporting obligations which explain how performance is monitored and how often reports should be provided.

· Incident Management and Escalation procedures for logging incidents, prioritizing issues, and escalating unresolved problems help ensure timely resolution and reduce operational disruption.

· Proportionate Remedies that are clearly defined if the service levels are not met.

Making SLAs Enforceable (Not Just Aspirational)

An SLA only delivers value if it can be enforced. This begins with precise drafting. Subjective terms such as “reasonable efforts” or “best endeavours” should be avoided unless clearly defined, as ambiguity undermines enforceability.

Performance metrics should be linked to outcomes that genuinely matter to the client’s operations, not merely what is easiest to measure. Remedies for non-performance should be objective and automatic, reducing the scope for dispute and discretion.

SLAs must also align with the broader contractual framework, including limitation of liability, termination rights, and dispute resolution provisions, to ensure consistency and avoid unintended consequences.

Common Pitfalls to Avoid

In practice, SLAs often fall short due to avoidable drafting issues, including:

· Unrealistic performance targets that are difficult to achieve in real-world conditions;

· Too many metrics, diluting focus and increasing administrative burden;

· Failure to include client obligations necessary to meet service levels;

· Outdated SLAs that are no longer aligned with current service usage or business priorities.

Berry Smith Bottom Line

When drafted effectively, SLAs are more than a compliance mechanism. They are a strategic tool that drives performance, supports continuous improvement, and strengthens long-term client relationships.

By making performance measurable and enforceable, SLAs create a shared framework for success, benefitting both service providers and their clients through clarity, accountability, and trust.

Early review and thoughtful drafting can prevent costly surprises and provide greater certainty throughout the life of the agreement.

Please contact us if you would like more information about the issue raised in this article, or any other aspect of commercial law, speak to our experts at commercial@berrysmith.com or on 02920 345511 and ask for the commercial team.