To Terminate or Not to Terminate: The Legal Aspects of a Service Level Agreement

As far as legalities are concerned, a service level agreement or SLA is rarely covered by any legal matters before the contract will be signed by both parties; the service provider and the consumer. Another factor may be that there are only a few lawyers who have a very reasonable working knowledge about such cases, especially when it comes to computers. The computer industry is mostly where an SLA is needed. Because of this, legal advice is no longer required for as long as both parties have clear understanding of the contract, its terms and conditions.

On the other hand, legal advice is needed when breach of contract occurred at any given time. The party who was violated has the right to sue for the loss suffered as a result of the breach. The termination of SLA may also be granted and penalty fees should be paid in full. A good example would be a security leak that is inadvertently performed by an outsourcer employee, giving out confidential information to a potential social engineer. If the social engineer used this information to collect money from the victim (which happens to be a client of the company who hired the outsourcer), the client can then file a law suit to the company. In return, the company that suffered loss due to the mistake of an employee can then sue the outsourcer as grounds for both legal and business implications, as well as termination of the SLA.  Indeed, an SLA plays a crucial role to defend your company from losses so proper measures should be considered upon its creation.