Negotiating and Drafting of Service Level Agreement - SLA Guide

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Know the terms for Negotiating and Drafting of Service Level Agreement. Use of SLA in Contract between service providers and consumer with complete information of features, range, limits and penalty.

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Negotiating and Drafting of Service Level Agreement - SLA Guide

  1. 1. Negotiating and Drafting of Service Level Agreements NATIONAL WORK SHOP ON DRAFTING OF COMMERCIAL AGREEMENTS NEW DELHI ORGANISED BY ASSOCHAM - 26TH SEPTEMBER, 2013 PRESENTED BY: S. RAVI SHANKAR ADVOCATE SUPREME COURT OF INDIA & PARTNER – LAW SENATE LAW FIRM
  2. 2. Negotiating and Drafting of Service Level Agreements  Service Level Management is a Scientific Process of  Managing Resources  To ensure acceptable quality of Service  At an acceptable Price  In an acceptable time frame
  3. 3. Negotiating and Drafting of Service Level Agreements The Basic philosophy of SLM is If we can Measure, we can Manage If we can Manage, we can improve
  4. 4. Negotiating and Drafting of Service Level Agreements  A Service Level Agreement is  A Binding Agreement  Negotiated and settled by Parties  With clear obligations to perform  To deliver the promised service quality
  5. 5. Negotiating and Drafting of Service Level Agreements Types of SLAs B2C B2B
  6. 6. Negotiating and Drafting of Service Level Agreements  SPECIAL FEATURES OF Service Level Agreements  Service Description  Service availability  Acceptable Range of Service Quality  Tolerance Limits of Service Quality  Meaningful Metrics  Monitoring System  Rewards and Penalties
  7. 7. Negotiating and Drafting of Service Level Agreements  Review Procedure  Crisis Management  Dispute Resolution
  8. 8. Legal Challenges - SLAs  Major Legal issues arise from  Dispute Resolution mechanism  Liquidated damages  Penalties
  9. 9. Dispute Resolution in SLAs IstStep Inter party Dispute Resolution Committee 2ndStep Mediation or Umpire System LastStep Arbitration or Litigation
  10. 10. Liquidated Damages LD Clause •If the service provider fails to do…., he shall pay,owner by way of liquidated damages and not by way of Penalty Rs……… LD Clause •The Service provider acknowledges that the liquidated damages are reasonable and genuine pre-estimate of the loss and damage that will be suffered by the owner
  11. 11. Liquidated Damages  Limitation of Liability:  The final liability of the service provider shall not exceed a sum equal to the contract Price or ………………. (Amount), except for exceptions (Exceptions to be specified)  Neither party shall be liable to the other for any direct or indirect damages
  12. 12. Indian Contract Act,1872  Section.73 : Compensation for Loss or Damage caused by breach of Contract:- When a contract has been broken, the party who suffers by such a breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
  13. 13. Indian Contract Act,1872  Section 74:Compensation for Breach of Contract: When the contract was broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any-other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contractreasonable compensation not exceeding the amount so named or as the case may be, the penalty stipulated for.
  14. 14. Views of Courts of India: ONGC Vs SAW Pipes Ltd., (2003) 5SCC 705  Terms of the contract has to be looked into before arriving at the conclusion whether the party claiming damages is entitled for the same.  If the terms are clear and the estimate of damages/compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation  Burden of Proof: It is not necessary that in all cases the aggrieved party needs to prove the loss of damage suffered by them and the court is competent to award the reasonable compensation even if no actual damage is proved to have been suffered in consequence of the breach.
  15. 15. Views of Courts of India : BSNL Vs Reliance Communication Ltd (2011)1SCC 390  It is desirable to provide for liquidated damages in the Contract  This is because liquidated damages reduce uncertainty and help in reducing litigation  Terminology used for these damages, penal or liquidated is not the decisive factor though it is one of the factors to be taken into considerationwhile determining the real nature of these damages whether they are penal or liquidated
  16. 16. Law Senate Contact Details Contact Us  Website: http://www.lawsenate.com  Office Numbers : +91-11-26102873, +91-11-26104773  Office Address: B3/73, Safdarjung Enclave, Lower Ground Floor, New Delhi - 110029 India.  Email Id:  contact@lawsenate.com, info@lawsenate.com Social Media  Twitter: https://www.twitter.com/lawsenate  Facebook: https://www.facebook.com/lawsenat e  Google Plus: https://plus.google.com/11077034051 7440850201/posts  LinkedIn: http://www.linkedin.com/company/l aw-senate
  17. 17. Thank You

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