Law of Contracts – Part 24

The Role of Service Level Agreements

By Adv Louis Nel.

(For a summary on this series see end of article).

Service level agreements (‘SLA’) come in different guises and fulfil varied functions.

The SLA is mainly uses in two ways – it is either a ‘stand-alone’ agreement or it forms part of/is an addendum to an agreement. It should be borne in mind that whatever the format (if properly drafted) it is a proper binding agreement giving rise to enforceable rights and obligations.

If it is a ‘stand-alone’ agreement, it is imperative that all elements be addressed i.e. not only service delivery but also issues such as term and termination, liability, dispute, etc. The service delivery should address the expectations and deliverables of each party and are usually referred to as ‘Key Performance Areas’ (‘KPA’) and ‘Key Performance Indicators’ (‘KPI’). When it is an addendum, only the KPA and KPI need to be addressed.

However what is very often not done in whichever format the SLA is used is to link the KPI to breach, the very purpose of the SLA. By linking the two it makes the identification of breaches that much easier, takes it out of the subjective realm and can not only be linked to issues such as penalties but also early termination.

What are the benefits of an SLA?

  • Manages & identifies expectations of the parties
  • Provides framework to manage relationship
  • Creates an awareness of the impact of poor service
  • Identifies each party’s needs and obligations resulting in organised goals
  • This in turn leads to goal orientated controls Stimulates constant improvement
  • Promotes: Communication/understanding/teamwork

The SLA is a dynamic document and should be linked to the following:

  • Audits
  • Reviews
  • Customer satisfaction surveys
  • Help desk reports
  • Management reports

Thus the SLA must be addressed in the process of deciding whether or not to litigate and if so the role of the SLA. If it has been effectively and unequivocally drafted, it can be a very useful dispute resolution mechanism. The non-compliance with some KPI can have concomitant penalties whereas others may give the affected party the right to terminate.


We have over the past few months in this series of articles given you an outline of issues to consider and possible strategies and now it is up to you – remember:

  • Assess all matters & weigh up implications
  • Make the right commercial decision – against legal ‘backdrop’
  • Your final decision must NOT be driven by (outside) legal representation
  • Bear in mind ALL the implications of litigation
  • Always bear in mind the ‘grapevine’ (rumours) – effective, early and ongoing communications are crucial!!!

Next year we will discuss the various alternatives to litigation – have a super Festive Season!

Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the tadventure tourism industry and is not intended as legal advice. © Adv Louis Nel, ‘Louis The Lawyer’, December 2016.


  • In Part 1 (Aug 2014), I categorised risk into five categories, namely; 1. PEOPLE, 2. MONEY, 3. LAW, 4. SERVICE and 5. ECOLOGY. In this series, I deal with the risk profile of each, i.e. broadly speaking the areas of risk that any business is exposed to can been allocated under these five categories.
  • Part 2, (Sep 2014) covered the category of ‘People’ under four sub-categories: Staff (discussed in Part 1); Third party service providers (‘TPSP’); and Business Associates.
  • Part 3 (Oct 2014), continued with ‘PEOPLE’ as Customers.
  • Part 4 (Nov 2014), started the discussion on the 2nd category, namely ‘MONEY’ in terms of CASH and CHEQUES.
  • Part 5 (Dec 2014), looked at CREDIT and CREDIT CARDS.
  • Part 6 (Jan 2015), looked at LAW and CONTRACTS, with an introduction and Requisite #1: Offer & Acceptance.
  • Part 7 (Feb 2015), continued with Requisite #1 covering telephone enquiries, e-mails, websites and advertising.
  • Part 8 (Mar 2015), covered Requisites #2: Legally Binding Obligation, and #3: Consensus in contracts.
  • Part 9 (Apr 2015), covered Requisite #4: Performance Must Be Possible.
  • Part 10 (May 2015), covered Requisites #5 & 6: Performance Must Be Permissible, and Capacity of the Contracting Parties.
  • Part 11 (Jun 2015), continued with Requisites #6: Capacity of the Contracting Parties.
  • Part 12 (July 2015), covered Requisite #7” Negotiating a Contract.
  • Part 13 (Aug 2015), covered Requisite #8 Drafting a Contract.
  • Part 14 (Oct 2015), covered Requisite #9 Contract Management.
  • Part 15 (Nov 2015), covered Requisite #10 Enforcing Your Contract – Part 1.
  • Part 16 (Dec 2015), Requisite #10 Enforcing Your Contract: Requisites (continued-1)
  • Part 17 (Jan 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-2)
  • Part 18 (May 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-3)
  • Part 19 (Jun 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-4).
  • Part 20 (Jul 2016), Requisite #10 Enforcing Your Contract: Requisites (continued-5).
  • Part 21 (Sep 2016), Enforcing a Contract: the 8th & final question.
  • Part 22 (Oct 2016), Enforcing a Contract: Step 3 – Impact on your Business.
  • Part 23 (Nov 2016) Enforcing a Contract: Step 4 – Who to Consult.

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