What service level agreement means
A service level agreement puts numbers on a promise to perform.
An ordinary services contract says the supplier will provide the service with reasonable care and skill. That is enforceable and it is also vague, because what counts as reasonable is argued after the fact.
An SLA fixes the standard in advance. The system will be available ninety nine percent of the time each month. Critical faults will be responded to within one hour and resolved within eight. Deliveries will arrive within two working days in Lagos. Calls will be answered within thirty seconds in ninety percent of cases.
Each of those can be measured, which is what makes it enforceable without argument.
The second half of an SLA is what happens when the level is missed. Service credits, being reductions in the fee, are the usual mechanism, escalating with the severity and persistence of the failure, and a right to terminate where failures continue.
How it is used
A workable SLA answers six questions.
What is the service, described specifically enough that both sides recognise it.
What are the service levels, expressed as measurable numbers with a measurement period.
How is performance measured and by whom, and what reporting will the supplier provide. A level nobody measures is decorative.
What happens when levels are missed: the service credit regime, and how credits are claimed and applied.
What is excluded: scheduled maintenance, force majeure events, failures caused by the customer, and third party outages outside the supplier's control.
And how the arrangement is governed: review meetings, escalation contacts, and the right to terminate for persistent failure.
The exclusions deserve attention on both sides. A supplier needs them to avoid being penalised for things they do not control. A customer should check that they are not so wide that the levels become unachievable to breach.
Key features
- Fixes measurable standards for service delivery
- Levels must have a defined measurement period and method
- Service credits are the usual remedy for missed levels
- Exclusions cover maintenance, force majeure and customer caused failures
- Should include reporting, review and escalation
- Persistent failure should trigger a right to terminate
How this works in Nigeria
SLAs matter more in Nigeria than in markets with reliable infrastructure, because the things that break are outside anybody's direct control.
Power, connectivity, logistics and third party platforms all fail more often here, and the practical question is who carries that risk. A supplier who agrees ninety nine point nine percent availability without an exclusion for upstream network failure has agreed something they cannot deliver. A customer who accepts exclusions covering every plausible cause of failure has agreed nothing.
The negotiation is therefore about allocating specific, named risks rather than about the headline percentage.
The second Nigerian point is measurement. Levels are frequently agreed with no method for measuring them and no reporting obligation, which means nobody knows whether they were met. A monthly report from the supplier, with the customer's right to query it, converts the SLA from an aspiration into something operable.
The third is enforcement. Service credits are automatic when the mechanism is clear and are simply never claimed when it is not. Customers should diarise the review and actually raise failures, because a pattern of unclaimed breaches makes a later termination harder to justify.
For smaller Nigerian suppliers, the honest position is to agree levels you can actually hit. An ambitious SLA signed to win a contract becomes a monthly deduction and a difficult relationship.
SLA vs warranty vs liquidated damages
Three contractual tools addressing performance, with different mechanics.
An SLA sets ongoing standards for a continuing service and provides a remedy, usually service credits, when they are not met. It operates month by month and it is designed to be used without going near a court.
A warranty is a promise that something is or will be a certain way. Breach gives a claim for damages, which requires proving loss.
A liquidated damages clause fixes a sum payable on a defined breach, based on a genuine pre estimate of loss. It is enforceable without proving actual loss, and if it is out of proportion it becomes an unenforceable penalty.
Service credits sit close to liquidated damages, and a credit regime so punitive that it bears no relation to the customer's likely loss risks the same treatment. Keep credits proportionate and tie them to the value of the service affected.
Limits and risks
Service credits cap the remedy. Where a failure causes loss far exceeding the credits, the customer may find the SLA is their only recourse if the contract says so.
Measurement disputes are common, particularly where the supplier controls the monitoring and the customer sees only the report.
Wide exclusions can hollow out the levels entirely, which is why they should be read as carefully as the numbers.
And an SLA does not fix a supplier who cannot deliver. Credits compensate for failure; they do not produce performance, and a customer collecting credits every month has a supplier problem rather than a contract problem.
Worth knowing
Insist on a monthly performance report and a defined measurement method. Nigerian SLAs routinely set precise levels with no way of knowing whether they were met, and a credit regime nobody can trigger is worth exactly nothing.
Questions people ask
What is a service level agreement?
A contract or contract schedule setting measurable standards for how a service will be delivered, together with the remedy, usually service credits, when those standards are not met.
What should an SLA contain?
A description of the service, measurable levels with a measurement period, how performance is measured and reported, service credits for failures, exclusions, review and escalation, and a right to terminate for persistent failure.
What are service credits?
Reductions in the fee applied when service levels are missed, usually escalating with severity and persistence. They are the standard SLA remedy and they should be proportionate to the value of the service affected.
Why do exclusions matter?
They allocate risk for things the supplier does not control, such as scheduled maintenance, force majeure and customer caused failures. Exclusions that are too wide make the levels impossible to breach, which is worth checking.
How should availability be measured?
By a defined method over a defined period, with the supplier providing a monthly report and the customer having a right to query it. A level with no measurement method is decorative.
Do service credits limit my other claims?
They can, where the contract says the credits are the sole remedy for service failures. A customer with material exposure should check that and negotiate a carve out for serious breaches.