Service Level Agreement: Types, What's Included
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What Is a Service-Level Agreement?
A service-level agreement (SLA) is a contract between a provider and the end user that states the level of service that the customer should expect from that service provider. That said, they also serve a company's internal operations as well. They're frequently used when a company is signing up new customers for a service.
In the event that the service-level agreement is between the marketing and sales departments, the SLA will detail the company's sales and marketing goals, such as the number of leads it intends to generate monthly and the action that the sales department will take to support the marketing department's efforts.
Why Service-Level Agreements Are Important?
A service-level agreement is important because it:
- Protects both parties: The SLA sets standards for the service, ensuring both the service provider and end user are on the same page with expectations. By creating clear, measurable guidelines, the end user knows exactly what to expect and what the responsibilities are for everyone involved.
- Provides recourse for unmet expectations: The SLA provides specific consequences for what will happen if a service provider fails to meet its obligations to the end user. Without the SLA, it's unclear what will happen if one or both parties fail to meet expectations. With a service-level agreement in place, there is transparency about what the targets are for each of the service levels and what will happen if they're unmet.
- Gives peace of mind: The SLA gives the end user peace of mind knowing they can hold their service provider accountable for the service they committed to at the time of the agreement.
Types of Service-Level Agreements
There are three basic types of service-level agreements:
Customer Service-Level Agreement
This type of SLA is between a business and a customer. It's also referred to as an external service agreement. It includes:
- Specifics of the service the customer will receive
- Conditions of the service availability
- Standards for the time windows of each service level, if applicable
- Responsibilities of each of the parties
- Escalation procedures
- Cancellation terms
Internal Service-Level Agreement
This is when a company has a service-level agreement in place internally, between its marketing and sales departments. For example, the sales team may have a goal of earning $10,000 in sales per month. If they know that each sale is worth $500 and they know that they have a closing rate of 20%, then they know they need to receive at least 100 qualified leads per month from the marketing department.
The two departments could put an SLA in place where the marketing department commits to delivering a minimum of 100 leads each month by a certain date. Part of the agreement could include sending weekly reports to the sales department to ensure the teams are on pace to hit their monthly goals.
Multi-Level Service-Level Agreement
This type of SLA outlines what's expected of the different parties when there is more than just one end user or one service provider. You could use this as a way to support customers or as part of an operations strategy. For example, your marketing and sales departments could also include the customer service team as part of the SLA to incorporate customer retention into the agreement.
What Is Included in a Service-Level Agreement?
Here is a look at the different information that goes into a service-level agreement:
- Summary of agreement : Your SLA typically contains a summary of the service, who is receiving the service, and how the success of the service is going to be measured.
- Goals of the parties: For an external SLA between a business and customer, the goals that are included in the agreement will typically be those of the customer. Your company should include measurable goals that it can regularly attain for its customer. If the SLA is internal, then the goals for all parties should be outlined.
- Description of what's needed to reach goals: The SLA should include descriptions of what each of the parties in the agreement need to achieve their goals. This could include things like technical maintenance, consulting, or reporting. If you're putting together an internal SLA, it should describe what the different departments need from one another to reach their goals.
- Reporting procedure: The SLA should include how and to whom any problems should be reported and what the reporting process should be.
- Consequences: The SLA should always state what the consequence will be if the specified goal isn't met. As an example, your company could issue service credits or other forms of compensation.
- Termination circumstances: Finally, the SLA should contain formal conditions for which the parties could terminate the agreement in pursuit of a better one. This could happen to an internal SLA, for example, if the SLA you put together isn't getting the buy-in you need from all parties involved or if you're frequently missing those goals.

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Service-Level Agreement vs. Key Performance Indicator
A key performance indicator (KPI) is a tool for measuring how well a business is performing in light of its strategic goals. A KPI can help a business identify areas where the organization is veering off track from its primary objectives.
The SLA outlines what the customer will receive and what they should expect from their service provider. It does, however, include measurements for evaluating the service provider's performance, which is where there can be overlaps between KPIs and SLAs. A service-level agreement defines KPIs in order to measure service performance. This means that, in the end, the metrics provided by the SLA become KPIs that the business will monitor and report on as measurements of success.
Choosing Metrics for a Service-Level Agreement
It can be challenging to choose metrics that are fair for all parties involved. However, it's best to choose performance metrics that:
- Are within the control of the service provider.
- Can be collected easily and accurately.
- Can be collected automatically, if possible.
It's also important to specify a reasonable baseline for the metrics, or a number that the company commits to hitting at the very least. This baseline can be shifted as more data is collected, and the service provider better understands what's possible for the client.
Service-Level Agreement Templates
Here are some service-level agreement templates that you can use to define the service you will offer end users:
- Small business service-level agreement
- Business analysis service-level agreement
- Business cloud service-level agreement
- HR business service-level agreement
- PandaDoc service-level agreement
A service-level agreement is essential for protecting a company and ensuring it maintains a good relationship with end users. By reaching a clear understanding of what standards are important and what the consequences will be if those standards aren't met, you can ensure that the relationship will be positive for all parties involved.
It's also a good idea to review your SLA as your business changes and grows, as the SLA should reflect its evolving needs and capabilities. If you need help creating a service-level agreement or would like to revisit one that you currently have in place, Contracts Counsel can help. We are happy to connect you with a fully-vetted lawyer who can help you create or review your service-level agreement. Contact us today to get started.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our Service Level Agreement Lawyers
Tim E.
I am a business attorney focused on providing practical, targeted legal services for small businesses, startups, contractors, consultants, and service providers. I help clients efficiently review, draft, and improve everyday business contracts, including service agreements, NDAs, independent contractor agreements, vendor contracts, commercial leases, and purchase documents. My approach is straightforward: identify the terms that matter, explain risks in plain English, and deliver clear, usable edits or drafts without unnecessary complexity. I regularly handle fixed-fee, quick-turnaround projects such as contract reviews, agreement drafting, and demand or termination letters. While I offer streamlined, project-based services for routine matters, I can also assist with broader business legal needs as they arise.
"Tim was excellent! I gave him project details (liability waiver and rental agreement) and what I needed and he produced the day he said he would with ZERO revisions needed. Highly recommend."
Jeffrey W.
Jeffrey W.
I am a business, transactions, contracts attorney. I was the sole in-house attorney for a good-sized staffing company. I can review and create nearly any type of document you need. I enjoy writing, reading, and editing contracts. I want to read your contract. If I cannot do it, I won't take the job and I won't charge you for what I cannot do. However, in reality, unless you need a 225 page financing agreement, is has never been an issue.
Daehoon P.
Daehoon P.
Corporate, M&A & Securities Lawyer | Managing Attorney, DP Counsel PLLC Practice Areas: Business Formation | Commercial Contracts | Contract Drafting & Review | Mergers & Acquisitions | Venture Capital | Securities Offerings | Franchise Law | Employment & Equity Compensation | Intellectual Property | Cross-Border Transactions About/Bio: I represent companies, investors, and fund sponsors in corporate transactions, commercial contracting, and private securities matters, from entity formation and early-stage financings to acquisitions, exits, and ongoing strategic counsel. As Managing Attorney of DP Counsel PLLC, I help clients structure transactions clearly, allocate risk thoughtfully, and move deals forward with documentation that is practical, enforceable, and aligned with business objectives. My practice includes both day-to-day commercial matters and more complex transactional work, including venture financings, private offerings, M&A deals, fund-related documents, and cross-border structuring. What I Do: Corporate & Commercial • Entity formation and structuring for corporations, LLCs, and limited partnerships • Operating agreements, shareholder agreements, and governance documents • Commercial contract drafting, review, and negotiation • Vendor, distribution, manufacturing, SaaS, and licensing agreements • Employment, consulting, confidentiality, and equity compensation agreements • Outside general counsel support for growing companies Securities & Private Capital • Private offerings under Regulation D and Regulation S • Private placement memoranda, subscription agreements, and investor documents • SAFE, convertible note, and priced equity financings • Venture capital and private fund formation matters • Fund governing documents and offering document packages • Securities law analysis for private capital raising transactions Mergers & Acquisitions • Letters of intent and term sheets • Stock purchase, asset purchase, and merger agreements • Due diligence coordination and transaction support • Disclosure schedules, closing documents, and post-closing matters • Earnouts, rollover equity, indemnity structures, and related deal terms • HSR, CFIUS, and related regulatory issue spotting for qualifying transactions Digital Assets & Emerging Technologies • Federal-law digital asset and token securities analysis • Entity structuring for blockchain and Web3 ventures • Digital asset fund and operating structures • AML/KYC documentation support and regulatory issue spotting Franchising • Franchise Disclosure Documents (FDDs) • Franchise agreements • Master franchise and area development agreements • Franchise structuring and registration coordination Real Estate Transactions • Commercial real estate acquisitions and dispositions • Real estate joint ventures and syndications • Commercial lease drafting and negotiation • Real estate investment structures and related offering documents Cross-Border & International • U.S. market entry and entity structuring for international clients • Delaware and multi-entity holding structures • Cross-border transaction planning and documentation • Coordination with foreign counsel and tax advisors on cross-border matters Why Clients Hire Me: • Big-law-level drafting with boutique responsiveness • Practical, business-focused advice grounded in execution reality • Clear scoping and transparent fee arrangements • Experience across financings, acquisitions, fund formations, and cross-border transactions Typical Projects: • Contract drafting and negotiation • Entity formation and governance packages • Private offering document suites • Venture financing documentation • M&A transactions from LOI through closing • Fractional or outside general counsel support Industries Technology | SaaS | FinTech | Digital Assets | E-commerce | Healthcare | Real Estate | Food & Beverage | Professional Services
"Daehoon drafted a co-op sublease for my New York apartment. He was thorough, responsive through several rounds of revisions, and gave me a clear checklist of everything the package needed. Would definitely recommend."
Gregory B.
I love contracts - and especially technology-related contracts written in PLAIN ENGLISH! I've worked extensively with intellectual property contracts, and specifically with IT contracts (SaaS, Master Subscriptions Agreements, Terms of Service, Privacy Policies, License Agreements, etc.), and I have built my own technology solutions that help to quickly and thoroughly draft, review and customize complex contracts.
"Greg was very helpful and responsive. He not only provided insightful comments on the contract but also explained the reasoning behind them. Highly recommended, especially for software contracts."
Briana C.
Legal services cost too much, and are often of low quality. I have devoted my law practice to providing the best work at the most affordable price—in everything from defending small businesses against patent trolls to advising multinational corporations on regulatory compliance to steering couples through a divorce.
"Briana was responsive and quick to put the draft together. It has been a pleasure working with her!"
Ricardo A.
Ricardo Aponte Parsi is a real estate and corporate counsel with a 22+-year track record of assessing risk, managing litigation, and building compliance systems to protect organizational interests. Trusted business partner and problem solver, dedicated to delivering exceptional results that advance business objectives through preventive counseling, strategic risk management, and shrewd advocacy. Collaborative team leader and project manager who builds relationships, leads change, and communicates effectively with private and public stakeholders. He obtained a bachelor's degree from Syracuse University (1994) with a major in International Relations and his law degree from the Interamerican University of Puerto Rico School of Law (2000). In May 2014, he completed a Master of Laws from Northwestern University School of Law and a Certificate in Business Administration from IE Business School in Madrid, Spain. In 2018, he completed a second LL.M. at Georgetown University Law School in Securities and Financial Regulation. In 2022, he completed a certification in Privacy Law from Seton Hall University School of Law. He was president of the Board of the Puerto Rico Education Council, the licensing agency for the Commonwealth, and is currently the Chairman of the Board of Trustees of the San Juan Community College. Since November of 2024, he has worked as an attorney-advisor for the United States Air Force Installations, Energy and Environmental Law Division (SAF/GCN) at Lackland Air Force Base, in San Antonio, Texas.SAF/GCN provides legal and policy advice to members of the Secretariat, the Air Staff, and the Space Staff on virtually all matters relating to the Department’s 180 installations, nearly 10 million acres of real estate, Base Realignment, and Closure; annual $7 billion installation and operational energy budgets; annual multibillion-dollar military construction program; $8.3 billion military privatized housing portfolio; programs for environmental planning, compliance, and restoration and natural and cultural resources management; and programs for safety and occupational health. The Division advises the Center of Excellence for Environment, Facilities, and Installations and the Energy, Environmental, and Installations Directorates within the Air Force Civil Engineer Center. Experienced with estate planning, wills, trusts, prenuptial agreements and powers of attorney.
"Ricardo helped me document the change from a single member LLC to a multi-member LLC. He was helpful along the way informing me of topics to consider and when to seek CPA advice. Highly recommend."
December 24, 2024
Benjamin E.
Dr. Ben Earwicker, J.D., Ph.D., is the director and administrator of the Idaho Human Rights Commission, the state-wide administrative law agency within the Idaho Department of Labor that enforces anti-discrimination law in Idaho. Prior to his work in administrative employment and civil rights law, he served as a faculty member and administrator at universities in the U.S. and New Zealand for 13 years and managed dual-enrollment modern language courses throughout Washington, Oregon, and Idaho. Ben is the CEO of VirNet Virtual Mediation, an online mediation platform with clients throughout the United States and abroad. He holds a Juris Doctorate from the University of Idaho College of Law, a Ph.D. in Spanish and Latin American Studies and a Master’s of International Studies from the University of Otago in New Zealand, and Bachelor of Arts Degrees in Psychology, Social Work, Spanish, and International Studies from Northwest Nazarene University.
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Can a company be held liable for not meeting the service level agreement outlined in a contract?
I recently entered into a contract with a software development company to build a custom application for my business. The contract included a service level agreement (SLA) that outlined specific performance metrics and guarantees for the software. However, since the project started, the company has consistently failed to meet these performance metrics, causing significant delays and impacting the functionality of the application. I want to understand if the company can be held legally liable for not meeting the SLA and if I have any recourse to seek compensation or terminate the contract due to their failure to meet the agreed-upon terms.
Jeff G.
Yes. A SLA in a written contract is part of that contract. And even without a specifically-stated remedy, you may be able to sue for breach. It's not all cut-and-dried, however, as there can be a multitude of other contractual limitations or considerations that would need to be considered after a thorough review of the agreement, the documentation of the work that's been done and any type of waivers provided for missing the SLAs.
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