Legal Term
SLA Penalties
Legal Definition
In software maintenance agreements, SLA penalties are contractual clauses that specify financial or non-financial remedies, such as service credits or fee deductions, imposed on the service provider for failing to achieve predefined service levels, including uptime, response time, or resolution time metrics outlined in the Service Level Agreement (SLA).
In Plain English
If your software vendor doesn't keep the system running as promised—like frequent crashes or slow fixes—SLA penalties let you get money back or other compensation for the downtime and problems.
Example in a Contract
Service Credit Clause: 'If the Provider fails to maintain the Minimum Uptime of 99.5% in any billing cycle, the Customer shall receive a credit of 5% of the monthly fees for each 0.1% of uptime deficiency, applied to the next invoice.'
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