Which one is legal, SLA or Underpinning Contract?

General discussion on all aspects of the IT Infrastructure Library (ITIL)
Post Reply
User avatar
LS
Itiler
Itiler
Posts: 9
Joined: Mon Dec 29, 2008 7:00 pm

Fri Jun 25, 2010 1:42 am

Hi,

Please advice which one among SLA and Underpinning Contract is legal?

Brgds, LS


User avatar
swansong
ITIL Expert
ITIL Expert
Posts: 109
Joined: Tue Nov 13, 2007 7:00 pm

Fri Jun 25, 2010 3:07 am

I guess its the one which is enforceable by law.

Laws differ between nations. Best ask your legal people whether an SLA or a contract can be enforced by law.
User avatar
Diarmid
ITIL Expert
ITIL Expert
Posts: 1894
Joined: Mon Mar 03, 2008 7:00 pm
Location: Helensburgh

Fri Jun 25, 2010 3:10 am

Is this an exam question?
"Method goes far to prevent trouble in business: for it makes the task easy, hinders confusion, saves abundance of time, and instructs those that have business depending, both what to do and what to hope."
William Penn 1644-1718
User avatar
LS
Itiler
Itiler
Posts: 9
Joined: Mon Dec 29, 2008 7:00 pm

Fri Jun 25, 2010 3:37 am

No, this is not an exam question. Yesterday, I along with my colleagues, was in a discussion regarding IT SLM process. And, during that we come up with this question in our mind.

For we were suspicious, conclusively seeking advice here!

Brgds, LS
User avatar
Diarmid
ITIL Expert
ITIL Expert
Posts: 1894
Joined: Mon Mar 03, 2008 7:00 pm
Location: Helensburgh

Fri Jun 25, 2010 4:03 am

In that case the answer is it depends.

A service level agreement can be part of a legally binding contract, but that would only be natural where the service is provided by a third party.

An underpinning contract is typically with a third party and therefore would want to be legally enforceable. However the concept of underpinning contract can be applied within an organization (although it is then likely to be called an "operational level agreement" to distinguish it).

In both cases, if there are not two or more legal "bodies" involved then it is a bit tricky making it a legally binding contract. In other words if the agreements are internal to the organization, then they are subject to the governance applied by that organization and not to law.
"Method goes far to prevent trouble in business: for it makes the task easy, hinders confusion, saves abundance of time, and instructs those that have business depending, both what to do and what to hope."
William Penn 1644-1718
User avatar
LS
Itiler
Itiler
Posts: 9
Joined: Mon Dec 29, 2008 7:00 pm

Fri Jun 25, 2010 6:16 am

Dear Diarmid,

Thanks a lot for your feedback but the confusion is not yet clear. For, underpinning contracts always set up with a third party/vendor whose services contribute service providers to achieve their targets documented under SLA with their customers.

By legal, my concern is, in case an SLA breaches and a customer holds or refuse to pay service provider then whether service provider can file a petition in court or not against the customer? If yes, then where the penalties would be documented earlier (before signing the deal), either in SLA or underpinning contract?

Please advice!
User avatar
Diarmid
ITIL Expert
ITIL Expert
Posts: 1894
Joined: Mon Mar 03, 2008 7:00 pm
Location: Helensburgh

Fri Jun 25, 2010 6:34 am

Essentially the customer can only refuse to pay for failure to meet what has been contracted, but please be aware that the law will be different in different countries and if this is important to you then you need legal advise, not ITIL advise.

If the SLA is attached to (and referred to) in the contract then it has whatever legal status the contract assigns to it.

So, if the contract simply says "there will be SLAs for each service" it won't have any clout at all.

But if the contract states that "services will be provided on the basis of formally drawn up SLAs, signed by both parties and documenting the penalties for any breach" then (but I'm not a lawyer, so don't take this verbatim - it has to be in proper legal-speak and it probably has to meet certain standards, for example of being "reasonable") you have a basis for legally agreed service levels and penalties.
"Method goes far to prevent trouble in business: for it makes the task easy, hinders confusion, saves abundance of time, and instructs those that have business depending, both what to do and what to hope."
William Penn 1644-1718
User avatar
LS
Itiler
Itiler
Posts: 9
Joined: Mon Dec 29, 2008 7:00 pm

Fri Jun 25, 2010 7:01 am

Dear Diarmid,

This is exactly what I was looking for. I do understand that you're not a lawyer but this time I have a better understanding :)

Brgds, LS
User avatar
UKVIKING
ITIL Expert
ITIL Expert
Posts: 3639
Joined: Fri Sep 15, 2006 8:00 pm
Location: London, UK

Fri Jun 25, 2010 7:35 am

LS

A service provider signs a contract with a service consumer to provide a service.

The contract spells out payment terms etc

These should be set up by legal types - lawyers and variations of these

The Service provider and the service consumer uses the IT SM concept of Service Level Agreements to help define how well a service is being provided / consumed

The SLA should not be considered a legal document but an operational one. If it is a legal document, then any changes would have to go to those lawyer like creatures for reviews / update

The SLA should be based on what is the deliverables / receivables are in the contract between the service provider / service consumer

As for breach of contract opposed to breach of SLA and non payments - that is a legal thing not an IT SM thing

DISCLAIMER: I am not a lawyer nor do i play one on the internet. All that is posted is my opinion - free advice. Any one who uses my advice is at their own risk for doing so
John Hardesty
ITSM Manager's Certificate (Red Badge)

Change Management is POWER & CONTROL. /....evil laughter
User avatar
Cking
Itiler
Itiler
Posts: 16
Joined: Thu Feb 26, 2009 7:00 pm
Location: North Coast, USA

Mon Jun 28, 2010 4:51 pm

I see SLA (as contract) and Underpinning Contract as relative terms.

As a service provider, I sign an SLA with my customer.

In order to meet those SLAs, I am dependent on my ISP to provide me with a particular level of service and negotiate and sign an SLA with them ... with Me as the Customer.

So to MY customer, the SLA with my ISP is the Underpinning Contract ... which my customer does not really care about because they signed their contract with me.

... Is this correct?
User avatar
SwissTony
ITIL Expert
ITIL Expert
Posts: 118
Joined: Wed Feb 25, 2009 7:00 pm
Location: Geneva

Fri Aug 27, 2010 4:44 am

freebird wrote:Underpinning Contracts are used to manage support services provided to the Service Desk by external service providers. These Contracts ensure the external parties maintain their obligations to the Service Desk, which allows the Service Desk to meet the SLA expectations of its Customers.
Why specifically the Service Desk? Where did you read / copy this from?
Post Reply