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Contract glossary

SLA & service credits

What is an SLA and how do service credits work?

A Service Level Agreement (SLA) sets measurable commitments: uptime percentage, response times, support hours. Service credits are the built-in remedy — if the vendor misses the target, you get a percentage of your fees back, typically as credit against future invoices rather than cash.

For an owner-operator, the fine print matters more than the headline number. "99.9% uptime" sounds strong, but if the credit for missing it is 5% of one month's fees and it excludes "scheduled maintenance," the vendor has little real incentive to perform, and your recovery is trivial compared to the cost of downtime.

Look at how uptime is measured, what is excluded, how you have to claim the credit (often you must request it in writing within a short window), and whether repeated failures give you a right to terminate. Credits should be automatic and meaningful, not a token gesture.

In a contract

"If monthly uptime falls below 99.9%, Customer receives a credit of 10% of that month's fees; credits must be requested within 30 days and are the sole remedy."

Related terms

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