The following Commercial guidance note Produced in partnership with Ian Edwards of Bird & Bird LLP provides comprehensive and up to date legal information covering:
Most outsourcing contracts will contain a range of mechanisms intended to incentivise suppliers by either punishing poor performance, or rewarding performance that exceeds the required level.
This Practice Note focuses on the following common methods of supplier incentivisation:
Service credits, earnback and service bonuses
Late delivery payments and early delivery bonuses
The tools discussed below are only part of a wider picture when it comes to incentivising supplier performance. Outsourcing contracts are often long-term arrangements requiring an ongoing relationship between the parties. As such, it often makes sense for the customer to recognise that:
it may be prudent to take a reasonably balanced approach and avoid pushing all risk onto the supplier
it has an ongoing role in ensuring the success of the services and the supplier relationship generally
formal legal remedies are not always the best way to solve problems, and
the supplier should be able to make an appropriate return on its services
Most outsourcing contracts will include a service level regime. These are intended to provide an objective method of defining the performance standards expected of the supplier.
The rationale for such regimes is that occasional performance failures are inevitable in any long-term contract. However, for non-critical failures, it will not be appropriate for the
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234