Difference between Memorandum of Agreement and Service Level Agreement

In business, agreements are essential for outlining the terms and conditions that parties involved will follow. Two common agreements that are widely used in the corporate world are Memorandum of Agreement (MOA) and Service Level Agreement (SLA).

While these two types of agreements share some similarities, there are significant differences that distinguish them from each other. In this article, we will look at these differences and provide insight into when to use each type of agreement.

What is a Memorandum of Agreement (MOA)?

A Memorandum of Agreement (MOA) is a legal document that outlines the terms and conditions that two or more parties agree to abide by, usually while collaborating on a specific project. MOAs can be between businesses, governments, or even individuals.

The document usually specifies the agreed-upon objectives, the roles and responsibilities of each party, timelines, and the expected outcome of the project. It also outlines the financial terms and other details such as confidentiality and intellectual property rights.

MOAs are often used in business partnerships and collaborations, and they help define the expectations of each party involved.

What is a Service Level Agreement (SLA)?

A Service Level Agreement (SLA), on the other hand, is a legally binding contract that outlines the agreed-upon level of service between a service provider and their clients. This agreement is common when businesses outsource services such as IT or customer support.

The SLA outlines the agreed-upon level of service, including the response time for queries, the expected quality of service, and the consequences if the service provider fails to meet the agreed-upon terms. SLAs are essential in defining the expectations of both parties involved and ensuring that the service provided meets the quality standards agreed upon.

What are the differences between MOA and SLA?

The key differences between MOA and SLA are the parties involved and the scope of each agreement.

MOAs are agreements between parties collaborating on a specific project. The parties involved may be businesses, governments, or individuals, and the MOA outlines the objectives, roles, responsibilities, and timelines of the project.

In contrast, SLAs are agreements between a service provider and their clients. The scope of the agreement is the quality and level of service provided, including the response time, quality of service, and consequences if the service provider fails to meet the agreed-upon terms.

Another key difference is the legal implication of each agreement. While both MOAs and SLAs are legal documents, MOAs are not as stringent as SLAs. SLAs are legally binding contracts that hold both parties accountable to the terms outlined in the agreement.

When to use MOA and SLA?

MOAs are ideal for business collaborations, partnerships, or projects involving two or more parties. The MOA helps define the expectations of each party involved and ensures that all parties are aware of their roles and responsibilities. MOAs can be used in various industries, such as construction, manufacturing, and research and development.

On the other hand, SLAs are ideal for businesses that outsource services to third-party providers. The SLA defines the level and quality of service expected from the service provider, ensuring that the business`s needs are met. SLAs are commonly used in the IT, customer service, and logistics industries.

Conclusion

In conclusion, while Memorandum of Agreement (MOA) and Service Level Agreement (SLA) share some similarities, they are distinct agreements with different purposes, parties involved, and scopes. Both MOA and SLA serve as essential tools to define the expectations of parties involved and ensure accountability. Understanding the differences between MOA and SLA is essential in deciding which agreement to use in business collaborations and outsourcing of services.