Outages: Overview, definition, and example
What are outages?
Outages refer to periods when a service, system, or infrastructure becomes unavailable or inoperative, either due to technical failures, maintenance, or unexpected disruptions. Outages can affect utilities (such as electricity or water), internet and telecommunications services, or critical business operations.
For example, if a cloud storage provider experiences an outage, users may be unable to access their stored files until the issue is resolved.
Why are outages important?
Outages can disrupt business operations, cause financial losses, and impact customer satisfaction. In contracts, outage clauses are used to define responsibilities, response times, compensation (if any), and service level expectations.
For businesses relying on third-party services, understanding outage clauses in contracts helps them assess risks, plan for downtime, and ensure they receive adequate support or compensation if disruptions occur.
Understanding outages through an example
A company signs a service agreement with a web hosting provider that guarantees 99.9% uptime. If the provider experiences an outage that exceeds the agreed downtime limit, the contract states that the company will receive a partial refund or service credits as compensation. This ensures that the provider is held accountable for prolonged outages.
In another scenario, a manufacturing business relies on a software system to manage its supply chain. If the system experiences an outage due to a server failure, the contract specifies that the software provider must restore service within 24 hours. If the outage extends beyond that period, the provider may face penalties or be required to provide additional support.
An example of an outages clause
Here’s how this type of clause might appear in a contract:
“The Service Provider shall use commercially reasonable efforts to maintain continuous availability of the Services. In the event of an unplanned outage exceeding [X] hours, the Customer shall be entitled to service credits or other remedies as outlined in this Agreement. The Service Provider shall not be liable for outages caused by force majeure events beyond its reasonable control.”
Conclusion
Outages can disrupt essential services and operations, making it crucial for businesses to have clear contractual terms defining responsibilities, response times, and potential compensation. By including an outages clause in agreements, companies can ensure accountability, minimize downtime risks, and set expectations for service reliability.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.