Performance requirements: Overview, definition, and example
What are performance requirements?
Performance requirements are contractual obligations that define the minimum standards, outputs, or results a party must achieve in delivering goods, services, or completing a project. These requirements can include timelines, quality levels, service availability, functionality, or other measurable outcomes. They are often used in service agreements, technology contracts, construction deals, and government procurements to ensure that the work meets agreed expectations.
Why are performance requirements important?
Performance requirements are important because they establish clear, enforceable benchmarks that help manage quality, timelines, and accountability. Without them, it becomes harder to determine whether a party has met its obligations or to resolve disputes. They also allow for structured remedies—such as service credits, rework, or termination—if performance falls short.
Understanding performance requirements through an example
A cloud service provider signs a service-level agreement (SLA) that requires 99.9% uptime per month. If system availability falls below that threshold, the client is entitled to receive credits on their invoice. That uptime target is a performance requirement that measures whether the provider is fulfilling its core promise.
Example of how a performance requirements clause may appear in a contract
Here’s how a performance requirements clause may appear in a service agreement:
"Service Provider shall perform the Services in accordance with the performance requirements set forth in Exhibit A, including minimum uptime of 99.9%, response times not exceeding four (4) hours, and resolution of critical issues within twenty-four (24) hours."
Conclusion
Performance requirements provide structure and certainty in contracts by defining what successful delivery looks like. They protect both parties by creating measurable standards and clear remedies in case of failure. Well-drafted performance requirements are essential in contracts where timing, quality, and reliability directly impact business outcomes.
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.