Uptime Credit Under the Service Agreement
Excerpt from a service agreement: "Vendor shall maintain a Monthly Uptime Percentage (MUP) of not less than 99.5%, where MUP = (Total Minutes − Downtime) ÷ (Total Minutes − Excluded Minutes). Excluded Minutes comprise Scheduled Maintenance Windows (SMW) and declared Force Majeure Events (FME). Downtime accrues from ticket open to service restoration. Service Credits equal 1% of the Monthly Recurring Charge (MRC) for each full 0.1% by which MUP falls below the threshold, capped at 20% of MRC. Credits are the sole remedy, must be requested in writing within 30 days of the month end, and are applied to the next invoice."
1. In February (40,320 total minutes), there were two SMWs totaling 480 minutes, a declared FME removed 45 minutes of service, and a fiber cut caused an outage from Feb 12 at 22:00 to Feb 13 at 03:00. MRC is $8,000. Compute the MUP and the credit.
Read the worked answer
Step 1 - Excluded Minutes. SMW 480 + FME 45 = 525.
Step 2 - Denominator. 40,320 − 525 = 39,795.
Step 3 - Downtime. Feb 12 22:00 to Feb 13 03:00 is five hours = 300 minutes. The FME window is excluded separately and is not part of this outage.
Step 4 - MUP. (39,795 − 300) ÷ 39,795 = 39,495 ÷ 39,795 = 0.992461…, or 99.2461%.
Step 5 - Shortfall. 99.5 − 99.2461 = 0.2539 percentage points.
Step 6 - Credit. Only full 0.1% increments count: 0.2539 contains two, with 0.0539 left over and discarded. 2 × 1% = 2% of $8,000 = $160.
The most common error is leaving the 525 Excluded Minutes in the denominator, which yields 99.26% and a different shortfall. The exclusion applies to the base, not just to the numerator.
2. The customer argues for a 3% credit because 0.2539% "rounds up to 0.3%." Who is right?
Read the worked answer
The vendor is right: 2%, or $160. The clause says "each full 0.1%." Full means complete - a partial increment earns nothing. Rounding 0.2539 to 0.3 would convert a partial increment into a full one, which is the opposite of what the clause contemplates.
The customer's arithmetic is not the problem; the word "full" is doing the work. Test it against the cap: if partial increments rounded up, a shortfall of 0.05% would earn 1% of MRC for an outage of roughly 20 minutes on a 40,000-minute month. The cap of 20% of MRC also confirms the parties intended increments to accrue slowly.
A useful cross-check for any similar clause: identify the rounding rule before computing, not after. Here it is embedded in the phrase "each full 0.1%," not stated as a separate sentence.
3. The customer emails the credit request on April 10 for the February period; the vendor refuses it. Is the refusal correct, and what else can the customer claim for the outage?
Read the worked answer
The refusal is correct. February ended February 28 (2025 is not a leap year; in a leap year it would be February 29, which would put April 10 at 41 days). Thirty days from February 28 is March 30. An April 10 request is late, and the clause makes a timely written request a condition of the credit.
What else the customer can claim: on this agreement, nothing for the outage itself. Credits are expressly the sole remedy, which forecloses a separate damages claim for the downtime.
Practical point: the customer should not simply accept the loss without checking the next invoice for credits already applied, and should calendar the 30-day deadline as a recurring month-end task. The sole-remedy language makes that deadline the only path to recovery, so missing it forfeits the entire claim - a $160 loss here, but the same habit scaled to a 20%-of-MRC credit is a much larger number.