The Good Industry Practice Clause: What It Means and How to Negotiate It (2026)

What is a good industry practice clause? A good industry practice clause sets the standard a supplier must perform to. It usually means the degree of skill, care, diligence and foresight that a skilled and experienced provider, engaged in a similar type of activity under similar conditions, would reasonably be expected to apply. In short, it holds a supplier to what a competent peer would do, not just to whatever the supplier chooses to do. It is common in outsourcing, managed services, IT, engineering and construction contracts, where the customer cannot list every single thing the supplier must do and instead relies on a general quality benchmark. The clause fills the gap between the specific obligations written into the contract and the broad expectation that the work will be done properly. It is often shortened to GIP and is closely related to a standard of performance clause, which does the same job of setting the level of quality and diligence expected. This article is general guidance, not legal advice. How a court reads words like "reasonable" or "prudent" varies by jurisdiction, so have a qualified lawyer review any clause before you rely on it. ## What the standard actually measures A good industry practice definition usually has three features. - A comparison group. The benchmark is a skilled and experienced person or organisation engaged in a similar activity. Some clauses raise this to a market-leading provider, which is a tougher standard.

• The elements of performance. Skill, care, diligence, prudence and foresight, and sometimes the methods, tools, systems and processes a competent provider would use.
• Context sensitivity. Better clauses allow the benchmark to take account of the nature and size of the parties, the service levels, the term, the pricing and the locations where the service is delivered, so the standard is realistic for the deal in question. The aim is an objective yardstick. If the supplier falls short, the question is not "did the supplier think this was fine" but "would a competent, experienced provider in this field have done it this way". ## Sample wording ``` GOOD INDUSTRY PRACTICE "Good Industry Practice" means, at any time, the exercise of that degree of skill, care, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced provider engaged in the same type of activity under the same or similar circumstances, having regard to the nature and scope of the Services, the Service Levels, the Charges and the locations of delivery. The Supplier shall perform the Services in accordance with Good Industry Practice and with all applicable laws, and where any Service Level or specification sets a higher standard, the higher standard shall apply.

- the higher of good industry practice and any specific service level or specification to apply, so the general standard cannot be used to water down a precise target;
- the clause to bite on regulatory compliance and safety, not just service quality. **The supplier usually wants:** - "good" rather than "best" practice, measured against a competent peer, not the market leader;
- the benchmark to be context sensitive, taking account of price, scope and location, so it is not held to a gold-plated standard on a budget contract;
- clarity on what prevails if the general standard appears to conflict with a specific instruction or specification from the customer. A recurring negotiation point is which standard wins when they conflict. A customer-friendly clause says the more stringent requirement always applies. A supplier-friendly clause lets a specific agreed specification override the general benchmark, so the supplier is not later told its compliant work still fell short of some unwritten ideal. ## A note on jurisdiction and enforceability A good industry practice clause is a creature of drafting rather than statute, so its effect depends on how the governing law reads open standards such as "reasonable" and "skilled and experienced". In many common law systems a professional supplier already owes an implied duty of reasonable skill and care, for example under the UK Supply of Goods and Services Act, 1982, and under service-contract principles in India drawn from the Indian Contract Act, 1872. A good industry practice clause makes that duty explicit and defines it, which reduces argument. Because the precise reading varies by jurisdiction, and because a general benchmark can still be contested, most contracts pair it with measurable service levels and clear remedies so the standard can actually be enforced. ## Where one contract workspace helps A good industry practice clause rarely sits alone. Its real strength depends on how it interacts with the service levels, the specifications, the compliance obligations and the remedies elsewhere in the contract, and on keeping that standard consistent across every supplier agreement you sign. Checking those links by hand, across many contracts, is slow and easy to get wrong. The idea worth taking from this is that drafting, reviewing, tracking and governing a good industry practice standard can sit in one AI workspace tuned to your company, where a contract is modelled as linked clauses so you can see where the general standard meets the specific service levels and keep the same benchmark wording across a portfolio of supplier contracts. A tool like [Adira](https://adiralaw.com) keeps the standard and the service levels in one workspace. The explanation above is enough to negotiate the clause on its own; a workspace simply keeps the standard consistent and connected.