Define: Good Industry Practice
Good Industry Practice is a contract standard requiring a party to perform its obligations using the skill, care, diligence, prudence and foresight that a reasonably competent, experienced provider in that industry would exercise, while also complying with the law. It sets an objective benchmark for judging whether performance is adequate, rather than leaving quality undefined.
Legal accuracy standard set & glossary spot-checked by Imad Mohammed Nazar , Skadden-trained M&A lawyer, Legal Engineer at GenieAI
What Good Industry Practice Means in a Contract
Good Industry Practice is a defined performance standard used to describe the quality, care and competence a contracting party must bring to its obligations. Rather than listing every technical requirement, the contract instead references an external benchmark, the conduct that a skilled and experienced operator in the relevant sector would reasonably apply. This allows the parties to avoid drafting exhaustive technical specifications for every scenario while still holding performance to a meaningful and enforceable standard.
The definition typically combines two elements: legal compliance and a subjective but objectively testable standard of skill, care, diligence, prudence and foresight. The reference to the party's own level of experience in the services, as seen in the example wording, ties the standard to what is reasonably expected of an operator with that particular expertise, rather than an absolute or theoretical ideal. This makes the standard flexible enough to apply across many types of services, from Relevant Circumstances
Relevant Sectors