Which formal agreement minimizes the risk of disputes that can occur between an IT service provider and an external supplier?

Operational contract is not a standard ITIL-defined term; the correct ITIL term for formalizing external supplier relationships is the underpinning contract.

An underpinning contract is a legally binding agreement between an IT service provider and a third-party external supplier that formally specifies deliverables, targets, and responsibilities required to meet service level commitments. By clearly defining obligations, penalties, and escalation paths, it reduces the risk of disputes arising from ambiguous expectations. This is distinct from a Service Level Agreement, which governs the relationship between the service provider and its customers rather than its suppliers.

Serviceability contract is an informal term sometimes used to describe supplier agreements, but underpinning contract is the precise ITIL-defined term for this purpose.

Service level contract is not a standard ITIL term; the equivalent customer-facing agreement is a Service Level Agreement, which governs provider-to-customer relationships rather than provider-to-supplier ones.