Lay out examples of material breach in the contract--such as failure to meet a specified number of service levels or intellectual property theft--to clarify termination rights. Even if a breach does not fall within the examples, they can still be useful in assessing whether the breach in question is material, says Peterson.

"If the breach in question has the same or greater adverse monetary impact on the customer's business as one of the breaches listed as an example, then the breach in question is probably material," he adds.

Many outsourcing contracts require conformity to "industry standards" or performance that is "appropriate," "sufficient" or "best practice." The problem with these adjectives, says Kriss, is that they have no clear meaning.

Instead, define specific standards of performance: tasks the provider is required to perform or results the provider is expected to achieve.