Introduction: If
you are doing a business you require goods and services to run your own
business on a daily basis. Any purchase is it from the e-commerce website, raw
material for your product, buying the goods for supply, would be considered a
vendor or service provider for your business.
Requirement of Vendor
Agreement
Defining the terms and conditions between your business and
the vendor in respect of the goods/ services provided, there comes a need of a
vendor agreement.
Vendor Agreement is an agreement between the goods or
service provider to company or individual. Vendor agreement is important when
you tie up for selling the products because it brings all the terms of sale and
purchase into writing. The basic purpose of entering into such agreement is to
describe the rights and obligations of the both the parties and hence avoiding
the risk of dispute in future between them.
Benefits of entering
into Vendor Agreement
Execution of standard agreement is an important tool for
managing a vendor business. Vendor agreements varies depending upon the type of
business and type of service provided
Written description of the services is always a welcome
option to avoid the disputes
Written agreement provides clarity between the parties
because it states the stipulation of the work to be performed
Executing agreement between the parties before entering
into services sets the expectations and avoid the confusion of what type and
quality of services to be provided or not to be provided
What Does A Vendor
Agreement Usually Cover?
Vendor agreements can be drafted of different forms
depending upon the type of business you are engaged in. However, there are
certain general terms that should be incorporated into any vendor agreement to avoid
the uncertainties in future. So below are some of the general clauses that
should be specifically included:
1. Scope of the
services or goods
This is one of the important clauses that must be
incorporated with clarity in any vendor agreement that defines the exact scope,
quality and type of goods/ services provided and not provided for their
business. The more detailed vendor contract is, the lesser wil be the chances
of dispute in the future.
2. Terms of Payment:
Next most important provision after the above clause is
mentioning the payment provision in a vendor agreement. By defining that
whether payment is to be in lump sum or made in installments, you are avoiding
the situation which could lead to disputes in future
3. Representations
& warranties:
While executing the agreement the vendor should set out some
of the representation that he has the necessary qualification to provide such
service and he has not infrigined the intellectual property right of the other
party
4. Dispute resolution
or mediation
The parties should always pay careful attention to insert a
dispute resolution clause in your vendor agreement that requires both the
parties to pursue mediation and dispute resolution mechanism in case of dispute
before proceeding for legal action.
5. Liability Clause
This clause must be stated as to what extend the vendor will
be liable to the loss caused due to his carelessness and negligence.
6. Termination Clause
A termination clause must be a part of the contract where
either of the party has an option to terminate the contract in case of breach
of confidentiality, or conduct of illegal activity by giving a notice period.
7. Indemnity clause
The vendor agreement should also cover up the indemnity
clause for making good the loss caused by the breach of terms of agreement or
loss caused due to the negligence of vendor
8. Confidentiality
This is the most important clause of any agreement which
clearly spells out is that all information shall be kept confidential and
cannot be shared without the knowledge and consent of company.
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