Every business needs goods and services from other businesses to run its own business. Anything from the internet services, raw material for your product, courier services, or the graphics for your online business, you need services and goods from a vendor. When it comes to defining terms and conditions between your business and the vendor, having a vendor agreement in place is very beneficial.
What is a Vendor Agreement?
A vendor agreement is a legal document that states the stipulation of the work to be performed by a contractor for your business. It sets the provisions regarding the type and quality of services to be provided, duration, cost, liability, etc. of the vendor’s services. The best startup lawyers in Gurgaon can help you in drafting a foolproof vendor agreement for your business.
Vendor agreements come in different forms depending upon the type of business you are engaged in and the kind of services you require from the vendor. It is important to consult a good startup lawyer in Mumbai to get your vendor agreement drafted. However, there are certain key provisions that are generally included in every vendor agreement, irrespective of those factors. Here are the important clauses that you must include in your vendor agreement:
1. Goods and Services: If you’re purchasing raw material from the vendor for your business, then the vendor agreement must specify the kind, quality and quantity of goods purchased from the vendor. Similarly, if you’re availing services from a vendor, then the startup lawyers in Delhi must state the type of service you’ll be requiring in the agreement. It should also include the standard by which the service will be performed by the vendor.
2. Payment: The best startup lawyer in Bangalore must include the payment clause in the agreement. This clause specifies the structure of payment that the vendor will receive in return for the goods and services that they deliver. The payment structure must contain the amount to be paid, time period for the payment and information about any advance payment made by your business.
3. Term: The vendor agreement must specify the duration of your business relationship with the vendor, i.e. the time period for which the vendor will provide their services or deliver goods to you. Usually, a vendor’s agreement is valid for a fixed term after which it needs to be renewed. The startup lawyer in Chennai must include the clause relating to the term for which the agreement is valid.
It must also contain the provision for termination of the agreement before the expiration of the term in case you or the vendor wish to terminate the contract by giving a notice. This gives a certain amount of flexibility to the agreement in case any of the parties want to discontinue it.
4. Warranties: Warranties that the vendor has agreed to provide to your business must be stipulated in the vendor agreement. Warranty includes exclusivity as a customer for a particular product or service, warranty against infringement of your business’s IPR, warranty regarding the vendor’s ability to avail the services or goods, etc.
5. Liability: The liability clause the vendor’s and your liability. The liability clause must limit your liability your liability in case of non-payment or delay in delivery due to vendor’s negligence or fraud. This clause enables your business to claim damages if the vendor’s actions cause damage to your business.
6. Dispute Resolution: The startup lawyer in Kolkata must include the dispute resolution method in the vendor agreement, that you and the vendor want to implement in case of a dispute. For instance, if the dispute resolution will be through Arbitration, then the agreement must specify the seat of Arbitration. Also, the laws applicable to both must be mentioned along with the court that will have jurisdiction in case of a court dispute.
Having a well-drafted vendor’s agreement is good for both your business and the vendors you’ll deal with as it sets the standards of goods or services expected from the vendor. Hiring a startup lawyer in Pune to draft the vendor agreement is always recommended as the lawyer can make sure that the agreement covers your interest adequately and has no loopholes for the vendor to escape their liability.
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