When it’s time to solidify your relationship with your chosen vendor, it’s important to ensure a strong vendor contract agreement is in place. From affiliate marketing to startup law, our services cover a wide range of business law and our experienced attorneys will help you navigate the vendor contract landscape from start to finish. We’ll work with you to make sure we create a solid contract and negotiate the best solution for your business or personal needs.
How to Create the Ideal Vendor Contract
Through our 10+ years of experience in business law, we’ve become well versed in the world of vendor contract agreements. Depending on your needs or area of business, the specifics of the contract may differ but there are a few generalities you want to see on any contract. These can include:
- Scope / Explanation of services provided
- Length of contract
- Specified type of contract
- Straightforward payment terms
- Details on when contract expires
- Consequences for unfulfilled obligations
Having these essential components in place help to create a strong foundation for the contract. Our attorneys will work to negotiate a contract that encapsulates these factors, as well as any other facets that may be required for the specific situation. On top of that, our experience means we’re comfortable helping you create contracts in many business areas, including:
What Are the Common Types of Vendor Contracts?
In general, there are six common vendor contracts that we’ll encounter. They are:
- Fixed Price: States that a fixed, agreed upon price will be paid for the defined service and/or goods
- Time and Materials: Used to lay out the hourly rate (generally labor) for any outside workers, contracts, or experts that are hired for the job
- Indefinite Delivery: Typically used when multiple projects are being done simultaneously or over a time period. As the name implies, this contract is for instances where specific numbers of goods or services cannot be stated, but time can
- Cost Reimbursable: Buyers will reimburse the sellers for the agreed upon work, while also offering a fee as profit. Typically seen when the work includes known risks or the scope of work is unknown
- Letter Subcontract: When timelines don’t match up, or there is an unexpected, emergency project, the buyer and seller will agree upon a percentage of the work that will be done within a subcontract phase
- Distribution Agreement: A simple contract agreement between a distributor and a vendor stating agreed upon details of how, when, and where the necessary products will be delivered
Vendor Contract FAQs
Although every contract will differ based on needs, you’ll want to make sure you understand a few core concepts. Some common questions we get around vendor contracts are:
- Q: What’s a typical contract length?
- A: Contracts will differ in length depending on the specific needs of the agreement, but commonly fixed term contracts will be for one or two years.
- Q: When are payments made during the contract?
- A: The due date of payments during the contract period will be determined within the agreed upon payment terms in the contract itself.
- Q: Are there fees for late payments?
- A: Yes, vendors can enact late fees or interest on late payments during the contract period if this provision is in the contract.
- Q: What happens if a delivery is late?
- A: Again, the specifics of this will depend on the contract itself. Typically, businesses can include stipulations in the contract that outline late fees or penalties for delayed and/or late deliveries
Should You Use a Vendor Agreement Template?
When you begin the process of creating a vendor contract, you’ll likely come across several vendor agreement templates. While it may seem like a great idea to use a template to help expedite the process, we strongly recommend against this practice. Using a vendor agreement template prevents you from being able to tailor the agreement completely to your specific situation. It may not even be enforceable!
You can certainly use a template as a reference point on what to include in your contract, but it should not be used for the execution of the final contract.
What Can Be Negotiated in a Vendor Contract Agreement?
Once you’ve laid out the foundation of the agreement, it’s important to understand what can and can’t be negotiated. To make sure you get what you need from the agreement, we’ll help you negotiate specific terms of the vendor agreement, including:
- Payment terms
- Contract length
- Expected delivery time of goods or services
- Contract renewal terms
- Specifics around late fees or interest for late/unpaid dues
- Quality/standard of goods or services
Depending on your situation, you may also have Service Level Agreements (SLAs) or confidentiality agreements to negotiate as well. No matter what your vendor contract entails, our attorneys will make sure to negotiate the terms to get you the best outcome.
Vendor Contract Management
Once the outline of the contract has been formed, the contract management process truly begins. Managing the contract, and the vendor relationship, is an ongoing process with no real fixed end point. When managing the contract, our team will help you with all parts of the process, including:
- Negotiating the details of the contract
- Crafting a risk management assessment
- Keeping up-to-date records
- Ensuring contract compliance from vendor
- Helping define expectations
Keep in mind, once the contract reaches its end, there are certain scenarios where the contract will renew automatically. In those situations, our vendor contract management responsibilities will extend to a contract renewal phase. This can include assessing new vendor possibilities, renewing the existing contract, or reshaping the contract. As long as your contract is active, you’ll have the support of our team.
Perfect Your Vendor Contracts with Gordon Law
When you work with Gordon Law, you can rest easy knowing you have a team of experienced contract attorneys supporting you. We’ll help you craft the best vendor contract agreement for your specific needs, and help you manage that relationship as long as you need it. Contact our office today or simply schedule a confidential consultation online to get started.
