What Is a Standard Vendor Agreement?
A standard vendor agreement is a contract by a vendor and an organization that details the goods and/or services that will be provided in exchange for payment.3 min read
2. Key Terms to Know
Updated November 3, 2020:
A standard vendor agreement is a contract between a vendor and an organization that details the goods and/or services that will be provided in exchange for payment. The contract details the provisions and conditions of the services the vendor provides.
Vendor Agreement Basics
A vendor provides services or supplies goods in return for remuneration or consideration. Vendor agreements may be used for various events, such as food fairs, arts festivals, or weddings. Signing a vendor agreement can help ensure the event is a positive and profitable one for all parties.
You might want to use a vendor agreement if one of the following applies:
- You are the host of an event and would like vendors to sell services or products at the event.
- You are a vendor who provides services or sells products and wants to do so at an event.
Event planners have many responsibilities, including seeing that vendors come on time, sell appropriate merchandise, and engage in appropriate conduct with the guests.
Vendors may want certain things, such as the event host to provide appropriate vehicle access that allows them to easily unload products. They might also want a specific spot in the venue.
A vendor contract should cover the following:
- Details of the work the vendor will complete
- Quality of the supplied goods or provided services
- Length of the contract terms
- Payment terms
- Indemnity, in the event of loss arising from negligence, etc.
The contract is legally enforceable only after the customer and vendor both sign it, showing their willingness to abide by the contract's terms and conditions.
Normally, the customer includes a statement with the contract that describes the quality and quantity of goods as well as the other particulars of the services or goods during the contract period. Payments made to the vendor are based on such a statement.
The customer may make payments in one installment or as running payments. Running payments are more commonly known as progressive payments. They're paid weekly or bi-weekly when the vendor submits invoices.
Key Terms to Know
Any business can face challenges when dealing with the vendor and third-party contracts. Proper negotiation of contract terms can potentially reduce your risk as well as positively influence the business decision-making process. However, you may run into some obstacles that affect, even limit, the degree of success you'll have in contract negotiations.
For instance, when considering the acquisition of a subscriber base (no matter which industry is involved), you'll have to think about how the value (or price you pay) is affected by key issues such as revenue projection revisions, customer attrition, and the possible loss of key personnel.
Certain sectors have additional business rules in place. These sectors include the following
- Credit unions
- Professional services
- Software licensing
In addition, there are entire industries that are subject to more regulations concerning the access and use of customer data. The agencies that govern these regulations may include the FCC, FTC, SEC, HHS, and state Attorney General.
Areas of big data, cloud, social, and mobile are further complicated when you factor in additional parties, such as vendors and consultants. Each of these industries comes with its own set of procedures, rules, and risks.
Service providers and advisers might not know about all of the unspoken rules that are part of an internal business structure. They don't regularly interact with and have the intimate knowledge that a management team has.
You can, however, prepare yourself for better contract negotiations by developing a contract negotiation playbook. Although the set of strategies and tactics will reflect a business's internal rules, some standard practices are solid enough to be effective in any playbook.
While you can find a sample contract template for a vendor agreement, you really want to customize your contract so that it meets your specific needs and the needs of the other contractual party. Without this customization, you put yourself at risk legally and financially. Consult with a contract law professional if you need help writing a contract or understanding all of the legalese in an agreement. When signing a contract, it's very important that you know the exact terms and conditions you're agreeing to.
If you need help with contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.