Vendor agreements are a part of nearly all aspects of a business, regardless of the size. Vendor agreements are a necessary component of any exchange of goods or services. If you are a small business, you may find yourself dealing with vendors for everything from software and office supplies to consulting, legal help, event planning, marketing, and more. Without proper vendor agreements to regulate and clarify these relationships, your small business could pay a big price. Understanding what vendor agreements and how to negotiate them allows you to clarify roles and expectations in business relationships and helps to avoid costly errors and miscommunications, as well as to protect against breaches, which can otherwise be catastrophic for a small business.
What is a Vendor Agreement?
Vendor agreements are contractual agreements used when one party is selling goods or services to another. The agreements should clearly delineate what is being sold and the terms of the sale, as well as what the expectations are for both parties. This agreement clarifies exactly what is being sold or what the services are that are being provided. A great amount of detail is used. This is so that if the selling party does not uphold their end of the bargain, you need to be able to point to the vendor agreement and show how they deviated from the agreed-upon terms. For instance, “Party A will sell a box of fruit to Party B each month,” lacks necessary specificity, as it does not qualify a specific amount of fruit, a specific type of fruit, condition of fruit, or date, method, or means of delivery. This means Party A could send a box with one measly apple in it and technically not be in violation of the agreement. It is important to use as much specificity as possible and clearly outline expectations, such as how goods will be delivered, when they will be delivered, who will be responsible for shipping costs, and what will happen in the event that the goods delivered are not sell-able or of acceptable condition.
Important Terms of a Vendor Agreement
In addition to including a clear description of the products or services being exchanged, payment details, shipping costs and details, and deliverables, a vendor agreement should also include terms dealing with things such as any representations and warranties that are being provided. Vendor agreements can also include terms for indemnification, limitations on liability, and even an agreement on the part of the selling party to maintain insurance. For example, if you are retaining the services of a lawyer, you may want to ensure that they have liability insurance in the case of an error. Vendor agreements should also clarify and define the relationship of the parties, and make sure it is in writing that the vendor is an independent contractor and is not an employee or agent of the other party.
Talk to a Florida Business Lawyer
If you are a Florida business and want to make sure that all of your bases are covered with regard to vendor agreements that protect your company and business relationships, talk to the experienced business attorneys at the SG Firm. Call today to schedule a consultation.