Vendor Agreement

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This Vendor Agreement could be use in a case where a company/firm/entity wants a vendor to sell such company’s/firm’s/entity’s goods.

What is Vendor Agreement?


Vendor Agreement is a legal document which stipulates the provisions regarding the work performed by the vendor. It is a contract which specifies the conditions regarding the performance of certain work. Vendor Agreement can be made for many purposes like office supplies, consultant, technology, services. While negotiating a clear vendor agreement one clearly puts the goals, strategies for cost minimization risk factor.


A Vendor Agreement is an Agreement which is made by a business owner who hires a person who will provide specific service or goods as per the requirement. There are various types in vendors agreement as per the requirement. The key points to cover in a Vendors Agreement are date, time & location of service. A Vendor Agreement should get along with the Statement of Work (SoW). A vendor agreement should not comes into operation without Statement of Work (SoW). It becomes enforceable after signing of both the parties.

Points to Remember while Makimg Vendor Agreement

While making a Vendors Agreement both parties should keep following things in mind:

  • There date of the agreement & the date of providing services or delivery of goods should be given in the Agreement.
  • The Precise time of the delivery should be given in the agreement.
  • Location where the service has been provided
  • Statement of Work without which a Vendors Agreement is treated as inoperative.

Points To Remember While Making a Vendor Agreement- LegalDocs

Registration or Notarization

As such Vendors Agreement need not ask for registration or any notarization of any amount on the Stamp Paper.

Requirement of Vendor Agreement

  • Date & details of the parties like names, addresses
  • Clarification of vending license to check whether the organization is permitted to deal with the product
  • Draft a brief statement of expectations of the vendor
  • Imposition of tax on product & services
  • Mention the delivery details

Procedure to make A Vendors Agreement

To make a Vendors Agreement, you just need to follow the two-step procedure:

1. To make a Vendors Agreement both parties should draft the agreement & put all the required clauses.

2. Once the Draft is ready just check the same & finalize & put the signature of both the parties

Important Clauses/Common Facotrs in Vendors Agreement

1) A Clear picture:

There should be proper description is given regarding the product or service which one is required & how much it is required.

2) Payment terms:

There should be proper costing regarding payment how much payment is due, mode of payment, late payment, terms of payment, penalties for late payment

3) Period of functionality:

There should be mention term of operation let us say for how much period the agreement is binding on parties. The period should be fixed at the beginning of time until the completion of the service.

4) Representations & Warranties:

Representations &warranties are important which should be stated in the Agreement.As the vendors should be comfortable with warranties & representations before entering into a contract.

To make a Vendors Agreement both parties should draft the agreement & put all the required clauses.

5) Confidentiality:

If you are providing confidential information to the vendor then clause of confidentiality plays a very pivotal role. As it protects the data from leakage.

6) Exclusivity:

All the vendors should have an exclusive relationship with the business owner as the product is unique & important to the business.

7) Intellectual Property:

When vendors are providing service or product to owners. While dealing in the business it should be only provided to owners. There should not be any other owner to avoid the risk one should get the grant of Intellectual property license.

8) Limited Liability:

In case of vendors, the liability is limited to the cost of services as this is not so good provision in case of agreement. From the perspective of business, if something goes wrong then one should ask for the damages more than the cost of services.

9) Indemnity:

Indemnification means when one party show the interest to bear the losses of other parties under ambiguous circumstances.

10) Insurance:

It is a very common practice in India to get a insurance as to ensure the safety.

11) Relation with parties:

An Agreement should clearly specify the relationship between parties. The vendor should be treated as an independent contractor. No other person can act on his behalf other than himself.

Key clauses to Include in a Vendors Agreement:

  • Specify the goods & services that will be provided
  • Mention payment modes
  • The manner in which a client will be billed
  • The manner in which a person will contact for accounts payable details
  • Include Statement of Work (SoW)
  • Knowledge of legal requirement & laws of the state
  • Insurance
  • A vendor is not an employee of the contractor & he is not eligible for any employment benefits
  • To show that a vendor is an independent contractor
  • Termination of vendors agreement
  • Payment or reimbursement of attorney fees

Advantages of Vendors Agreement

1. With the help of Vendors Agreement, it specifies the limitation of the vendor.

2. By writing down the business requirements it minimizes the risk for future

3. It states the procedure which the vendor should follow while working

4. It helps to gear up the work

Agreement for E-commerce Industry

E-commerce industry is most rapidly growing industry. It has covered large capital form. As it is wider in scope. In India, most of E-commerce business set up very closely associated with the Vendors or Sellers. It looks like a formal business transaction, but not like which one carries daily in physical form where both the parties meet & carry on the business. In here parties do act like the same but parties do not meet. While dealing through a network portal both the parties makes an agreement which is binding on them. And while drafting the Agreement itself both parties are advised to put all the necessary details they want in dealing

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Vendor Agreement FAQs

What is the meaning of Vendor’s Agreement?

A Vendor’s Agreement is an agreement which defines the rights, duties & responsibilities which should be performed by the vendor.

What is the main purpose behind making a Vendors Agreement?

It basically acts as a composite insurance made by two parties with mutual consent. It is made when you are dealing on the small-scale business, but now by seeing the benefits, the operativity had increased immensely.

What is the need to make a Vendors Agreement?

Whenever you are dealing with the vendors, you need to make the vendors agree to protect their business is future. As it clearly states the roles & responsibilities of the vendors in terms of business. Basically, every condition of making a business should be incorporated carefully.

Is registration of Vendors Agreement is required?

There is no such requirement for registration simply singing the agreement is enough to make it functional.

What is the provision for notarization?

Once the draft is ready it is just needs affixing signatures of both parties. There is no requirement of notarization. Signature of both the parties is enough to make it operational.

What is the basic requirement of Vendors Agreement?

Vendor agreement is made to specify all the conditions between parties to avoid future problems. The well-drafted agreement should contain the following factors-
a) Date
b) Time
c) Delivery details
d) Statement of Work (SoW)

What is the meaning of Statement of Work?

Statement of work is basically a document which depicts all the details like activities, time period, cost, duties. It is basically done for project purpose to keep the track of work.

What is the procedure to make a Vendors Agreement?

To make Vendors Agreement there is only two-step procedure:
1. Drafting of the Agreement with proper details of all parties
2. Affixing Signature of all parties
There is no requirement of notary or registration signature of parties is enough.
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