Vendor agreements are contracts that a business owner, or someone representing the business, enters into with a vendor, an individual, or company that provides products or services to the business. Vendor agreements can cover a number of different products and services, including professional consulting services, office supplies, software, marketing, event planning, and more.
It is critical to have a solid vendor agreement in place before working with any third party, as these contracts clearly delineate and define every aspect of the service or product provided. Working with a Mt. Pleasant commercial attorney ensures a clear and thorough vendor agreement, all while reducing the possibility of conflict and confusion.
What You Should Include in a Vendor Agreement?
Vendor agreements should include everything that is most important to the details of a specifics business arrangement. What works for one company or vendor may not work for another. Generally speaking, the main provisions to include in a vendor agreement are as follows:
- Clear descriptions of the scope of service. All vendor agreements should include a description of the specific products or services provided to the company. A Statement of Work is often attached to the contract and this document provides every detail necessary for the arrangement.
- Terms of payment. Every vendor agreement should also clearly detail what the vendor will charge for their product or service, a timeline detailing when payments are due, the person or company to whom the invoices should be paid, and any penalties attached for late payments.
- Term of the agreement. Vendor agreements should clearly outline the term of the agreement, as well as any provisions for renewing the contract. These documents should also state how either party can terminate the arrangement. Whether termination should occur after a specific period of time, or only for cause, will depend on the specifics of the arrangement.
- Details surrounding intellectual property. Sometimes a business owner or a vendor must access the other party’s intellectual property, such as trade secrets. In these cases, the agreement should clearly state which party owns the intellectual property, how that property can be used, if the other party will need a license to use the property, and, if so, what the terms of that license are.
- Deliverables. If deliverables such as software, documents, or reports are going to be part of the arrangement, the agreement should outline which party owns the deliverables and if they are considered “works for hire.”
- Warranties. Vendors often provide warranties, and when they do, the vendor agreement must include these. Warranties may include that the vendor has the authority to enter into the agreement, and that the goods will conform to specific requirements and not infringe on any intellectual property rights of a third party.
- Confidentiality. The majority of vendor agreements will also stipulate how confidential information should be disclosed. In some cases, the vendor and business owner will choose to enter into a non-disclosure agreement. Some important things to consider are including a definition of the confidential information, if there are marking requirements, how long the protection stands, and if anything is excluded from the confidential information.
- Indemnification. Indemnification is defined as an obligation for one party to shield another from legal ramifications for the conduct of one party, or of another person. It is typically considered reasonable for vendors to agree to indemnify for a breach of warranty, negligent or willful acts, and infringement of a third party’s intellectual property rights.
- Liability limitations. Clauses outlining limitations on either party’s liability are not uncommon in vendor agreement. These clauses typically exclude special, incidental, consequential, or indirect damages for a party’s liability. Caps on damages when liability issues present themselves are also very common in these contracts.
- Insurance clauses. Vendors usually need to carry specific types of insurance and this requirement is outlined within the vendor agreement. For example, if a business owner was using professional services, they may include a clause that requires the vendor to carry errors and omissions insurance.
- The relationship of all parties. Vendor agreements must always clearly outline the relationship of the parties. For example, the document should state that the vendor is an independent contractor and has no authority, right, or power to act on the behalf of any other party.
While extensive, the above are just a few of the clauses often included in vendor agreements. The main purpose of these agreements is to clearly outline the obligations and rights of each party, while also reducing the possibility of a legal dispute in the future.
Why Work with a Mt. Pleasant Commercial Attorney?
Every contract you enter into is of extreme importance to your business, and it is crucial that they are drafted properly, including vendor agreements. Although the use of vendor agreements is fairly standard, it is still important to include all of the important clauses without any party taking offense to the terms. A commercial attorney will know how to draft and execute the contract with impartiality.
An attorney will also have a higher level of expertise about the industry regulations and the state laws that are always changing. For lawyers, staying up to date on these changes is a full-time job, while the parties entering into the contract may not be aware of these important terms. Finally, a lawyer will also ensure the agreements include the best terms for your business, while also closing potential loopholes that could present an issue in the future.
Call Our Commercial Attorney in Mt. Pleasant Today
At Beth Santilli Law, LLC, our Mt. Pleasant commercial attorney has the necessary experience to draft an agreement that is fair to both parties and that will protect you and your business. Call us today at 843-216-0009 or contact us online to schedule a consultation and to learn more about how we can help.