Critical Issues to Define in Any Vendor Agreement

No matter what type of business you own, chances are you utilize vendors for something. Whatever they provide, from the paper you put in the printers in your office or the ingredients you use in your restaurant, vendors are essential to nearly any and all business ventures.

However, there are a wide variety of risks inherent in any type of relationship between your company and another business, including having a vendor provide you with some sort of goods or services. Thus, you should never work with a vendor without first drafting and signing a strong vendor agreement. Below we have detailed six key issues which need to be explicitly defined in any contracts you have with your vendors.

Terms and Conditions – Any good vendor agreement should detail a wide variety of stipulations which are essential to define. Are there prerequisites to the service? Must the product adhere to a specific degree of quality or be delivered by a certain deadline every month? You must make your expectations of the vendor very clear. Not only is this important so that you will be able to take action if the vendor fails to fulfill his or her obligations, but it also help to ensure you and the vendor are on the same page which will help you avoid confusion or misunderstandings about your business relationship.

Dates – You should define precisely when the contractual relationship with the vendor is to begin, when the relationship will terminate, as well as any provisions for renewal of the contract if needed.

Goods or Services Provided – Your vendor agreement must clearly define exactly what it is the vendor is supposed to provide to your business under the auspices of your contract. Whether the vendor is providing you with office supplies, cleaning services, or anything else, make sure your contract explicitly states whatever good or services they must provide.

Cost or Estimated Cost – Depending on the nature of the goods or services which the vendor is providing, you may be able to define exactly what the cost will be, or provide a reasonable estimate of the total cost of working with the vendor if it is something which is more difficult to precisely predict. Either way, you need to detail some expectation of cost in all of your vendor agreements.

Payment Schedule – When are you expected to pay the vendor? Will you be required to pay on a certain date each month for ongoing services, or will you pay upon completion of the services or delivery of the goods? It is not enough to simply state how much you are expected to pay. You must also include when you are expected to pay.

Liability – What are the potential risks of your business relationship? If some sort of violation of the law occurs, who is responsible? If possible, you will want to try to ensure that the vendor will be responsible for any liabilities for which he or she is the cause. That way, if your vendor violates a federal statute while working in your service for example, you will not be held responsible for their actions.

Before you begin any sort of working relationship with a vendor, be sure to contact APH Law and let us provide you with legally compliant, enforceable contracts that will mitigate your risks and help you avoid legal problems arising from vendor-related issues. Give us a call today!

Written by APH Law PLLC


When we founded APH Law PLLC in 2010, we did so out of a desire to connect business owners with more and better opportunities. No matter what industry you’re operating in, creating a strong foundation, preparing for the future, and protecting against challenges are key to long-term success. It is this kind of support that we take tremendous pride in helping businesses.