Setting Yourself Up for Success | How to Create a Strong Vendor Agreement

For many companies, using vendors is a great way to accomplish business goals without having to be responsible for everything that takes place. Vendors can be a great way to complete one-time tasks or perform highly specialized work. When working with vendors, you will need to have a vendor agreement written up and signed by all parties involved. A strong vendor agreement will make the working relationship easier for everyone and help avoid problems as the work is completed. The following are some key items that should be included in a good vendor agreement.

Define Terms Clearly

The most important part of any vendor agreement is going to be the terms of the service that they provide. Including as much specific detail as possible will avoid misunderstandings now and further trouble down the road. Things like start dates, end dates, and any information about the goods or services they are providing should be included in the agreement documentation.

Identify Consequences of Failing to Meet Objectives

Whether due to negligence or unavoidable circumstances, there will be times when a vendor is unable to meet their obligations. Your vendor agreement should clearly state what will happen in this type of situation. Some common examples would include a reduction in the fees, written warnings, and even a termination of the agreement. When coming up with the consequences for this type of thing, make sure they are reasonable and enforceable.

Include a Non-Disclosure Clause (If Applicable)

Many companies use specific procedures, products, or other details to ensure what they provide to their customers is exactly how it should be. When a vendor comes in to do work, they will likely have access to the information and other things used to create the products or services offered by your company. This could result in them taking that information and either using it themselves or sharing it with another client for some type of compensation. To avoid this risk, it is often a good idea to include a non-disclosure clause as part of the vendor agreement. Even if you don’t have your employees signing these types of agreements, it can be a good idea with vendors due to the reduced level of control you have with them.

Don’t Settle for a Standard Agreement

There are plenty of “one-size-fits-all” vendor agreements available today, and it can be tempting to just fill in the blanks and use them. The fact is, however, that just like your business is unique, so will be the vendor agreement that you need. Having an experienced attorney write up a customized vendor agreement will not only help to make everything clearer, but also make the agreement more enforceable should that become necessary. Contact APH Law to discuss your needs with our attorneys today.