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The purpose of a vendor contract is simply to set out the obligations clearly, in writing, between your business and vendors who supply goods or services.
What does the vendor provide? When and how often will they provide the product or service? How much is the customer or client going to pay for the product or service? What happens if something is wrong with the product or service?
The payment terms section of a vendor contract should govern the amount of payment, the frequency of payments, whether or not purchase orders and invoices are going to be issued, and how often.
In addition, the contract should articulate what occurs in the event of late payments or defaults. Is there an opportunity for a cure in the event of late payment? Are there penalties involved or interest?
Delivery deadlines should be clearly laid out in a vendor contract, detailing how often a product is going to be delivered, along with consequences for late delivery. Will there be penalties associated, such as a reduction in fees?
Without clear expectations in writing, you and the vendor are setting yourselves up for avoidable professional, financial, and legal disputes.
Attorney Craig Donnelly is a focused, proficient business attorney serving Illinois. For 20 years, he’s helped clients just like you avoid common business pitfalls, craft meaningful and sound vendor contracts, and securely prepare their business for future growth.
Ready to get started? Have further questions?
Contact Donnelly Law at (630) 608-2124 for a free initial consultation today!
In some cases, both sides may have interests and needs that would require confidentiality. A vendor, for example, might be giving you a discounted pricing arrangement and they don’t necessarily want to advertise this to the public.
In other circumstances, your company may have certain processes or inside information that the vendor has access to during your relationship. A confidentiality clause ensures that both you and the vendor refrain from sharing sensitive information with competitors or the public, according to your respective interests.
First and foremost, if a termination clause is not included and the term of the contract goes into perpetuity, that may impact the enforceability of the contract.
A clear termination clause, therefore, sets out the time parameters for the vendor relationship and helps your company budget for the amount of money that is going to be spent during the life of the contract.
Plus, if a contract is set up such that it automatically renews after a period of time, it’s important that there be termination clauses included. This helps both you and the vendor know what to do if either needs to terminate the contract.
Insurance requirements vary by industry and by the parties. If the relationship is such that insurance would be required or appropriate, it should be clearly set forth in the vendor contract.
It’s not uncommon for there to be some requirement in these contracts for parties to carry some form of general liability coverage. In many cases, the vendor contract might provide that one of the parties is listed as an additional insured under the other party’s policy.
First, you and your attorney will review the document and see if the contract can be amended. It’s generally important to be sure that contracts have clauses that allow them to be modified or amended based on changes in circumstance.
Often, these contracts may be amended by mutual written agreement between you and the vendor, which is generally the most agreeable position for both parties.
For more information on Crafting The Perfect Vendor Contract, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (630) 608-2124 today.
Attorney Craig Donnelly is a focused, proficient business attorney serving Illinois. For 20 years, he’s helped clients just like you avoid common business pitfalls, craft meaningful and sound vendor contracts, and securely prepare their business for future growth.
Ready to get started? Have further questions?
Contact Donnelly Law at (630) 608-2124 for a free initial consultation today!
