A Vendor Agreement is an agreement which is made by the business owner, or any other individual to hire products and/or services from other party. It covers various areas such as office supplies, professional services, technology services, marketing etc. It is a very important agreement as it defines the description of the product or services. To minimize the risk of conflict, expectations are clearly defined under Vendor agreement.
Few things must be considered while drafting vendor agreement.
There must be a detailed description of products or services.
Work statement should also be attached with the vendor agreement.
There must be a clause consisting payment terms of the product or services.
There must be penalty provisions in case of late payment.
Termination terms of the agreement must be clearly defined.
There must be a clause consisting intellectual property like who owns the IP, license granted to the other party.
It should also specify the representation and warranties.
Confidentiality: There must be terms regarding disclosure of confidential information and for this parties can also execute non disclosure agreement.
Indemnification term: Under this, vendor agrees to indemnify for a breach of warranty, willful/ negligent act, and omissions in case of infringement of a third party’s intellectual property rights.
Limitation of liability clause is very important as it excludes the incidental or consequential damages from the liability of the party.
A vendor’s agreement must define the relationship among both the parties.
Source url - https://entersliceindia.it.gg/Why-vendor-agreement-must-be-executed.htm
