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Vendor Agreement

Frequently Asked Question

What are the key elements of a vendor agreement?

The following are some of the key elements of a vendor agreement-

  1. Clear description of product or scope of services to be provided by the vendor should be given
  2. Payment terms should be properly negotiated and described in the agreement considering a potential increase in prices of inputs & time value of money. Due date of payments, mode of payments & legal effects of payment delays should be clearly stated
  3. The scope of confidential information should be determined and it should be covered in the agreement that how will the disclosure of confidential information shall be dealt with. In many cases, the entities enter into a separate Non Disclosure Agreement with the vendors
  4. The agreement should also define the terms of engagement of vendor and the manner of renewal. Further, the agreement should also chalk out the events where the agreement can be terminated and the manner of such termination
  5. Indemnification clause may be included in the agreement so that both the parties may be saved from mal effects of breach of agreement by either party
  6.  The parameters as to quality control for goods and services to be provided by the vendor should be clearly spelt out in the agreement
  7. If either party is providing or will be using intellectual property under the agreement, the parties should clearly provide who owns the IP, what it is to be used for, whether a license is granted to the other party for the use of IP etc.
  8. The vendor agreement should state the warranties the vendor has agreed to provide and the duration of such warranties along with mode of providing warranties
  9. A vendor agreement should clearly specify the relationship between parties. It should be clearly mentioned that the vendor shall work as an independent contractor and there will be no employer-employee relationship

Is it compulsory to register the vendor agreement?

No, it is not necessary to register the vendor agreement on a stamp paper