5 Essential Elements of a Strong Vendor Agreement

June 20, 2018
Andrew Cove

Vendors are an important component of any business. Whether you’re buying goods or services from your vendors, it’s important to have a strong vendor agreement in place. A strong vendor agreement clearly explains the particulars of your business transaction and can settle disputes early. An experienced Florida business law attorney can guide you through everything you need to include as every agreement will be unique. For now, here are the most essential elements.

  1. Clearly describe the product or the services being provided.

The most important component of your vendor agreement should be a clear description of what exactly is being provided. While a description of the goods provided is important, this step is particularly important when services are provided. Take the time to clearly explain what you expect.

  1. State the terms of payment.

A smooth transfer of money is important to every good business relationship. Payment schedules should be clear and organized with no room for confusion. If you have any questions about when payments are expected, make sure to ask early on and clearly state the expectations in your agreement so that it’s in writing.

  1. Specify the terms for termination.

Think about what would be an appropriate reason and method for you to exit this agreement. Likewise, think about what would be an appropriate reason and method for your vendor to exit this agreement. Expect the unexpected when you draft your vendor agreement. Your Florida business attorney has likely encountered many legal scenarios and can help you plan ahead. If one of the parties needs to exit the agreement, there must be a legal or proper means to do so in order to avoid a lawsuit.

  1. Make sure to include information about indemnification and a limitation of liability.

Make sure to include sections about indemnification and limited liability. Indemnification is also known as a “hold harmless” agreement. Your agreement may state that the vendor holds the business harmless, that the business holds the vendor harmless, or that there is a mutual “hold harmless.” A limited liability clause will normally set a cap as to the monetary amount that the business will pay for any damages that may occur to the vendor.

  1. Talk about insurance.

It’s very common for businesses to request that their vendors carry their own insurance. If there’s any particular coverage that you require or think would benefit you, make sure to state it in your vendor agreement.

These five crucial components of a strong vendor agreement are just some examples of what your vendor agreement will need to contain. In reality, vendor agreements normally cover much more than this. The best way to ensure your vendor agreement is iron-clad is to work with a qualified Florida business lawyer like Attorney Andrew Cove at Cove Law. Andrew Cove has been helping Florida businesses for over 25 years. Give him a call today at (954) 921-1121 to find out how he can help you!

Andrew Cove
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