What is Vendor Agreement?
A vendor agreement is an agreement which defines the provisions and conditions of work to be performed by the vendor. Vendor is typically used in describing the entity that has paid for goods that are provided. The basic points included in this include date, time and location where services must be provided.
If you are a seller or in vendor business then there must be cases when you might require a vendor agreement document. It serves as a composed insurance between two parties with mutual consent. You may have an agreement with your customers or your providers when you are into customer/supplier business transaction. A Vendor agreement is usually made when your business is small and you have couple of products or services for sale.
Advantages of a Vendor Agreement:-
- It specifies the limitation of the works to be performed by the vendor.
- It protects both the parties as it minimizes the risk of future litigation by laying down the terms and conditions, rights and duties of the both parties.
- It lays down the procedure which is to be followed by the vendor while working.
- Vendor agreement speed up the work as the vendor is now having clarity about the work which is to be performed.
The common elements of vendor agreement:-
(Depending upon the type of industry, the following elements are central to the drafting of vendor agreements)
- Description of Goods and services: – Exact elucidation of the services and goods should be the part of the condensed clause.
- Pricing:-One of the important clauses is the price at which the products will be given to the vendee. The price can be either fixed or variable. Or it can change with the requirement of time and need.
- Delivery Terms:- The vendor agreement must clearly stipulate the time and frequency terms of the contract.
- Payment Terms: – The vendor agreement should also prescribe penalties or interests charged for deferred or delayed payments. The mode of payment needs to be laid down as well.
- Indemnity clause: – The problems concerning damaged or defective good, delayed payments should be addressed effectively.
- Exit/Termination clause: – A termination manner or an exit option unilaterally or bilaterally should form the basis of any agreement according to the requirement.
- Ownership concept: -The whole concept of work product ownership between a vendor or vendee needs to be previously decided by way of including an explicit clause.
- Confidentiality Issues: – The obligation to not disclose any material information to the third party or non- stakeholders should find a mention.
In this way, these are the steps or the requirements needs to be done or fulfilled to form a vendor agreement for E- commerce in India.
ECommerce business is trend in India so many startup started marketplace business model but they need Vendor Agreement when they tie up with them for selling their products. Vendor Agreement is very important part for any ecommerce business in india. reason is simple because in the marketplace business model tax liability of the vendor is different.