Vendor Agreements
A vendor agreement is a contract that a company (acting as the buyer) enters into with a service provider or supplier (the vendor) for the provision of goods and/or services in connection with the buyer’s business activities.
The vendor agreement sets forth the terms and conditions pursuant to which the goods or services will be provided to the buyer, and it outlines each party’s rights and responsibilities.
All companies, regardless of industry, enter numerous vendor agreements in the ordinary course of running their businesses. Unfortunately, many companies, to their detriment, spend inadequate time reviewing the substantive terms of vendor agreements, not recognizing how those terms might adversely impact their business. Having experienced counsel carefully review and negotiate the terms of a vendor agreement helps:
1
Comprehensive Contract Review
Ensure alignment regarding the parties’ expectations for the business relationship, thereby preventing costly misunderstandings and disputes. For example, you may have thought, based on conversations with a vendor, that the marketing materials you paid them to develop are owned by your company and can’t be repurposed for your competitor’s use.
Wouldn’t it be horrifying thereafter to see your competitor use a repurposed version of those materials, and then open your contract with the vendor only to realize the legal terms say they own the materials and you have no rights to prevent your competitor’s use?
That can happen unless the parties address the misalignment between the “business understanding” and what the legal terms say. The expression “the devil is in the details” is quite appropriate here – don’t get caught skipping over “all that legalese.”
2
Cost-Effective Solutions
Identify areas to reduce potential costs/expenses. Many “legal terms” can also be “business terms” that have an economic impact on the transaction, yet they are often ignored by non-lawyers who may be focused only on the fee terms.
3
Risk Mitigation and Legal Protection
Protect your business and reduce potential future liability. While we all hope a transaction is never litigated, it is prudent to protect yourself in case a dispute ever arises.
Courts often defer to the terms of a contract when there is a contract dispute, so it is important to make sure the contract terms reflect the proportionate amount of liability you are willing to take on if something goes wrong.
Unfortunately, the initial draft of any contract is often written in one-party’s favor, so the other party must negotiate the terms if it wants a more balanced, fair approach to sharing risk. Moreover, a well written contract that clearly lays out the business understanding between the parties will keep the costs of dispute resolution lower.
Customized Solutions for Every Business Agreement
At GTX Legal, we understand that not every vendor contract or business arrangement is the same. Some agreements may be very important to your business, justifying a thorough review and negotiation, while others are less significant. We get that, which is why we offer two service offerings for vendor agreements, allowing you to tailor the amount of support needed (and costs incurred) based on the needs of your business.
See the “pricing” page for further details on those two service offerings.