According to the U.S. Department of Health and Human Services, vendor contracts safeguard both the provider and vendor and can help foster positive work relationships when put together properly. When it comes to contract drafting, these agreements should contain the following components.
Vendor contracts should clearly define the scope of services that a company needs from the vendor. For example, if a firm hires a vendor to provide janitorial services, the vendor contract should clearly state which areas require cleaning and the manner in which they must be cleaned.
Price is another crucial component and if a company is contracting with another provider for more than one service, it is very important for them to outline how much they will pay for each service. By specifying the price, vendors cannot suddenly increase the cost of their services.
For services that involve technology, a vendor contract should contain provisions outlining how that technology will be updated and the frequency of updates. In the information age, many companies rely on technology to produce products and take care of their customers and it is important for them to address the updating of their technology systems properly.
Within the vendor contract, you should have termination clauses that explain which circumstances could result in one party having the right to end the relationship. Furthermore, while some firms decide to enter negotiations with more than one vendor to secure greater leverage, doing so can be costly and time-consuming. Before moving forward with any vendor contract, thorough evaluation and planning is essential.
If you would like more information on contract negotiation and counsel, feel free to explore our page on contract law.