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Vendor Agreement Format for E-Commerce in India

July 11, 2017

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Vendor Agreement

A Vendor Agreement is an agreement (agreement is defined under section 2(e) of the Indian Contract Act,1872, which states that any promise or any set of promises which forms considerations for each other is called an agreement) which specify the conditions under which the work is to be performed by the vendor. It is a wide ranging agreement which includes various features such as the quality of goods supplied or service provided, duration of the contract, terms and mode of payment or you can say at the end of the day it includes limitations on every works of the vendors. Such agreements are mainly required for those vendors who use to host the large events comparatively.

What are the 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.

As a marketplace Portal, you need basically a contract that is called Vendor Agreement to tie up with vendors and get on marketplace portal so in the vendor agreement all the terms and conditions with payout policies and the terms of service & lot of other legal things are mentioned or illustrated. Basically most of the start ups in the initial phase, choose a good lawyer to draft the Vendor Agreement but it became really very expensive for the start ups to do. So they end up making a Vendor Agreement following the trend.

Note: If you are an E-Commerce Start up then you should also go for the below given Legal Documentation and Registrations:-

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.