A robust vendor agreement protects cash flow, inventory reliability, and customer satisfaction by setting clear performance standards and remedies. It clarifies payment terms, warranties, indemnities, and intellectual property rights, and helps prevent costly disputes. Proactive contract management also supports business continuity planning and helps secure favorable terms with key suppliers.
Clear delivery schedules, contingency plans, and remedies for delayed or defective performance reduce the likelihood and impact of supply interruptions. A well-constructed agreement provides practical steps for mitigation and recovery that help maintain service levels and protect customer relationships.
Clients rely on Hatcher Legal for thoughtful, commercially minded contract drafting that reflects real-world operational needs. We focus on reducing legal and financial exposure while preserving productive supplier relationships and ensuring clarity in performance obligations and remedies.
When disputes arise, we prioritize resolution through negotiation or alternative dispute resolution before considering litigation. We advise on remedial steps, enforce contractual remedies, and pursue efficient enforcement to protect business continuity and limit the cost of conflict.
A comprehensive vendor agreement should clearly describe the goods or services, pricing, delivery and acceptance criteria, warranties, payment terms, and timelines. It should also address intellectual property rights, confidentiality, insurance requirements, and dispute resolution paths to ensure both parties understand obligations and remedies. Including performance metrics, remedy provisions for nonconformance, termination clauses, and allocation of risk such as indemnities and liability limits reduces ambiguity and helps preserve business continuity while protecting financial interests.
To protect against supplier delays, include detailed delivery schedules, liquidated damages or remedies for late performance, and clear notice and cure periods. Contingency planning language, such as alternative sourcing rights and step-in options, helps manage supply chain risk and reduces operational impact. Regular performance monitoring and contractual reporting obligations enable early detection of problems. Maintain open communication channels with suppliers, document delay causes, and use contractual change management procedures to manage expectations and adjust schedules if needed.
Requiring insurance from a supplier makes sense when the supplier performs activities that could cause third-party liability, property damage, or business interruption. Primary and additional insured provisions, along with minimum coverage limits, ensure resources are available to address losses tied to supplier performance. Insurance requirements should be tailored to the type of goods or services and the scale of risk. Review policy types and endorsements to confirm coverage aligns with contract obligations and consider requiring certificates of insurance and notice of cancellation provisions.
Yes, you can negotiate liability limitations to cap exposure, exclude certain types of damages such as consequential losses, or create carve-outs for intentional wrongdoing. Clear and reasonable liability provisions help protect a companies financial stability while still providing meaningful remedies for breach. Courts may scrutinize overly broad or unconscionable limitations, so it is important to craft balanced clauses that reflect commercial reality. Ensure liability caps, baskets, and carve-outs are consistent with applicable law and the parties relative bargaining positions.
Protect confidential information by defining what qualifies as confidential, limiting use and disclosure, and establishing security and return or destruction obligations. Include exceptions for information that becomes public or is independently developed, and require notice and cooperation for compelled disclosure. Supplement confidentiality with nondisclosure agreements and data handling protocols when sensitive personal or proprietary information is involved. Define remedies for breach, including injunctive relief and monetary damages, and consider audit rights to verify compliance with security measures.
A master services agreement sets the overarching terms that govern a long-term supplier relationship, including general responsibilities, liability allocation, and dispute resolution. Purchase orders typically address specific transactions under those terms, specifying quantities, prices, and delivery details for individual orders. Using a master agreement with purchase orders streamlines recurring procurement by avoiding repetitive negotiations while enabling flexibility for transaction-specific details. Ensure purchase orders reference the master agreement to prevent conflicting terms and protect consistent contractual expectations.
Review supplier contracts periodically, at least annually or whenever there are material changes in your operations, regulatory environment, or supply chain. Regular contract reviews identify expiring terms, performance issues, and opportunities to renegotiate more favorable conditions. Conduct reviews after significant events such as mergers, new product launches, or supply disruptions. Proactive audits support compliance, mitigate risk, and help maintain supplier relationships by addressing issues before they escalate into disputes.
Common remedies for breach include cure periods, price adjustments, withholding payments, repair or replacement obligations, termination rights, and indemnities for damages. Including clear steps for notice, cure, and escalation allows parties to address breaches without immediate resort to litigation. Alternative dispute resolution mechanisms such as mediation or arbitration can be effective in resolving disagreements quickly and with lower cost. Tailor remedies to the severity of potential breaches and to preserve continuing performance where appropriate for business continuity.
Cross-border supplier agreements should address governing law, dispute resolution forums, customs and import/export compliance, taxation, and currency/payment arrangements. Clarify which jurisdictions laws apply and include enforceable dispute resolution clauses that consider practical enforcement of judgments or awards. Account for differing regulatory regimes by assigning compliance responsibilities and import/export controls. Consider logistical risks such as transit delays and customs holds, and include clear allocation of responsibilities, insurance, and duties related to international shipment and compliance.
Before terminating a supplier, review termination clauses, notice requirements, and cure periods in the contract to ensure compliance with agreed procedures. Document performance failures and follow contractual notice protocols to preserve the right to terminate and limit exposure to wrongful termination claims. Assess transition plans to avoid operational disruption, including substitute sourcing, inventory ramp-up, and data transfer. Consider negotiating an orderly wind down or interim supply arrangement to maintain continuity while disputes are resolved or replacement suppliers are engaged.
