Vendor and supplier agreements allocate risk, set performance standards and secure payment terms, which directly affect profitability and predictability. Well-drafted contracts reduce disputes, enable consistent supply, and provide mechanisms for remedying failures. Clear provisions on liability, insurance and delivery timelines keep operations running and help avoid costly interruptions or litigation.
Careful drafting ensures that responsibilities for defects, delays, and third-party claims are allocated to the party best able to manage them, increasing predictability. This reduces surprise losses, clarifies insurance needs and helps procurement teams make data-driven decisions about supplier selection and contract acceptance thresholds.
Hatcher Legal combines commercial awareness with contract drafting and negotiation services tailored to business objectives. The firm focuses on translating operational needs into clear contract language that manages risk and supports growth, while maintaining responsiveness to client concerns and timelines throughout the engagement.
Monitoring performance against SLAs and documenting breaches enables efficient enforcement and resolution. When disputes occur, we assess options for cure, negotiation or formal enforcement and pursue remedies designed to restore performance or recover losses while minimizing operational disruption.
A comprehensive vendor agreement should clearly define the scope of goods or services, delivery and acceptance criteria, pricing and payment schedules, warranties, and remedies for nonperformance. It should also address intellectual property ownership, confidentiality, insurance requirements, and the parties’ responsibilities for regulatory compliance to avoid ambiguity and disputes. Including dispute resolution procedures, limitation of liability, termination rights and notice requirements helps manage risk and provides a roadmap for addressing breaches. Clear documentation standards and invoicing requirements reduce payment disputes and support enforcement if performance issues arise.
To protect against supplier failures, include performance metrics, remedies for breach, and termination rights that allow for replacement suppliers when necessary. Allocation of inventory risk, lead times, and penalties for missed deliveries can also incentivize reliable performance and reduce operational disruption. Maintain diversified supplier relationships and include transition assistance clauses to facilitate knowledge or inventory transfer when a supplier underperforms. Requiring insurance, adequate notice and cure periods helps your business manage financial exposure while pursuing replacement options if needed.
A master services agreement is appropriate when you anticipate multiple transactions or ongoing services with the same supplier, as it creates a consistent framework for pricing, performance and dispute resolution. It simplifies subsequent work orders or statements of work by establishing standard terms that apply across engagements. Use an MSA when you need flexibility to add projects or expand services without renegotiating core terms every time. Complement it with project-specific statements of work that capture deliverables, milestones and acceptance criteria for each engagement.
Reasonable payment terms align with your cash flow while respecting supplier needs and industry norms; common approaches include net 30 or net 45 invoicing, milestone payments for larger projects, or progress-based installments. Clarify invoicing procedures, required documentation and the timeline for disputed amounts to avoid ambiguity. Consider including interest on overdue payments and dispute resolution protocols that allow prompt handling of billing disagreements. Negotiating holdbacks or conditional final payments tied to acceptance testing can protect buyers on significant projects.
Indemnity provisions require one party to cover losses or claims arising from specified events, such as third-party claims or breaches. Liability caps limit the maximum financial exposure a party faces under the contract. Together they balance responsibility and financial risk between buyer and supplier. Negotiations typically focus on scope, exceptions and monetary limits. Caps are often tied to contract value or insurance limits, while narrow indemnities limit exposure by specifying covered claims, notice requirements and control of defense to protect both parties’ interests.
Termination for convenience allows a party to end the contract without cause, providing flexibility to exit relationships that no longer serve business needs. Such clauses should specify notice periods, payment for work performed and any transition assistance to protect ongoing operations. For high-value or long-term agreements, buyers may negotiate termination for convenience with fair compensation for suppliers, while sellers often seek limitations or compensation mechanisms. Including clear procedures for winding down reduces disputes and preserves business continuity during transitions.
Before signing a supplier contract, perform a careful review of scope, pricing, liability, termination rights and performance metrics. Verify that obligations align with operational capabilities and that acceptance criteria are measurable to prevent disputes over fulfillment and payment. Confirm supplier references, insurance coverage and any regulatory requirements, and ensure terms for confidentiality and intellectual property protect your interests. When in doubt, seek drafting or negotiation support to adjust unfavorable clauses before execution.
SLAs set objective performance standards such as uptime, delivery times or defect rates and provide remedies for missed targets, creating clear expectations and accountability. Well-crafted SLAs include measurement methods, reporting obligations and escalation procedures to address performance issues before they escalate into contract breaches. Including credits, corrective action plans or termination rights tied to SLA breaches motivates suppliers to maintain quality and provides buyers with predictable remedies. Regular performance reviews based on SLA metrics support continuous improvement and better supplier relationships.
Confidentiality provisions protect trade secrets, proprietary processes and sensitive business information exchanged during the supplier relationship. These clauses limit disclosure, require secure handling, and typically define permitted uses and exceptions, helping maintain competitive advantages and regulatory compliance. Combine confidentiality requirements with appropriate data security standards and breach notification obligations. Clear definitions of confidential information and duration of confidentiality obligations reduce disputes and ensure that sensitive materials are handled consistently across supplier engagements.
Disputes under supplier contracts are often resolved through staged processes starting with negotiation and escalation, followed by mediation or arbitration if necessary. Including a clear dispute resolution clause with steps for notice, negotiation timelines and chosen venues helps resolve issues efficiently while preserving commercial relationships. Mediation offers a structured, confidential way to reach agreement while arbitration provides a binding, private decision that can be quicker than court litigation. Selecting appropriate mechanisms in advance reduces uncertainty and the time required to achieve resolution.
