Whether you’re hiring a marketing agency, IT provider, or cleaning service, having a clear vendor or service contract is essential. A well-drafted agreement protects your business, manages expectations, and minimizes the risk of disputes.
Here’s a checklist of the key elements every vendor or service contract should include:
- Names and Contact Information
Start with the full legal names and contact details of both parties. This ensures clarity on who is bound by the contract and helps avoid confusion if issues arise later.
- Scope of Services
Spell out exactly what services will be provided. Be as specific as possible. Instead of saying “monthly maintenance,” outline what that includes: such as the number of visits, response times, and which tasks are covered.
- Payment Terms
Detail how much you’ll pay, when payments are due, and how they should be made. Also include:
- Late payment penalties
- Payment schedules (e.g., upfront, milestone, or net 30)
- Whether taxes, fees, or expenses are included or billed separately
- Timeline and Deadlines
Include a clear start date, project milestones, and a completion date. For ongoing services, define the renewal terms and how either party can end the agreement.
- Performance Standards
If you expect certain quality levels, turnaround times, or customer service benchmarks, include them in the contract. This holds the vendor accountable and gives you leverage if performance falls short.
- Termination Clause
Explain how either party can end the agreement, and under what conditions. Common termination options include:
- Termination for cause (e.g., breach or failure to deliver)
- Termination at-will
- Automatic termination at contract expiration
- Confidentiality and Data Protection
If the vendor will have access to sensitive business information, include confidentiality clauses or NDAs. For tech vendors or anyone handling customer data, include data security and compliance requirements (especially for industries with strict privacy laws).
- Intellectual Property Rights
Clarify who owns any materials, designs, or content created during the engagement. If you’re paying for custom work, you’ll likely want full ownership or a license to use it without restriction.
- Dispute Resolution
Include a process for resolving conflicts, such as requiring mediation or arbitration before going to court. This can save time and legal costs down the line.
- Indemnification and Liability Limits
Protect your business from third-party claims that result from the vendor’s work. Also consider limiting your liability in case something goes wrong and check if the vendor carries appropriate insurance.
Conclusion
Even simple contracts can have hidden risks. Before creating or signing any vendor or service agreement, have a Romano Law attorney review it to ensure your interests are protected.
Need help drafting or reviewing a vendor agreement? Contact our office today. We’ll help you build strong business relationships with confidence and peace of mind.
Contributions to this blog by Kennedy McKinney.
