Vendor Agreement in India
Comprehensive guide to drafting, negotiating, and enforcing vendor agreements for the supply of goods or services.
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Overview of Vendor Agreement
A Vendor Agreement is a legally binding written contract that outlines the terms and conditions under which a vendor will provide goods or services to a customer. It includes key details such as the date, time, and location for delivery of goods or services. Vendor agreements help ensure mutual understanding and reduce risks by clearly stating rights and obligations.
Applicable Law
In India, vendor agreements are governed by multiple laws including the Indian Contract Act, 1872, the Consumer Protection Act for safeguarding buyers’ rights, and the GST Act which applies when goods or services are supplied and tax obligations arise.
Negotiation and Drafting
Although verbal agreements may occur between known parties, formalizing a vendor agreement in writing is essential. The process includes introducing parties, stating agreed terms and conditions, and allowing modifications before signing. It ensures clarity on financial arrangements, responsibilities, and delivery expectations.
Requirement of a Vendor Agreement
A complete vendor agreement should include party details, confirmation of a valid license (if applicable), description of products or services, tax provisions, and clear delivery schedules. It helps define the business transaction and avoid ambiguity.
Key Advantages
• Defines business transactions with written clarity • Increases efficiency by outlining procedures • Includes dispute resolution mechanisms • Minimizes risks related to pricing, delivery, and unforeseen events • Maintains professional business relationships
1. Essential Requirements
• Names, addresses, and contact details of both parties
• Confirmation of vendor's valid license (if applicable)
• Scope of services or goods
• Delivery details including time, place, and method
• Payment terms and applicable taxes
• Confidentiality and indemnity clauses
• Termination and dispute resolution provisions
• Signatures and date of agreement
Procedure for Drafting a Vendor Agreement
• Engage a legal expert to discuss objectives and requirements
• Provide contract details including scope, terms, and payment
• Lawyer drafts initial agreement for review
• Parties suggest revisions and approve final draft
• Final agreement is signed and becomes enforceable
Common Elements in a Vendor Agreement
• Pricing: Fixed or variable as per mutual agreement
• Delivery Terms: Schedule, location, and installment options
• Payment Terms: Method, timelines, and penalties
• Indemnity Clause: Liability for defective or damaged goods
• Termination Clause: Conditions for ending the agreement
• Warranties: Representations and guarantees by parties
• Confidentiality: Non-disclosure of sensitive information
• Dispute Resolution: Arbitration or mediation preferred
Timeline for Finalizing Vendor Agreement
Vendor agreements typically take around 3 to 4 days to finalize.
Initial Consultation
1 day
Discuss objectives, scope, and necessary clauses.
Drafting Agreement
2 days
Lawyer prepares and shares the draft agreement.
Review and Modifications
1 day
Parties suggest changes and finalize the terms.
Signing
1 day
Both parties sign and retain copies of the agreement.
Why Choose Dostatup?
Dostatup provides expert legal assistance for customized vendor agreements tailored to your business needs.
Experienced legal drafting team
Quick turnaround time
Clarity in terms and protections
End-to-end support including negotiation and execution