Vendor contracts helped make supplies and services predictable. They can help control operational expenses and limit opportunities for disputes.
In addition to outlining standards, delivery expectations, timelines and pricing, there are many other details that can be valuable to include in vendor contracts. The three additions below can help to protect companies from disruptions and contract breaches.
1. Communications standards
The contract could include provisions requiring a specific amount of advance notice in cases where vendors want to make price adjustments or when they are unable to make deliveries as scheduled. Requiring communication makes it easier for the client organization to make alternate arrangements as necessary when a vendor cannot consistently fulfill their contractual obligations.
2. Restrictive covenants
Vendors often have access to non-public information about how a company operates. As such, they could monetize that nonpublic information or take steps to compete unfairly against a client. Restrictive covenants that prohibit the solicitation of employees or clients, the disclosure of trade secrets or direct competition can be helpful.
3. Clauses imposing consequences
In some cases, contracts may include provisions that impose a financial penalty for late deliveries, payment delays or other breaches of the original agreement. When there is a financial consequence to failing to fulfill the agreement, a vendor may be more fastidious about fulfilling all obligations promptly.
Depending on the nature of the business at issue, the prior relationship with a vendor and other details about a particular situation, there may be other contract inclusions that could prove helpful when taking out a new vendor or adjusting arrangements with an existing vendor. Working with an experienced business law lawyer can help company leadership craft contracts that promote stability and limit organizational exposure accordingly.