Vendor contract: How to write one and why you need them.

Learn why your business needs vendor contracts and how to sign them quickly with digital signatures.

Business is all about the exchange of goods and services. When you sell or buy something, you need to accurately record the transaction for bookkeeping, taxation, and legal reasons. That’s where vendor contracts come in.

What is a vendor agreement exactly? Read on to learn what it is, why you need it, and how to write a vendor contract so you can sign it easily with e-signatures.

What is a vendor agreement (aka contract)?

A vendor agreement, or contract, is a business document that defines the terms of a business transaction. It details the provided goods or services and establishes how much they cost, the delivery method, and the obligations of both parties.

Vendor agreements are legally binding contracts that make sure both buyers and sellers are held accountable for their role in the transaction. They often include not only the goal of the business dealing but also the terms that will be enforced if one or more parties fail to carry out their part of the agreement.

Now that you can answer “What is a vendor contract?”, let’s explore why you should have a vendor contract in place.

Why have vendor contracts in place?

Vendor contracts help both business partners understand what the other expects to get out of their relationship. They’re also a vital tool for mitigating risk in business transactions.

Vendor agreements are vital to business operations because they ensure that everyone involved in a transaction is clear on the terms and held accountable for their role in the business dealings, whether that’s providing a product or service or delivering payment in due course.

What are the different types of vendor agreements?

There are different types of vendor contracts for different purposes. The type of agreement needed is usually dictated by the type of business being transacted. Here are a few examples of the most common vendor agreements.

• Fixed-price contract. Covers a single delivery of a service or product for a lump sum.
• Time and materials contract. Confirms an hourly rate and time frame for a service to be provided.
• Indefinite delivery contract. Allows more flexibility by leaving the quantity or timeframe for services open-ended.
• Confidentiality agreement. Ensures that specified parties keep dealings and proprietary information private for a set term.
• Cash reimbursable contract. Establishes a fee for service alongside a commitment to compensate for additional costs associated with the project.

What information should be included in a vendor contract?

When you write a vendor contract, you must include enough information to make its terms crystal clear. A vendor contract should include the following:

1. Contact information for both parties
2. Detailed description of the goods or services
3. Length of the contract and/or expected product delivery time
4. Price and payment method
5. Terms for ending the contract
6. Consequences of contract breach

How to write a vendor contract.

Writing a vendor agreement that is clear and concise can be the key to ensuring everyone involved understands their role in the transaction while being held accountable until the end of the engagement. To do this, there are several steps to follow in order to write the contract effectively, and you can use these to create your own vendor contract example.

1. Collect the terms. Be sure to involve the vendor or client in the initial discussion in order to confirm that all of the requirements and terms are included in the document.
2. Create a template. If you don’t have one already, developing a vendor contract template can be a great way to streamline the agreement creation process.
3. Populate the contract. Enter the terms of the agreement into a draft that encompasses the relationship between parties, service scope, inclusions, timeframes, and confidentiality.
4. Include space for signature. Contracts that are legally binding often require signatures, and e-sign tools can be a great way to track and confirm identities to ensure contract enforceability.
5. Review and revise. Take the time to review the contract for any errors, grammatical or terms-based, before sending it to the vendor.
6. Submit for approval. Send the completed contract out to the vendor to review and confirm their role in the transaction.

If you find yourself frequently writing vendor contracts for your business, you can consider using vendor contract management software for additional benefits.

Sign vendor contracts quickly with e-signatures.

One secret to successful business transactions is speed. That’s why you need to get signatures for vendor contracts quickly. The fastest way to do it is to handle PDF contract signing online with e-signatures.

You can share PDF contracts faster than paper ones while also saving money on printing and mailing. E-signatures are legal and can be more secure than handwritten ones. A good e-signature software, like Adobe Acrobat, also lets you track the signature process, send reminder messages, and more.

Discover how Acrobat can help you efficiently process vendor and other types of business contracts.