Limited Liability Partnership is one of the forms of company structure that was introduced as an improvement over the traditional form of partnership firm. The LLP possess the features of both the partnership firm and the company. The LLP works on the LLP agreement agreed on by all the partners. The LLP agreement acts as the charter of the company according to which all the activities in it are managed. Now the LLP may have vendors working with it and to regulate the relationship with them, there is a requirement of executing the vendor agreement. Vendor agreement plays an important role in keeping the relationship of LLP and vendor authentic. In this blog we will be understanding the elements of vendor agreement and its significance in LLP.
What is the vendor agreement?
A legal document that contains the description of the relationship between the vendor and the Limited Liability Partnership is known as the vendor agreement. This agreement contains the various details like the work to be performed by both members, the type of services provided, cost, duration and liability etc. There are clauses that protect the company from any possible frauds, losses etc. With the proper vendor agreement in place the proposed activity is ensured to be completed on time and as per the agreed terms and conditions. There are different elements in the Limited Liability Partnership agreement as explained under.
What are the various elements of vendor agreement?
Basic Details of Both Parties – The basic of both parties including their names, address and their registered office address should be mentioned on this agreement.
Details of the Goods and services – Now, it is important that the comprehensive details of the goods and services to be dealt between the parties should be mentioned. The details like the number of the goods to be delivered, quality of the goods, size, color and shape etc should be mentioned.
Pricing – The agreed cost of goods and services between the parties should be stated in the agreement. Apart from the complete cost of the goods and services, mode of the payment and the structure of the payment should be stated in the agreement.
Time duration – The completion of work in time is a very important factor. Thus the time limit within which the contract will be executed should be mentioned the agreement. Apart from the renewal period of the vendor agreement should also be mentioned.
Duration of the agreement – The total time period for which the agreement is executed should be specified clearly.
Confidentiality – Mostly every agreement consist of the confidentiality and privacy clause. The vendor agreement must also contain this clause and describe the matters that should be kept confidential. The LLP can also put in place a separate disclosure agreement.
Termination of contract – The proposed contract should also explain the terms and condition on which the proposed contract will stand terminated. Some of the reasons for which the contract can be terminated include the non delivery of services, low quality of products, non-payment or late delivery of services etc.
Resolution of Dispute – It is one of the other most important clauses in the vendor agreement. There is always a possibility of occurrence of the dispute between the parties so it is important to have a proper agreement in place on prior basis only. The vendor agreement should consist of the provision in case a dispute arises between the parties and they cannot agree on common terms.
It is important for the LLP to be diligent while preparing the vendor agreement as it can have long term implications on the activities of the company.