Supplier agreement template - free to use (2024)

Every business, from the tiniest freelance operation, to the biggest enterprise, has suppliers. And if you have suppliers, you need supplier agreements to govern the relationships between you.

This article explores the ins and outs of supplier agreements, explaining what they are, how they operate, when to use them, what to include in your supplier agreement template, and how they're managed.

What is a Supplier Agreement?

A supplier agreement, sometimes referred to as a vendor agreement or procurement contract, is a legally enforceable contract between a business and a provider or supplier.

The supplier in this context is an individual or business offering goods or services to another business. The buyer (or purchaser) is the entity acquiring these goods or services. Often we talk about these in terms of 'buy-side' and 'supply-side' contracts.

A supplier agreement sets out the terms and conditions under which the supplier will deliver the goods or services. It includes elements such as product or service specifics, pricing, delivery schedules, quality standards, payment conditions, and dispute resolution procedures in the event of a breach of contract.

How does a Supplier Agreement Work?

A supplier agreement takes effect once both parties — the supplier and the buyer — sign the document, indicating their acceptance of the terms and conditions in the document. (Read more about contract execution)

The agreement then directs the relationship between the two parties, setting out their respective rights, obligations, and responsibilities.

Typically, a supplier agreement includes a scope of work that details what goods or services the supplier is to deliver, along with any key performance indicators (KPIs) or service levels that the supplier must adhere to. (You might be interested in our free Statement of Work template too).

The buyer is usually required to pay the agreed sum in exchange for the supplier fulfilling the conditions they agreed to in the contract.

Fundamentally, the supplier agreement acts as a guide for the business relationship, offering a clear framework within which the supplier and the buyer interact.

If either party fails to fulfill their obligations under the agreement, the other party may have recourse to various remedies, including termination of the contract or legal action. You can get hold of a simple supplier agreement free of charge by grabbing the supplier agreement PDF above.

When to use a Supplier Agreement

Supplier agreements should be implemented whenever a business intends to enlist a supplier for goods or services.

This can range from acquiring raw materials, to signing with an independent contractor for a specific project, to hiring an IT service provider. Even for minor transactions, it's a good idea to have a supplier agreement in place to safeguard both parties.

These agreements are especially vital when forming significant or long-term business relationships. They guarantee that the terms of the relationship are clearly articulated, minimizing the likelihood for misunderstandings or disputes down the line. Having a settled supplier agreement template is a step towards maturity in your procurement processes.

What should a supplier agreement template include?

We've discussed what a supplier agreement is and how it functions. But what should a supplier agreement template actually include?

Well, your supplier agreement template should answer the following questions:

• Who is involved in the contract / transaction? The start of your contract should clearly identify both the supplier and the buyer using their legal names.

• Which goods or services are being provided? The supplier agreement template should give a thorough description of the specific goods or services that the supplier will provide, along with detail about the quantity, quality, and specifications.

• How much will the supplier be paid, and when? Your supplier agreement template should set out the exact cost for the goods and services being contracted for. There should also be detailed information about payment (consideration) including the due dates and payment methods.

• How will the goods or services be delivered? Your supplier agreement template should outline the supplier's obligations regarding delivery, including the delivery schedule, delivery method, location, and who bears the risk during transit. Any penalties for late delivery should also be noted.

• How long will the contract last? The agreement must mention the contract's effective date and end date. For recurring or ongoing contracts, the terms and conditions for contract renewal and notice periods for termination should be explicitly stated.

• Which standards are expected from the supplier? The supplier agreement should articulate the performance standards, key performance indicators (KPIs), or service levels the supplier is obligated to meet.

• How can parties end the contract? You should have a section defining the conditions under which either party can terminate the agreement. This could be due to a breach of contract, failure to deliver, insolvency, or 'for convenience' (i.e., without a specific reason), usually with a notice period.

• How will potential disputes be handled? The agreement should delineate the procedure for resolving any disputes that may arise, whether through negotiation, mediation, arbitration, or litigation. The choice of law and the venue for legal proceedings should also be defined.

• How will parties protect confidential information? If the supplier will handle confidential information, it's essential to include a confidentiality or non-disclosure clause. This should outline what constitutes confidential information, the obligations to protect it, and the consequences of unauthorized disclosure.

• What will happen in the event of losses or damages? Your supplier agreement template should cover the protection available in the event of losses or damages caused by a party’s actions. The supplier might agree to compensate the buyer for any damage caused by defective goods, for example.

How should you manage a Supplier Agreement template?

How a business manages its supplier agreements will vary depending on the tools and templates they have in place.

However, a typical supplier agreement management process will look like this:

1. The sales team contact the legal team asking for a supplier agreement to send to a prospect

2. Legal drafts the supplier agreement or directs the commercial team to find a supplier agreement template in a shared drive which they then have to populate manually

3. Once drafted, the contract is shared internally for review via Slack, Teams or email. It's then approved via that communication platform.

4. The supplier agreement is then shared with the counterparty for review, usually via email.

5. The counterparty (the buyer) will review the contract and make their own revisions by moving the document back into Word to be redlined.

6. Their revised version is shared via email with the contract owner and this process to either accept or reject their suggestions. This process and back and forth between tools continues until the terms are finalised.

7. The final version of the supplier agreement is saved as a PDFand sent via email for the signatories to sign.

8. Parties move the contract into their own eSigning solutions to formalize their agreement to the terms.

9. A signed copy of the supplier agreement is uploaded to a shared drive, or worse, a local drive. The contract data isn't captured or tracked, making it hard to monitor contracts and their obligations.

How to automate your supplier agreement template

Luckily, there's a way for modern businesses to streamline and automate the process they use to manage supplier agreements, without relying on copy/pasting PDFs. They can do this by adopting a flexible, collaborative contract management solution like Juro and using it to create and manage supplier agreements.

With Juro, businesses can:

1. Generate supplier agreements in seconds

In Juro you can create a dynamic supplier agreement template that commercial teams can use to create contracts themselves.

These automated contract templates allow teams to create contracts in just a few clicks, and these templates can be populated automatically using either a simple Q&Aform or via an integration to amend the details that change each time (party names, dollar values, dates and so on).

2. Bake rules and conditions into contract templates

Instead of constructing bespoke contracts for different suppliers, Juro users can automatically incorporate certain conditions into a supplier agreement based on the supplier or transaction's data.

3. Collaborate on contracts in real time

Supplier agreements are often subject to negotiation. However, Juro’s in-browser contract negotiation functionality lets suppliers to add questions, comments, redlines and suggestions directly onto the contract for consideration.

4. Sign supplier agreements on mobile

Suppliers can promptly sign their agreements as soon as they've read and received them, thanks to Juro’s built-in eSignature capability. Juro's legally binding electronic signatures are also mobile-responsive, allowing parties to sign from wherever they are.

5. Track and store contracts securely

Supplier agreements can be secured in Juro's contract repository, where they are easy to search through, query, and monitor at scale.

Juro users can even set automated reminders for important dates in their supplier agreements, meaning they'll never miss an important deadline again.

Automate your supplier agreement template with Juro

Sick of reinventing the wheel every time you need to contract with a provider? The free supplier agreement template PDF above is a good first step, but what if you didn't need PDFs at all?

By automating supplier agreements from a digital template in Juro, you can save countless hours wasted on low-value paperwork and admin. To find out more about Juro's flexible, collaborative and data-rich contract management platform and how it's used to power contracts for 6000+ companies, hit the button below.