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Why Are Vendor Contracts So Important?

Posted by Jonathan Krems | Dec 15, 2021 | 0 Comments

Just about ever small business owner has vendors.  Even vendors have vendors.  In today's Freedom Friday blog, I want to answer an important question that is not always asked, and that is “Why are vendor contracts so important?”

First of all, what's a vendor?  A vendor is a business that supplies a good or service for your business.  This includes Walmart if that is where you get your printing paper.  If you have hired a bookkeeper to help with your accounting, he or she is a vendor.  Likewise, if you run your business on any kind of software, then that software provider is a vendor.  Yes, if you use SalesForce or Hubspot, they are vendors.  Another example is your landlord.  If you lease commercial office space, or have a coworking contract, then the other party in that lease or contract is a vendor.  No matter who your vendor is, its always a good idea to have a written contract in place that better defines your relationship with your vendor.

The best time to enter a vendor contract is before the start of the business relationship.  At this stage, both parties will want to be fair to one another to avoid losing the contract.  Many vendors also are really interested in earning your business.  For instance, if you are looking at leasing office space for your small business, or looking at coworking, then Regus really wants your business.  But they are a vendor.  If you negotiate a contract with a vendor after the business relationship is already established, the bargaining positions will not be equal, and the negotiations will favor one party over the other. 

A solid vendor contract will cover issues such as price, quantity, and delivery times, if applicable.  If your small business's supplier is providing “protected” products, such as special seasonings intended for gourmet steaks, the vendor contract should include confidentiality and non-disclosure provisions.  Another important issue in any vendor contract is the issue of termination.  A solid vendor contract will explain how either party may terminate the business relationship and the consequences of said termination.

The most important reason why vendor contracts are so important to your small business is having written contracts in place with your vendors will help both your small business and your vendor avoid costly litigation.  If you do not have a written contract with your vendor, and your business relationship breaks down, not only is there no written record of your contract terms, but there is no written record of how a dispute can be resolved if the business relationship breaks down.  Dollars spent on costly litigation always exceed the cost of a highly detailed written vendor contract.  However, if the parties have a written contract in place, litigation is less likely to happen.  Even if the parties end up in a dispute, resolving that dispute, even through the court system, will be less expensive because the parties won't need to prove to the court their own version of the contract terms.  The contract can be provided to the court as part of the litigation process.

At Liberty Legal Solutions, LLC, we provide a full range of legal services in regards to contracts.  Everything from contract review, drafting, and negotiation to prosecuting and defending breach of contract disputes on behalf of our clients.  If it involves a contract, this is a daily part of our legal practice at Liberty Legal Solutions, LLC.  If you are a small business owner, and you have any issues involving contracts, we can help you.  Just send a short email regarding your contract issue to [email protected], and you will receive a FREE consultation.

If you are interested in starting a small business anywhere in Oklahoma, or you need legal help building, protecting, or defending your small business or other assets, please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at

About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...


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