What does a vendor agreement cover?
A vendor agreement covers the goods or services a supplier will provide, the price, and when they arrive. It is a contract of supply. It does not employ the vendor, and it does not make the buyer and the vendor partners.
What does it cover?
| Term | What it should say |
|---|---|
| Supply | The goods or the service, and the standard they must meet |
| Price | A fixed price, or a price based on time and materials, and whether GST sits inside that figure |
| Delivery | The date, the place, and who bears carriage |
| End | When either side can stop, and what is paid for goods already delivered |
The parties can also write who owns any intellectual property in the work. This page is not a template, and it does not quote a price.
Which tax still applies?
A supplier whose turnover crosses the line registers for GST. That line is on the GST page. A fee for professional work, as distinct from a sale of goods, is on the professional-fee page.
What is it not?
It is not a freelance agreement for a person’s own assignment. That contract is on the freelance page. It is not a partnership deed. A firm is on the partnership page. A heading that says “letter subcontract” or “indefinite delivery” is still this contract if the parties are only buying a supply.
Frequently asked questions
Four questions cover price, employment, a partnership, and GST.
Does the contract fix one price for every supply?
Only if the parties write a fixed price. They can also agree a price for time and materials. This page does not set either figure.
Is a vendor an employee?
No. The vendor supplies goods or services as an independent party. The contract does not create employment.
Is a vendor agreement a partnership deed?
No. The buyer and the vendor do not become partners by the supply. A partnership is a different agreement.
Does the contract remove GST?
No. A registered supplier charges GST on a taxable supply. The contract can say whether the price includes that tax. It cannot repeal it.
Sources
The contract is under the Indian Contract Act, 1872. GST on a taxable supply is separate. A person’s own freelance work is a different guide.