A supply or vendor agreement is a commercial contract where a supplier agrees to sell and deliver goods to a buyer, usually on an ongoing or repeat-purchase basis. It settles the price, quantity, delivery schedule, quality standards, payment terms, and the remedies if either side defaults.
The buyer or its legal team usually drafts this agreement, and the standard form tends to favour the buyer by shifting operational and financial risk onto the supplier. A supplier should review the document closely because one-sided terms on liability, payment delays, and unilateral cancellation can seriously hurt cash flow and business viability.
Who it usually favours: The standard form usually favours the buyer; the supplier should push back on clauses that delay payment, cap liability unfairly, or allow the buyer to cancel without reasonable cause.
What each one settles in a supply / vendor agreement, and the wording that shifts the risk.
Why it matters. This clause decides when the supplier gets paid and what conditions must be met before an invoice is due. It directly affects the supplier's working capital.
Watch for. Look for extended credit periods, 'pay-when-paid' chains, or a right to unilaterally deduct or set-off amounts without prior notice.
Why it matters. This clause caps the maximum amount one party must pay the other for a breach. A low cap can leave the supplier bearing a disproportionate share of the loss.
Watch for. A cap that is limited to fees paid in a short period, or the exclusion of liability for delivery delays, may leave the supplier exposed while the buyer's liability is negligible.
Why it matters. An indemnity requires one party to compensate the other for specific losses, such as third-party claims from a defective product. The scope can be very broad.
Watch for. A one-sided indemnity that covers the buyer for all claims, including those caused by the buyer's own negligence or modification of the goods, is worth pushing back on.
Why it matters. This allows a party to end the contract without any breach by the other side. It can wipe out the supplier's expected revenue stream overnight.
Watch for. A clause that lets the buyer terminate immediately for convenience, without compensation for raw materials or work-in-progress, shifts significant risk to the supplier.
Why it matters. This may restrict the supplier from selling to the buyer's competitors or in certain territories. It limits the supplier's other business opportunities.
Watch for. Overly broad exclusivity without a guaranteed minimum purchase quantity can lock the supplier into a relationship that is not commercially viable.
Why it matters. Warranties are promises about the quality, fitness, and title of the goods. Breaching a warranty gives the buyer a right to claim damages or reject the goods.
Watch for. Warranties that go beyond what is in the Sale of Goods Act, such as guaranteeing 'satisfactory quality' for a purpose the buyer did not disclose, can be traps.
Why it matters. This clause excuses a party from performing its obligations when an extraordinary event occurs. It decides who bears the risk of supply-chain disruption.
Watch for. A clause that lists force majeure events only for the buyer, or excludes common supplier disruptions like raw-material shortages or transport strikes, is unbalanced.
Why it matters. This clause states how disagreements will be resolved—through arbitration, mediation, or court litigation—and where. It affects the cost and speed of justice.
Watch for. A venue in a distant city convenient only to the buyer, or an arbitration clause that appoints a sole arbitrator chosen by the buyer, can make pursuing a claim impractical for the supplier.
The Micro, Small and Medium Enterprises Development Act 2006 requires buyers to pay MSME-registered suppliers within a specified period. If the buyer delays, it must pay compound interest at a rate set under the Act. A supplier with an MSME registration should check that the payment terms in the agreement do not override this statutory protection.
The Sale of Goods Act 1930 implies certain conditions into a contract, such as that goods will match their description and be of merchantable quality. Parties can contract out of some of these implied terms, but a clause that tries to exclude all liability for defective goods may not be upheld. It is worth checking whether the warranties clause strips away protections the Act would otherwise provide.
An advocate can upload the draft agreement and the tool will detect the document type, the parties, and the governing law. It then checks each clause against central Indian Acts, flagging points for an advocate to confirm in hedged language, and assesses which party each clause favours. The output is a plain-English summary with ranked findings, a balance assessment, and a full report listing every clause with the legal provision relied on, which the advocate can download as a PDF.
Free trial · Assistive review, not legal advice — every finding is a starting point for an advocate.