A first-time working relationship with a new supplier benefits considerably from a clear written agreement, even a simple one, covering the basics of what's expected on both sides. This doesn't need to be a heavily formal legal contract to still meaningfully reduce the risk of a misunderstanding later.
What a simple vendor agreement typically covers
- What's being supplied, described specifically enough to avoid ambiguity about quantity, quality, or specification.
- Pricing and payment terms, including when payment is due and any relevant conditions.
- Delivery or fulfilment expectations, including realistic timeframes.
- What happens if something goes wrong — a late delivery, a quality issue — even briefly, so both sides know the basic expectation.
Steps to put one together
- Draft the key terms covering the areas above, in plain, clear language both sides can easily understand.
- Share the draft with the supplier and confirm both sides genuinely agree to the terms before finalising.
- Convert to PDF with HTML to PDF or export directly from whatever document tool you used.
- Keep a signed or agreed copy on file for both parties' records.
Why a simple document is better than no document at all
A short, clear written agreement, even without full legal formality, gives both sides something concrete to refer back to if a question or disagreement comes up later, rather than relying entirely on memory of a verbal conversation, which can be recalled differently by each side over time.
When it's worth involving a lawyer instead
For a larger, higher-value, or longer-term supplier relationship, involving a lawyer to draft or review a more formal agreement is a reasonable step up from a simple document like this. Reserve the simple approach for smaller, lower-stakes, or shorter-term arrangements where the cost and time of formal legal drafting isn't proportionate to the relationship's scale.
Keeping the agreement accessible for future reference
Store the finalised agreement somewhere you can find it again easily, alongside your other business documents, following the same organisational approach covered in our guide on keeping customer documents organised for a small business, applied here to supplier records instead.
Revisiting the agreement as the relationship develops
If the working relationship with a supplier grows in scope or value over time, it's worth revisiting and updating the original simple agreement to reflect the current, larger scale of the relationship, rather than continuing to operate under terms that were only ever meant to cover a smaller initial arrangement.
What to do if the supplier proposes their own agreement instead
Sometimes a supplier will offer their own standard agreement rather than working from one you draft. Read theirs carefully with the same attention you'd give your own draft, and don't hesitate to propose specific changes if something doesn't reflect your actual understanding or needs, rather than accepting an unfamiliar document purely because it was presented as standard.
Keeping the relationship's actual terms consistent with the written agreement
Once an agreement is in place, try to keep how the relationship actually operates consistent with what's written, and formally update the document if the practical arrangement genuinely changes. A written agreement that no longer reflects how things actually work in practice loses much of its value as a clear, reliable reference for both sides.
Setting expectations around communication, not just delivery
Beyond the core terms of what's being supplied and at what price, it's worth briefly covering how and how often you expect to communicate with a new supplier — regular check-ins, how issues should be reported — since misaligned expectations around communication style are a common source of early friction in a new supplier relationship, separate from the actual terms of the deal itself.
Building trust gradually with a smaller first order
For a genuinely new, unproven supplier relationship, starting with a smaller trial order before committing to a larger ongoing arrangement is a reasonable way to build confidence on both sides before the agreement covers a more significant volume or value.
Being clear about what happens if either side wants to end the arrangement
Even a simple agreement benefits from a brief, clear note about how either side can end the working relationship if needed — how much notice is expected, for instance — so this doesn't need to be figured out awkwardly in the moment if the relationship doesn't work out as hoped.
Reviewing the agreement together rather than only exchanging it by email
Where practical, a brief conversation reviewing the agreement together, even quickly, catches misunderstandings that a purely written exchange can sometimes miss, particularly for a first-time relationship where neither side yet has a strong sense of how the other communicates.
Frequently asked questions
Does a vendor agreement need to be formally drafted by a lawyer?
Not necessarily for a smaller, lower-stakes relationship; a clear, simple written document is often sufficient, though a larger or longer-term arrangement may warrant formal legal drafting.
What should a simple agreement cover at minimum?
What's being supplied, pricing and payment terms, delivery expectations, and a basic understanding of what happens if something goes wrong.
Should both sides sign the agreement?
Yes, having both parties agree to and keep a copy of the same document reduces the risk of a later disagreement about what was actually agreed.
Should I update the agreement if the relationship grows?
Yes, revisit and update it to reflect the current scope and value of the relationship rather than relying on outdated original terms.
Where should I keep the finalised agreement?
Somewhere organised and easy to find alongside your other business records, so it's accessible if a question comes up later.
What if the supplier disagrees with a term in the draft?
Discuss and adjust before finalising; both sides should genuinely agree to the terms rather than one side simply presenting a document as final.
Are the tools used to prepare this free?
Yes. No sign-up, no watermark, and files are removed from the server automatically about an hour after processing.