Vendor Agreements

Vendor Agreements

 

Most vendor agreements you will be asked to sign contain some pretty vague wording. I cannot help but feel that a lot of thought goes into these agreements – thoughts on how to get the best of the contractor in the field. You might want to ignore the rest of this page if you don’t want to be discouraged or led into paranoia but I offer the following tidbits extracted from an assortment of agreements on my desk. Keep in mind that I might be completely wrong; this stuff may be perfect. It’s just my opinion and that’s not what you really need anyway. You absolutely must have legal advise if you are in this business so have your legal advisor look over any and all agreements before you sign. You will eventually be very sorry if you do not.

 

Here’s some examples of contract paragraphs I find designed to create a winning situation for servicing companies and losing situations for contractors:

 

  1. Vendor understands, agrees and acknowledges, that COMPANY will pay vendor as follows:

75% of the proceeds of each VALID WORK ORDER that is APPROVED by Company’s client will be paid to vendor a minimum of ninety (90) days after COMPANY receives payment for that specific work order from COMPANY’s client.

COMPANY reserves the right in its sole discretion to pay vendor for VALID WORK ORDERS prior to the 90 day period, in COMPANY’S sole discretion.

Here’s my interpretation of this garbage and by the way, the capitalization and bold type was in the original. There’s so much scary crap it’s hard to say where to begin but at the beginning makes sense:

  • What is a VALID WORK ORDER? The company explains that in the next paragraph but let’s move thru this one first.
  • What is APPROVED? They define this two paragraphs later and you’re going to really enjoy it!
  • It sure is nice of them to make it perfectly clear that the contractor, that’s you, will not be paid until a minimum of ninety (90) days after COMPANY receives payment…  This means there’s no way in high heaven you are going to get paid before a 90 day period has gone by. I did not find a limit on the maximum amount of time they can take – did you? And, do you think they are going to keep you closely informed as to when they do receive payment? Sure they are.
  • I really love the ending sentence: COMPANY reserves the right in its sole discretion to pay vendor for VALID WORK ORDERS prior to the 90 day period, in COMPANY’S sole discretion. That’ sentence was put in just to throw you off and have you think they might decide to pay you before that 90 days has passed. Yea, in your wildest dreams!

 

2. “VALID WORK ORDER” MEANS:

ALL REQUESTED WORK LISTED ON THE SPECIFIC WORK ORDER MUST BE COMPLETED WITHIN 48 HOURS OF THE HOUR RECEIVED BY VENDOR; ALL VENDOR PAPERWORK MUST BE COMPLETED AND RETURNED TO COMPANY WITHIN 48 HRS OF THE HOUR VENDOR RECEIVED THE PAPERWORK (SEE ATTACHED ADDENDUM), AND ALL PHOTOGRAPHS MUST BE RETURNED WITHIN THE ABOVE LISTED 48 HR PERIOD AND MUST BE PROPERLY LABELED. COMPANY WILL PROVIDE INSTRUCTIONS FOR LABELING THE PHOTOGRAPHS (SEE ATTACHED ADDENDUM).

Again, bold lettering and underlining is in the original agreement. All I have to say about their “VALID WORK ORDER” definition is there is way too much leeway for “completed”, “completed and returned” and “properly labeled”. Please have your legal advisor look over all agreements (contracts). You may decide to go ahead and sign the darn things after your legal advisor tells you it is full of bad stuff but at least you will know what kind of company you are dealing with. Do not let  your accounts receivable build up too much with these guys. They may suddenly start declaring your work orders as invalid.

Oh, and by the way; some companies will email or fax workorders around midnight so if you get in the office at say 6:00 am you better get going. You’ve already lost six hours of that 48!