If you run a business, this probably isn’t the first time you’ve heard of a procurement agreement. But, if you haven’t heard of it yet and you either run or are looking to start up your own business, we’re here to provide a quick rundown about what they are, what they should include, and the purposes that they serve. So let’s discuss.
In general, procurement is the process of finding and ultimately acquiring goods or services from a third party source. From IT installations to coffee filter delivery, you’ve likely engaged in the process of procurement both in and outside of your business whether you were aware of it or not. Throughout the process, it’s important to make sure that you are obtaining the best deal for the goods or services you need — and that’s where procurement agreements come in.
A procurement agreement is a legal document designed to ensure that every element of your third party dealings is clearly and efficiently laid out. Because procurement agreements are used for a variety of different projects across all industries, the specific information within will vary but the purpose remains the same: to detail the project, goods, or services, manage expectations, and protect your business in the event something doesn’t go as planned.
What should they include?
As you might have guessed, there are a lot of things that need to be included in procurement agreements, so we’ll list the key ones here to help illustrate their importance a little bit more.
- Statement of Work: This will expressly detail the goods or services. Additionally, if it’s project-based, every element of the project and its phases should be outlined here as well.
- Inspection, delivery, and payment schedules: These are important to hold your third party accountable and to make sure that your project stays on track.
- Governing Laws: Although this is a staple in most contracts, it’s important to highlight it’s significance again here because procurement agreements often involve outsourcing to third parties that reside outside of your state.
- Termination clause: Again, although common, termination clauses are worth noting here because working with a third party on an important and time sensitive project for your business can be tricky. The success of your project often hangs on the shoulders of the procured party, so you want to make sure to detail what will give you the right to terminate the contract if things aren’t going as planned.
- Charge-back or expense policy: Because the other party is going to rack up a list of expenses throughout the duration of your contract, it’s essential that you have clearly outlined what types of charges can and cannot be charged back to you.
Contact the Trembly Law Firm today.
As with any other business contract, it’s essential that you work with an experienced business law attorney in the drafting of your procurement agreements to make sure that your business is fully protected in every situation. At the Trembly Law Firm, we understand what it takes to make sure your business remains protected and want to work with you so that you know what everything means in the contracts your business executes. If you have any questions about your business’ contracts, please contact us today at (305) 431-5678!