What is a Wholesale Contract?
A wholesale contract is a binding agreement between a business and a vendor or supplier, which allows the business to purchase products at a bulk or discounted price to then resell to others. Most often, these contracts are negotiated between a wholesaler and a supplier or vendor so that the wholesaler does not have to worry about paying upfront for products; rather, they agree to pay for the products at a later date. Because there is often a significant deal of money on the line, a wholesale contract is essential for wholesale businesses to ensure necessary assurances are in place and to avoid future disputes over the terms of the sale. While wholesale contracts can take different forms and serve different purposes – such as for inventory , food, clothing, and medical supplies, for example – some of the key terms that you can expect to appear in a wholesale contract include:
•Identification of both parties
•Specification of terms of purchase, including quantity, type, pricing, sale price, and delivery dates
•Compliance with the law and business standards
•Restrictions for the vendor to purchase the same product from another vendor
•Upfront payment requirements vs. payment terms
•Guarantees of product quality
•Compensation and credit details
•Dispute resolution measures.
Advantages of Using Wholesale Contracts Made By Templates
Every business engagement revolves around contracts. Even if the parties do not realize it, the ground rules on how the dealings or transaction will be handled are set by contract and any breaches will be based on the terms stated therein. Wholesale dealings are usually agreed upon through a wholesale purchase agreement, also simply referred to as a wholesale contract. This contract contains a list of all the products being purchased and the measures that should be adhered to. Having a contract template to just fill in the details makes it easier to create new wholesale agreements every time you have a new supplier or need to purchase other products. It also greatly reduces the chances of having loopholes and you can even distribute it to everyone who will be working on the wholesale deal for improved effectiveness. Several benefits come with working on a wholesale contract template.
A wholesale purchase contract template saves time and resources. A standard contract template has a lot of the details that are common to wholesale purchase contracts already pre in them. You only have to fill in essential information such as contact details, product details, prices, and other transaction-related details. You may even have a general wholesale purchase contract template that you can always edit out and include in the specific conditions detailed in the wholesale transactions. It saves you a great deal of time because you do not need to waste time writing and sending documents back and forth during the negotiation stage. You simply send your template to the other party once you agree to negotiate and it saves you from great delays as you will not continue writing new documents or making edits.
Using a standard contract template provides some costs savings to your legal department. Most businesses have a department where the contract is reviewed and other aspects of the purchase details can be negotiated. But having a template will greatly reduce the workload of the department. They can simply look over the standard conditions in the template and make a few more adjustments to it. You may only need the help of experts when certain wholesale transactions involve a lot of money.
Also, most contract templates come with the necessary items that protect your interest and reduce liability. If you were to look through standard contract templates provided online, they contain all the clauses or general terms you should have in your contract so that you do not forget to include any critical point as it could land you in serious trouble. For example, a non-disclosure clause is a must in a wholesale purchase contract because you do not want your suppliers to deal with other suppliers your way. A FAQ section or amendment section should also be included in case there are complaints or issues getting resolved.
Having a wholesale purchase contract template makes it easy to edit out some content only without starting a new contract from scratch. This way, you can easily include or remove clauses as necessary depending on the type of purchase or kind of product you want to deal with. You can also easily update the contract when needed – say, yearly.
How to Change a Free Wholesale Contract Template to Your Liking
Once you have downloaded your free wholesale contract template, it’s time to customize your document. In this section, we will cover the how-to steps for customizing your contract template and some of the areas of the contract that may require customization based on your specific needs or preferences. When you initially create your free wholesale contract template, it should include several key terms and, in many cases, even go further by including other terms and conditions as a form of a general sales agreement. However, you should take the time to customize it to your specific business needs, especially if there is something that the template includes that isn’t relevant to the contract governed by the template. Likewise, if the template doesn’t include terms that are important for your business or they aren’t included in a clear or concise manner, you will want to take the time to customize your free wholesale contract template. When you scan the document, you will see that it has quite a number of articles that you can customize. For those articles that are pre-included, you may want to reread them and determine whether there are any changes that will be needed based on the relationship that you have with the other party, the goods or services being sold or delivered and whether the template contains terms that are not relevant to your agreement. The areas that you may want to alter, add to or provide additional clarification to the wholesale contract template include: When you are done customizing the free wholesale contract template, make sure you do one last thorough review of the document. It is also a good idea to have it reviewed by your lawyer, even if the only modification you are making is to ensure that you have read and understand all of the terms. Most importantly, once you and the other party have agreed to the terms as they appear, it is crucial that you get both parties to fully sign and date the document.
Wholesale Contracts Common Clauses
A wholesale contract is only as useful as the amount of detail it contains. The following is a list of common clauses you may want to include in your wholesale contract. Examples of the wording for each clause are included.
Pricing. The contract should specify in writing the pertinent details of the pricing structure, including the amount and how long it lasts. You might word this section of the contract like this: "Retailer will pay a 10% margin on each product sale, provided that the products cost the manufacturer $100 per unit. The price is subject to change if manufacturer’s costs increase more than 5%."
Delivery. This section should include information about the delivery schedule and options for both expedited and next day shipping, as well as who bears the costs for shipping. It could be worded this way: "Retailer will pay for standard shipping to destination at a rate of $20. Any expedited shipping or expedited packaging will be payable by retailer."
Quality. Because you expect the highest quality from the products you’re purchasing, it should be included in the contract. When you specify your expectations, it’s known in advance that you will expect your wholesaler to provide consistent quality. You could word this section like this: "Retailer expects all products to come from a certified facility, representative of the product provided to retailer for samples. Any inconsistencies will be corrected with no additional charges to retailer."
Termination. You should make sure a clause is included to cover termination of this agreement. You could use the following language: "In the event either party wishes to discontinue this wholesale agreement, they must provide a written notice to the other party 90 days prior to the intended termination date."
Confidentiality. Your business information should be kept confidential, and you can provide some protection by including this provision in the contract. Here is an example of wording: "Manufacturer agrees that it will not disclose any information regarding the business practices, distribution, suppliers, or trade secrets of the retailer in any form, to any individual company, organization or entity."
Where Can I Get Some Good and Free Wholesale Contract Templates?
Internet search engines offer many links to templates for wholesale contracts that can be downloaded. Here are a few sites where free, downloadable templates are readily available. The disclaimers set out the importance of having any downloaded template carefully reviewed for legality and appropriateness before using or relying upon it.
LegalZoom offers a template that is discussed there as a "Distributor" Agreement. LegalZoom suggests on the web page dealing with its "Distributor" Contract template that the template can be "used for a one-time transaction or for an ongoing buying/selling relationship". LegalZoom also offers an "Exclusivity" Contract template. LegalZoom advises that the "Exclusivity Contract enables two parties to agree to certain terms of exclusivity, such as where one party sells exclusively to the other and no longer sells its products to its existing customers, or where one party agrees to only distribute the products of another. Use these contracts for one-time or continuing agreements."
eForms.com (also known as FindLegalForms.com) offers templates for various kinds of wholesale contracts. This website enables visitors to search the "Wholesale Agreement" database by specific type of agreement or contract. Specific types include "Exclusive Distributorship Agreement", "Importing and Exporting Agreement", "Wholesale Price List", "Vendor Agreement", and "Wholesale Drug and Cosmetics Agreement". The importer and exporter site is available at no cost, but for instance the exclusive distributorship site is offered at a price of $15. Deeds vs. Bills of Sale, the "Wholesale Price List" is offered at no cost .
eForms.com also offers examples of a listing agreement that may be helpful to businesses, particularly real estate ones that need to offer a listing agreement for making a property available for sale to other buyers or agents. A listing agreement allows a business to make a property available for purchase to only a few people or a company. A Listing Agreement is a contractual document that describes the conditions and terms for selling property.
LegalContracts.com offers a down loadable "Exclusive Distributor Agreement" between a distributor and a supplier. LegalContracts.com suggests that "With an Exclusive Distributor Agreement, an exclusive sale territory can be established for a product designed for distribution. Once a written document is set up with the parameters of such an agreement, you can have protection from the company for which the distribution takes place." The Exclusive Distributor Agreement template may be used to establish a business or sales relationship between two or more parties (including, but not necessarily limited to, individuals, companies, corporations or other business organizations). LegalContracts.com advises that "The person or group responsible for sales is the distributor, the supplier is the one who is supplying the items to the distributor. The Exclusive Distributor Agreement enables a company to protect themselves from spending time and effort in sales activities and competing against a subsidiary that tries to sell their products at a lower price than the company itself." The Exclusive Distributor Agreement template is being offered by LegalContracts.com for a limited time period for no charge.
Using Free Wholesale Contracts Free of Legality
One of the biggest risks to your business is an enforceable written contract. Many wholesale suppliers employ either poorly drafted forms or forms that are not even theirs. You need an enforceable contract to help protect yourself, which usually requires a written contract.
One affordable way of getting these documents is through one of the many free online template companies. However, while these forms are readily available, you must be careful in using them so that you do not expose yourself to liability.
The most common risk is that the form actually belongs to the publisher of the template. If you used the form as yours, you may have infringed on their rights. Frequently, the terms may not even be what you wanted because they are taken from a previous transaction with another company.
Another risk is that the forms themselves may not be enforceable. In California, for example, several online contract companies have been sued over the enforceability of the contracts they publish and offer for free. Contracts with consumers made online must comply with California Contract Law and also with the Online Privacy Protection Act (OPPA). Failing to comply with this law could expose you to liability in case it was alleged that the contract was unfairly obtained. Many courts have held that a contract obtained through improper means is not enforceable and leaves you with no breathing room in case a client later tries to sue you over the breach.
Finally, even if the form itself is enforceable, lets say that you inadvertantly filled it out incorrectly, or included provisions that you did not even review or understand, you could still expose yourself to liability. In particular, if you write the contract yourself, or do not have it reviewed by your attorney, you run the risk of making it virtually impossible to collect. Because a contract is a legally binding document, if it is not properly filled out, it could be assumed that you were either intending to be misleading, or were negligent.
Having an attorney review your contracts could be an easy way to stop some of the risk. However, that need not be the only option you have. In fact, by thoroughly reading the contracts before you sign them, you can prevent some of the problems that could occur. Remember that misrepresentation is the last resort of a liar, and it should not be your first. In fact, there are steps you can take to make sure that your contracts are as clear as possible. In particular, make sure to always read the whole thing before you sign it, and be aware of all the provisions. If you are unclear on any of the terms, take the time to ask before you sign it. Lastly, whenever possible, make sure that you fill out the contract and do not let someone else do it for you. Otherwise, you will be unable to prove what it really meant.
One of the best ways to be assured of the enforceability of the contract is to have an attorney prepare it. By using a form published by an established company, you are also assuring that your contract is legal and that you are not exposing yourself to liability. Although this may cost more money, in the long run, it could save you a lot of legal headache.
Helpful Tips for Contract Management
Once your wholesale contracts are executed, there is still much that must be done. Record-keeping practices should be set-up to maintain a copy of every executed contract. The original contract terms should be reviewed with staff to ensure that the terms are fully understood and that the contract is correctly administered. Depending on the length of the contract term for service , contracts may need to be reviewed for possible extension or negotiation of new terms. Contracts may require updates for changing circumstances, including termination procedures and pricing adjustments. Over time, a business will have an extensive contract portfolio and it should have a process by which contracts are tagged for follow-up actions and monitoring.