Vendor (Supply) Agreement Template (India) — Free Format
A vendor or supply agreement sets the terms on which a supplier sells goods to a buyer: specifications, purchase orders, delivery, inspection, price, payment, warranties and liability. This template suits recurring purchases by Indian businesses from manufacturers, distributors or traders.
Stamp, registration and e-sign at a glance
The three things to settle before anyone signs this agreement in India.
Payable under the stamp law of the state where it is signed; rates vary by state. Unstamped, it cannot be used as evidence until duty and penalty are paid.
Check your state's rateRegistration is not required.
This agreement can be signed electronically with Aadhaar eSign or a DSC under the Information Technology Act, 2000. Electronic signatures listed in the Act's Second Schedule carry a presumption of reliability.
What cannot be e-signedWhat is a Vendor Agreement?
A supply agreement is a framework contract. Individual purchases are made through purchase orders, and the agreement governs every order. It sits on top of the Sale of Goods Act, 1930, which fills gaps on delivery, acceptance and passing of risk if the contract is silent.
When to use it
- Buying raw materials, components or finished goods repeatedly from one supplier
- Setting standard terms for a list of approved vendors
- Moving from one-off purchase orders to a long-term supply relationship
Key clauses checklist
Make sure your draft covers each of these. Linked clauses open a sample wording with drafting tips.
- Purchase orders and acceptance
- Delivery, risk and title
- Inspection and rejection
- Price and payment Sample clause
- Product warranty Sample clause
- Indemnity and recall Sample clause
- Force majeure Sample clause
- Limitation of liability Sample clause
Indian law notes
Sale of Goods Act, 1930
The Act implies conditions such as goods matching their description and being of merchantable quality, unless the contract excludes them. Spell out specifications and inspection periods so acceptance is clear.
MSME suppliers
If the supplier is a registered micro or small enterprise, the MSMED Act, 2006 caps the payment period at 45 days from acceptance and imposes compound interest at three times the RBI bank rate on delayed payments. A contract cannot override this.
Force majeure
Indian courts read force majeure clauses narrowly. Where the contract is silent, relief is only available if performance becomes impossible under Section 56 of the Contract Act, which is a high bar.
SUPPLY AGREEMENT
This Supply Agreement is made on [Date] at [City] between:
[Buyer Name], having its office at [Address] (the "Buyer"); and
[Supplier Name], having its office at [Address], GSTIN [GSTIN], Udyam Registration No. [if any] (the "Supplier").
1. SCOPE
1.1 The Supplier shall supply the products listed in Schedule 1 (the "Products") as ordered by the Buyer through written purchase orders ("POs").
1.2 A PO is binding once accepted by the Supplier in writing or by dispatch. If a PO conflicts with this Agreement, this Agreement prevails unless the PO expressly says otherwise.
2. FORECASTS
The Buyer may share non-binding forecasts. Only accepted POs create an obligation to buy.
3. DELIVERY
3.1 The Supplier shall deliver Products to [delivery address] on the dates stated in each PO, on [Incoterm / door delivery] basis, with an invoice, packing list and any test certificates.
3.2 Risk passes to the Buyer on delivery. Title passes on [delivery / payment].
3.3 If delivery is late by more than [7] days, the Buyer may cancel the affected quantity without liability or recover [0.5]% of the value of late Products per week of delay, up to [5]%, as a genuine pre-estimate of loss.
4. INSPECTION AND REJECTION
The Buyer may inspect Products within [15] days of delivery and reject any that do not match the specifications. The Supplier shall replace or refund rejected Products within [10] days and collect them at its cost.
5. PRICE AND PAYMENT
5.1 Prices are as stated in Schedule 1, exclusive of GST, and fixed for [12 months] unless revised in writing.
5.2 The Buyer shall pay undisputed invoices within [30] days of acceptance of the Products, and in any case within the period required by the MSMED Act, 2006 where it applies.
6. WARRANTY
The Supplier warrants that Products will conform to the specifications, be free from defects in material and workmanship, and comply with applicable law for [12 months] from delivery. Defective Products shall be repaired, replaced or refunded at the Buyer's option.
7. INDEMNITY AND RECALL
The Supplier shall indemnify the Buyer against claims arising from defective Products, infringement of third-party rights, or breach of law by the Supplier, and shall bear the reasonable cost of any recall caused by defective Products.
8. FORCE MAJEURE
Neither party is liable for delay caused by events beyond its reasonable control, such as natural disasters, epidemics, war or government action, provided it notifies the other within [7] days and takes reasonable steps to mitigate. If the event lasts more than [60] days, either party may terminate the affected POs.
9. LIMITATION OF LIABILITY
Except for indemnity, confidentiality and fraud, each party's liability is limited to the value of the POs in the [12] months before the claim, and neither party is liable for indirect or consequential loss.
10. TERM AND TERMINATION
This Agreement runs for [2 years]. Either party may terminate on [90] days' notice, or immediately for an uncured material breach. Accepted POs continue unless cancelled under this Agreement.
11. DISPUTES AND GOVERNING LAW
Indian law applies. Disputes shall be resolved by arbitration by a sole arbitrator under the Arbitration and Conciliation Act, 1996, seated at [City]. Where the Supplier is an MSME, it may also approach the MSE Facilitation Council as permitted by law.
12. GENERAL
Entire agreement; amendments only in writing; electronic signature permitted; notices to the addresses above.
Schedule 1 – Products, specifications and prices: [table]
For the Buyer: ____________ For the Supplier: ____________
Name / Designation: [Name] Name / Designation: [Name] Replace every [placeholder] and delete options that do not apply. Check MSME delayed-payment interest
How to execute it
From blank template to a signed, stamped and stored contract.
Attach a clear product specification and price schedule.
Check whether the supplier is an MSME and set payment terms within 45 days if so.
Agree inspection, rejection and late-delivery terms.
Stamp the agreement in the state of execution and sign.
Link POs and invoices to the agreement so warranty and renewal dates are tracked.
Frequently asked questions
Is a purchase order enough without a supply agreement?
A PO accepted by the supplier is a contract, but it usually lacks warranty, liability and dispute terms. A framework supply agreement covers every PO consistently.
Can a buyer agree a 90-day payment term with an MSME supplier?
Not for registered micro and small enterprises. The MSMED Act, 2006 caps the agreed period at 45 days from acceptance, and delayed payment attracts statutory compound interest.
Is a late-delivery deduction enforceable?
Under Section 74 of the Contract Act a pre-agreed amount is the upper limit of compensation; a court awards reasonable compensation up to that amount. Keep it a genuine pre-estimate of loss.
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