White Label: Contracting with suppliers
Usually, when you do Dropshipping, the supplier has their own contracts ready for you online, you just need to agree on the terms, but that doesn’t mean that you don’t read the terms and conditions they give you. Of course, we all know that we must read the terms and conditions agreement before agreeing on anything, and we all know that 99% of us don’t read it before agreeing.
We are always in a hurry, so we don’t do it.
When it comes to business, it’s different than social media websites and online shopping. In business you need to read every single clause in every contract represented to you, even if you don’t understand everything written inside, consult your lawyer or family lawyer or at least anyone who deals with contracts regularly.
Today, I’m going to state each important clause in contracts and its explanation.
Each supply contract should have the following clauses and without them, the contract will be flawed.
1. General Information
Here you will see the general information of the supplier and the buyer, like:
a. Header (Supplier’s company logo)
b. Company Name
c. Company Address
d. Authorized signatory
2. Product
This clause is for the product information; it will explain what the product is exactly.
3. Quality
The quality clause sometimes comes with the product clause, which mentions the product specification.
4. Quantity
Your contract quantity should be in this clause, the trial order, monthly and yearly quantity.
5. Packaging & Labels
Here you will find the exact packaging and labels details, type, and sizes you requested from your supplier.
6. Delivery Terms
The shipping method you agreed on with your supplier.
7. Price
The pricing clause can be written as follows:
a. In detail, which includes:
i. Product Cost
ii. Packaging & Labels Cost
iii. Shipping Cost
iv. Taxes if applicable
v. Any extra costs if applicable
b. Total cost including everything
8. Payment
This clause is for your payment terms if it’s cash in advance, deferred payments, or bank instruments.
9. Media
If you agreed with your supplier to use their own media content like photos, videos, and writing content, you must add this clause to the contract, otherwise, they have the right to sue you. It’s permission to use their media.
10. Non-Disclosure Agreement (NDA)
The NDA usually puts in the contracts if there is any information that you or the supplier doesn’t want to be disclosed to others. Like a product formula, special pricing, or if you are afraid the supplier will contact your clients directly without you knowing (of course this is for the Dropshipping option as well).
11. Copyrights & Trademarks
a. Trademark: This is an important clause if you have a brand name and you trademarked it, write this clause is in the contract. I’ve seen cases the supplier takes his client’s brand and sells it to another region as it’s his own.
b. Copyrights: This clause is usually for the supplier; it protects the content and the writings of their company to not be used by others or by you.
12. Disputes
It’s a must. You must put this clause, as it protects both sides, if you disagreed on a specific subject, or one of the sides didn’t comply with the contract terms, it specifies how the issue will be settled between you and the supplier.
13. Failure to fulfill
Failure to fulfill is when one of the sides doesn’t fulfill their role in the contract. If the supplier doesn’t supply you with products, or if you didn’t make the payments.
14. Electronic Document Transmissions (EDT)
This is not a clause, but it’s used when the supplier and the buyer are in different countries and want to execute the contract fast without waiting for the hard copy to arrive. It binds the Electronic Signatures and Document transmissions executed online, it’s protected by the U.S. Public Law, United Nations Center for Trade Facilitation and Electronic Business, and the European Community Directive.
15. Signatures
No need to explain this section, it’s just your name, position, Company name, and your signature. (Applicable for both sides)
16. Attachments
a. Here you can put any document attached to the contract like:
i. Company License
ii. Factory License
iii. Tax Certificate
iv. Quality Certificates if needed
v. Packaging & Label Designs
I think I explained the major clauses and sections that must be in any purchasing contract, and by now you have enough confidence to go through and sign any agreement that comes to you.
Don’t forget, if you find yourself not understanding anything, or you find lawyerly wordings in the contract, ASK FOR HELP!
