Critical Red Flags
Liquidated Damages (Excessive): Penalties for delays that exceed the actual value of the goods.
Unilateral Termination: Client can cancel the order after you've already purchased raw materials.
Indemnity for Third-Party Parts: Making you liable for failures in sub-components you didn't manufacture.
Vague QC Standards: 'To be of acceptable quality'—too subjective and leads to payment delays.
Must-Have Clauses
Quality Acceptance Window: Fixed time (e.g., 48 hours) for the client to inspect and 'accept' or 'reject'.
Payment via MSME Samadhaan: Mentioning MSME status to ensure your 45-day payment right in India.
Force Majeure (Supply Interruption): Protection if raw materials are blocked by generic port delays or war.
Retention Percentage: Limiting the 'holdback' amount to 5-10% until final delivery.
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