It's likely your restaurant, too, will need to sign a contract with a vendor, whether for a POS system, alcohol purchases, marketing, promotion agencies, or something else. Yes, it does take time and energy to negotiate these contracts with the vendor, but keep in mind, the contract is the bible of your relationship with that vendor... it is a good idea to negotiate the following provisions to protect yourself:
- Confidentiality. Vendors may have access to confidential information such as financial information, future plans, and recipes. A provision allowing vendors to disclose confidential information only to the limited extent necessary for them to perform the contract will help protect your business.
- Indemnification. Indemnification has a reputation among non-lawyers as being complex, but it actually is simple. When a vendor indemnifies you, it generally means that the vendor protects you from liability if it does something bad (e.g. breaches your agreement, acts negligently) and a third party sues you. Indemnification keeps things fair.
- Attorney's Fees. Attorney’s fees during litigation can easily reach six figures. Under an attorney’s fees provision, the losing party must pay the winning party’s attorney’s fees (without this provision, each party must pay its own attorney). This provision encourages each party to comply with the agreement – neither side wants to do anything that will expose it to the possibility of losing in litigation and paying two sets of lawyers
- Venue. Venue refers to the state where a lawsuit is litigated. Venue should be in a state that is convenient for you or equally inconvenient for you and the vendor. If you are a Colorado restaurant and your vendor is from New York, avoid New York venue. You would incur significant expense flying to New York to bring or defend a lawsuit, the vendor would not incur much expense, and the vendor’s attorneys might know the local judges.
- Quality of Service. It’s always a good idea to include a sentence saying something like: the vendor will provide services in a good and workmanlike manner, with the skill and expertise of a similarly situated business providing similar services. This just means the vendor has to do a good job. It also means the vendor breaches the agreement if it doesn’t do a good job, likely triggering a variety of rights for you.
