Fulfillment terms are the primary promises in a procurement contract. They spell out what goods or services will be delivered or performed as well as when, how, where, by whom, and everything in between. Carefully crafting clear and methodical fulfillment terms will help protect the company in cases of breach and also ensure a smooth procurement process between the parties. Business leaders will need to work with many internal stakeholders to map out a company’s own production process to craft optimal fulfillment terms. Although difficult to prepare for and draft, accurate and specific fulfillment terms are necessary not only to inform the provider how to perform, but also to hold the provider to the particularly-desired performance. The more elaborate the production process, the more costly the indirect procurement will be; however, providers can provide cost savings for the company (by providing the goods or services more cheaply than the company itself could). Cost savings incentive plans should be worked into the agreement in relation to fulfillment terms to encourage adherence.

If you are a business leader considering indirect procurement, you should work with an attorney to structure your contract in accordance your specific needs. This article was sponsored by Vlodaver Law Offices, LLC, an experienced business solutions and transactions law firm in the Twin Cities. If you would like a free legal consultation, contact us, or call at 612-424-1LAW.