This article is written by Kshitij Pandey, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com.

What is a portal usage and supplier agreement

Portal usage and supplier agreement are a part of an E-commerce vendor which comprises an agreement between the Supplier and the company owning the Portal, where the supplier of the goods transacts with the third parties via an online website or portal.

A Vendor’s agreement for e-commerce, is an agreement between an e- vendor and an online shop store owner for sale and purchase of goods on an ongoing basis. An e-vendor supplies the software and services to various online store owners to operate their websites.  It forms a part of the Vendors agreement. A vendor agreement stipulates some significant conditions under which the work undertaken is to be performed by the vendor.  The agreement is used for many purposes like office supplies, consultant, technology, services etc. under which e-commerce vendor agreements are a part.

Why is it used

Since a lot of Retail brands and companies are using online websites, Suppliers and vendors for their profitability of business are switching to online web stores or portals to sell their goods. An online portal and supplier agreement minimises the risk of disputes by laying down terms and conditions regarding the portal’s use and the rights and duties of both the parties.

What are the main clauses of this agreement

Apart from the basic clauses of any contract like, Name of the agreement, parties, recitals, definitions etc. The main clauses that must be added to an Online Portal usage and supplier agreement are:

• Competencies to Contract – In this clause the parties have to state and prove that they are competent to enter and perform their specific obligations in this contract. It can be drafted as follows –

‘The Parties shall confirm that:

1. They have the authorization to agree and perform their part of obligations on behalf of their respective companies.
2. The parties have the ability to form legally binding contracts.

• IDs & passwords– This clause lays down some terms and precautionary measures regarding the Id and password given to the supplier for logging into the online website/store. It can be drafted as follows –

‘The supplier agrees that:

1. The IDs and passwords given to him/her should only be used for logging in the “Web Store/online portal”. 
2. If he/she discloses or shares his/her ID and password with any unauthorized third party or uses it for any unauthorized purpose other than the purpose of using it discussed under this agreement. He/she shall be solely responsible.

• Transacting on the portal – This clause lays down some terms and conditions regarding the transactions that are going to happen between the supplier and the third party where the company will have no business with. It can be drafted as follows –

1. All the transactions entered into between the supplier and the third parties/ buyers on the “Web Store/web portal” are covered under some Terms and Conditions which are not set or endorsed by the company. 
2. The power and the ability to make significant decisions of doing the business shall vest with the supplier and the company shall not be a party and interfere in any transactions carried out by the supplier relating to such as price, product quality etc. the supplier and the buyers shall transact with each other on the Web Store at their own risk.

•  No warranty – This clause states that the supplier will transact with the third parties at his own risk and no warranty will be provided to him by the company.  It can be drafted as follows- 

1. The Supplier gives his assent and agrees to the terms and conditions and also agrees to the risk associated while using the web store/online portal The company provides the Portal and its services without any warranty.
2. The company denies any warranties of any kind, inclusive of but not limited to:

• The service of the supplier will be continuous, uninterrupted and  error-free;
• For replacement of any goods which is sold on the Web Store by the Supplier to any of its Buyers.
• The assurance as to the quality, identity, functioning or reliability of any buyer 
• The assurance as to the accuracy of any information made available on or through the “Web Store” by or on behalf of any buyer.

• Information posted on the Portal – This clause states the information that will be posted or displayed at the portal. This clause can be drafted as follows-

The “Web Store” may contain: 

1. News and information published by various third parties, some of which may contain facts, views, opinions, analyses and recommendations of individuals. 
2. The company does not guarantee the accuracy or otherwise endorse these views, opinions. The supplier assumes full responsibility and risk for use of such content.
3. The Parties agree that the supplier’s postings such as about the product, pricing, delivery etc. to the Portal are the sole responsibility of the Supplier and the company has no obligation to monitor or check Portal contents.
4. However, the company has the right to take any action with respect to information posted on the “Web Store” that company deems inappropriate.
5. The supplier shall further confirm that all the information posted on the “Web Store” by him/her is complete, true, accurate and not misleading to the best of its knowledge and the product description and their respective images are not deceptive. 
6. The Supplier shall be solely responsible for any mismatch between product categories and quantity selected by any of its buyer and the also shall be solely responsible for any disputes relating to the product’s quality, warranty etc. 

• Protection of data provided by supplier – This clause shall state that the company is free from providing any personal data protection to the supplier and shall not incur any liability for its security. The clause can be stated as follows:

1. The Supplier shall agree that the company will have no liability to protect any personal data or information provided by the supplier on the “Web Store”.
2. The Company shall also not incur any liability for the security of any of the information provided by the Supplier which may cause any wrongful Loss or gain to any third party. 

• Compliance with laws– this clause shall state the supplier shall follow or comply with the laws regarding the web store owned by the company. This clause can be stated as follows:

“The Supplier shall follow/comply with all the applicable laws, statutes, ordinances and regulations regarding the use of the “Web Store”.

• System integrity – This clause shall state that the supplier must not tamper with the system functionality of the online portal.  This clause can be stated as follows:

1. The Supplier shall agree, not to tamper in any way with the software or functionality of the “Web Store”. 
2. The Supplier shall also agree not to put any computer programs, information or data into the “Web Store” which contains any viruses, Trojan horses, worms, cancel bots or other computer programming routines that may damage, interfere with, intercept or expropriate any system, data or information.

• License – This clause will state that the company has granted the license to the supplier to use the online portal for buying and selling of its products. This clause can be stated as follows:

1. Subject to the Terms and Conditions, the company hereby grants the Supplier a personal, non-transferable, non-exclusive, non-sublicensable license to use the software and the user interface for conducting its business as mentioned in this agreement.
2. The rights and the title relating to the software, user interface and shall belong to the company and The software and user interface made available from, on or through this “Web Store” may not be copied, modified or distributed by the Supplier.
3. The license granted pursuant to the Terms and Conditions is solely for the internal use of the supplier and for no other purpose shall it be used.
4. The Supplier shall have no right or claim of right to the software or any unique ideas found on this “Web Store”. No ownership rights are granted to suppliers hereunder and no title is transferred hereby.

• Relationship – This clause shall describe the relationship between the company owning the online portal and the supplier. This clause can be drafted as follows:

‘The company and the supplier are independent contractors, and no agency, partnership, joint venture, employee-employer or franchisor-franchisee relationship is intended or created by this Usage’.

• Termination– this clause shall state the conditions for termination of this contract between the parties. This clause can be drafted as follows:

The company in its sole discretion may terminate the Supplier’s usage of the “Web Store” products or services, postings, or current bids immediately if the Supplier. 

1. Breaches any of the Terms and Conditions,
2. Fails to pay any overdue amount, or 
3. If the company is unable to verify or authenticate any information provided by the Supplier. 

Notice of termination must be provided within 30 days. The Supplier also agrees that, upon termination of this Usage Agreement, the said Supplier will pay all outstanding amounts owed to the company.

Any amount not due prior to seven x days from the date the Usage Agreement is terminated is due within seven x days after termination.

The supplier hereby acknowledges and agrees that in the event said Supplier fails to pay all amounts due within seven x days after termination of this Usage Agreement, such unpaid amounts shall be deemed “overdue” and interest will accrue on such overdue amounts at a rate of one and x % per month or part thereof, or the maximum amount allowed by law, whichever is less. The company will give notice with regard to the aforesaid termination to the Supplier and the agreement would stand terminated within 1 month of such notice given by the company to Supplier.

• Settlement of disputes – This clause shall mention about the mode of settlement of disputes i.e. mediation or arbitration. This clause can be drafted as follows-

1. In case of any dispute arising between the company and the Supplier with regard to any of the clauses agreed between the parties such as transaction, termination, recovery of dues etc. The parties shall first appoint an impartial mediator to negotiate and settle their differences/ disputes.
2. In the event that the Parties fail to resolve or settle the Dispute within x days of their meeting, the Dispute shall be decided by arbitration in accordance with the procedural rules Arbitration and Conciliation Act, 1996. The arbitration proceeding shall be conducted at New Delhi. The cost and expenses of the arbitrators shall be shared equally by the parties. There may be 3 arbitrators appointed out of which 2 may be appointed by each party and those 2 arbitrators will appoint a third arbitrator. The fee of the arbitrators will be capped at INR ______. The language of the arbitration will be in English.
3. The award of the sole arbitrator so appointed shall be final and binding on the parties to the agreement.

• Service of notice – This clause shall state the manner and how any information or notices under this agreement shall be dealt with. This clause can be stated as follows: “Any information/ notices or communications shall be given/made under this Agreement. the notice or information shall be in writing and shall either be delivered personally by hand or sent by courier, on a registered address or certified mail. (address of both the company and the supplier should be stated).
• Governing laws and jurisdiction – This clause shall state the jurisdiction or location where the online portal shall be accessible and the governing law of the area covering the contract signed between the supplier and the company owning the online portal. The clause can be stated as follows:

1. This Agreement shall be governed in accordance with the laws of India.
2. The company also makes no representation that the information and the material on the “Web Store” shall be available or not for use in other locations, or that the contents comply with local law. Those who choose to access the “Web Store” from other locations do so on their own initiative and are responsible for compliance with local laws.

• Indemnification – This clause shall state the indemnity provision and the conditions under which the supplier will be liable to indemnify the company for. This clause can be stated as follows:

Without limiting the generality or effect of other provisions of this Online portal and usage Agreement, as a condition of use, The Supplier shall agree to indemnify and defend the company against all liabilities and damages incurred by any Indemnified Party in connection with any third-party claims arising out of:

1. Failure of any Products listed by the supplier on the Web Store or breach of warranty,
2. The Supplier’s failure to comply with any applicable laws and regulations or to obtain any licenses or approvals from the appropriate government agencies necessary to purchase or sell the subject goods and services,
3. The Supplier’s breach of any of its obligations set forth in the Terms and Conditions, 
4. Any damages arising out of third party transactions between by the supplier. 

• Limitation of liability – This clause shall state about the liability of the company owning the web portal. This clause can be stated as follows:

1. In no event shall the company, nor its employees or associates be liable to any third party for any direct or indirect damages, even if it out of: the use of the “Web Store” by the Supplier, 
2. In Any transaction entered between the Supplier and any third party, the company’s liability to the user or any third party in any circumstances is limited to deactivation of membership and cancellation of orders /products delivered by the suppliers.

• Miscellaneous provisions – This clause can add any miscellaneous provision or significant clause that needs to be agreed. For ex: – Terms and conditions. This clause can be stated as follows:

1. The Terms and Conditions of this agreement, constitute the understanding between the parties with respect to the Supplier’s use of the “Web Store”.
2. A party’s failure to insist upon or enforce strict performance of any provision of the Terms and Conditions shall not be construed as a waiver of any provision or right. 
3. Neither the course of conduct between a Supplier and the company nor trade practice shall act to modify any provision of the Terms and Conditions.
4.  If any particular provision of the Terms and Conditions is held to be invalid or unenforceable, such determination shall not affect any other provision of the Terms and Conditions which shall remain in full force and effect. In addition, if any provision contained in the Terms and Conditions shall for any reason be held to be excessively broad as to activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with applicable law. 
5. These Terms and Conditions may not be assigned or transferred to third parties by Supplier without prior written permission from the company. The Supplier shall not be construed to be a third party beneficiary of any agreement between the company and any supplier to the company.

What are the things that should be kept in mind while drafting an online portal and supplier agreement

The Online Portal usage and Supplier agreement like any other contract needs to be thoroughly drafted, especially the boilerplate clauses. The clauses discussed above especially Competencies of Parties, Licence, transaction, data protection should be drafted only after conducting a thorough due diligence of the parties. Apart from this, both the parties’ lawyers for their client’s benefits should keep in mind some clauses as explained below.

From the supplier’s side

1. A thorough due diligence should be conducted of the company owning the web portal and should check their competency to enter into this contract with also reviewing the web store’s authenticity and whether it will be profitable for the supplier to sell his products through it or not.
2. Should try to narrow down the supplier’s liability and trimming terms and conditions from the company’s side.
3. Should try to force the company in providing some data protection services for securing the transactions of the supplier.
4. Should try to widen up the scope of license given to the supplier.
5. Should try to include clauses of indemnifying the supplier by the company as well in case of cyber-attacks on the website, if the supplier incurs loss due to it, the company should rightfully indemnify the loss created.

From the company’s side

1. A thorough due diligence should be conducted of the supplier and should check his competency to enter into this contract with also reviewing his products authenticity and whether they are legal to sell or not.
2. Should try to widen up the conditions in which the supplier could be held liable for damages arising out of his transactions in the Portal. 
3. Should try to avoid any liability regarding the data protection and services of the supplier in the portal. 
4. Should try to restrict the scope of license given to the supplier.
5. Should try to only include clauses of indemnifying the company by the supplier.
6. Should try to limit the liability of the company as far as possible.
7. Should try to gain approval of the supplier to maintain the integrity of the portal and not cheat the third parties in the transactions by providing quality goods etc.

Conclusion

With the era of digitization, the market has evolved to a more, convenient and sophisticated buying and selling approach through online web stores or portals. Online portal usage and supplier agreement simplifies and provides a wider and comprehensive option to the suppliers or vendors for selling their goods. However, these contracts should be dealt with carefully with apt due diligence from both the side of the parties as disputes are common, especially related to licensing and data security. If the drafting part comes flawless, it could be a solid binding contract between both the parties for years to come as scope of profits will marginally increase over the years in this business.

References

• https://www.upcounsel.com/vendor-agreement-for-e-commerce#
• https://www.thestartupjournal.com/brief-vendor-agreement-e-commerce-india/
• https://www.tbuy.in/seller-agreement
• https://www.callcollector.com/agreement-terms.html
• https://nsic.co.in/
• https://legaldocs.co.in/vendor-agreement

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