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A marketplace vendor agreement is a legal document between a vendor (seller) and an online marketplace business. This document lays out terms and conditions for the vendor to sell goods or services on the marketplace’s platform.
In addition to establishing regulations and permissions, the vendor agreement also outlines services the seller can access during their ongoing participation on the platform.
The vendor agreement may accompany a Statement of Work (SoW) from the vendor. The Statement of Work is a way marketplaces can manage a vendor or freelance contractor using their platform.
A Statement of Work is a legally binding document that details the scope of work or products the vendor or contractor will perform or deliver, timelines, payment terms, liabilities, and other responsibilities.
Within the marketplace vendor agreement, the company may include a sales commission agreement that allows the seller to freely operate on their platform in exchange for a percentage of their sales.
Here is an example of a commission agreement template that you can review.
A marketplace vendor is a seller or the supply-side of a marketplace. For example, people who hail a car on Uber hire a marketplace vendor, the car's driver. For Airbnb, the marketplace vendor would be the host providing their property for short-term rentals.
Using an online marketplace allows someone to become an e-commerce vendor. Although they are considered self-employed, they must still follow the terms and conditions of the marketplace to keep their store open.
The marketplace “leases” a digital space to the seller in exchange for commission or subscription fees.
Here is an article where you can learn more about the definition of a marketplace and how it’s evolved over the years.
Meet some lawyers on our platformEach marketplace will establish its own terms and conditions, so agreements will vary by the marketplace. That being said, you will still find several common characteristics in any legally sound marketplace vendor agreement.
Many marketplaces may expand their vendor agreements to reflect elements specific to their platform. For example, additional services that are not included in a subscription may affect the vendor’s total financial liability.
It is a good idea to list these services, their costs, and how a seller will be billed if they elect to purchase them.
In addition, vendors may sign a vendor confidentiality agreement to keep certain information about sellers and the marketplace private.
Here is an article about different types of legal agreements in online marketplaces.
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Anyone who sells goods or services through a marketplace will need to sign a marketplace vendor agreement. While some marketplaces may not require a vendor agreement, most do. This protects the company from liabilities in the event of injury, damages, or other losses the vendor experiences.
Using a standard vendor agreement also gives the vendor certain rights on the platform that they cannot have revoked. For example, if someone signs up for a one-year subscription to a service, having the signed agreement helps them demonstrate their legal right to use the marketplace for the length of their subscription term.
Yes, you will need to provide a different agreement for the customer. The terms and conditions of being a vendor are not the same for customers who purchase goods or services through the marketplace.
Using a marketplace customer agreement (sometimes a Term of Service ) allows your company to give the customers an extra layer of protection while waiving the company for liability if vendors do not provide services as advertised.
For example, imagine a client orders a logo design through a freelance graphic designer on a marketplace like Upwork. By signing a customer agreement, the client cannot hold UpWork legally accountable if the freelance designer fails to meet expectations or deliver the product properly.
However, per the marketplace vendor agreement, the customer could report the vendor. The vendor may lose their right to sell on the marketplace if they do not fulfill customers’ orders or adhere to the company’s sales policies.
Here is an article that explores the current limits of marketplace liability and its effects on customers.
There are several reasons why using a marketplace vendor agreement is important.
The vendor agreement can also lay out guidelines for a vendor's services. The agreement minimizes the marketplace’s risks while setting clear rules, boundaries, and expectations for the vendor.
A standard vendor agreement protects the company and vendor more than no agreement. Without any, there could be a large risk of marketplace abuse, and the company could take vendors’ profits without any way for the seller to prove what they were owed legally.
A vendor is someone who runs a business. The marketplace is, in a sense, a partner in that business. Although they do not own the vendor’s company in any way, their platform is what allows customers to patronize the vendor.
So, having a marketplace vendor agreement ensures that the vendor and the marketplace are equally protected and follow appropriate conduct.
Here is an article about marketplace seller state guidelines that may be enforced in a vendor agreement.
If necessary, you can download a free vendor agreement online and a commission agreement template. Contract templates allow you to easily modify the agreement's contents to reflect each client's needs.
You could also contact an internet lawyer well-versed in business and contract law. They can draft a marketplace vendor agreement for you that covers all your company's most important liabilities and needs.
Although templates are a good way to begin any contract, you should ensure that all the necessary elements are in place to prevent legal disputes. Consider sending your draft to a lawyer for review to ensure it fully covers your business. In most cases, marketplaces have nuanced services or products, so it may be hard to find a legal template that fits your use case.
Likewise, vendors may consider reaching out to a lawyer to review an agreement if they are unsure about the contract terms, conditions, and other elements.
Here is an article to review a vendor agreement template.
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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.
I am a lawyer who helps small businesses, nonprofits, and startups with a wide variety of agreements, corporate formation, and corporate governance. I earned my BA from Tulane University and my JD from the University of Chicago Law School. Before starting my own practice, I worked at an international law firm in New York City. Outside of work, I am on the board of the nonprofit Seattle REconomy (which runs the NE Seattle and Shoreline tool libraries) and I enjoy gardening, baking bread, and outdoor activities with my spouse and two dogs.
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