Preferred Vendor Agreement Definition
A preferred vendor agreement (PVA) is a contract between a company and a supplier that stipulates the terms of the business relationship between them. The agreement defines the products or services to be supplied, the price, quality, and delivery terms. It also sets out any exclusivity arrangements.
A PVA is a way for a company to lock in favorable terms with a supplier so that it can focus on its core business. The agreement can be for a specified period or open-ended. Usually, there are termination clauses that allow either party to end the agreement early if certain conditions are not met.
The key elements of a PVA are:
-Scope of work: what products or services will be supplied?
-Price: how much will the supplier charge?
-Quality: what standards must the supplier meet?
-Delivery: when will the products or services be delivered?
-Exclusivity: is the supplier the only one who can provide these products or services?
-Termination: under what conditions can either party end the agreement early?