Business Legal Documents
A business contract with detailed terms and conditions of engagement by an entity with its customers, or class of customers. Brings clarity of purpose, objective, modes of dealing, payment conditions, and other clauses that avoids any dispute, confusion, and disagreements and helps maintain long term fruitful relationship with customers.
A customer agreement is a legally binding contract or agreement between the company and the customer which states the conditions regarding the sale and the use of the product or service of the company. It outlines the parameters both the parties have to work through regarding subject matters being transferred, confidentiality, specifications, performance standards and dispute resolution methods in case of a discrepancy.
It mentions the legal obligation of both the parties and most importantly the payment terms that the customer is obligated to pay the company at once or at definite intervals for the product or service taken.
The importance of Customer Agreement
- It helps in mitigating the risks that can come up if the customer fails to comply with the end of his agreement and helps in the easy filing of a lawsuit.
- There is accuracy in the payment for the services; there will be no confusion regarding the payment terms or the stipulated time of the payment.
- It will protect the interests of both parties in case of termination of the agreement.
- The confidentiality clause can help the business to be sure that their processes or trade secrets are not disclosed elsewhere.
- Better products or services can be given to the customer after carefully analysing the customer agreement.
Advantages of the customer agreement
- The customer agreement gives protection against the various litigations and business risks that can lead to penalties or other forms of litigations.
- Helps to recognise high-value customers and their purchase behaviour.
- As the agreement explains the process of litigation and how it works, there will not be any ambiguity in the procedure that can further lead to unnecessary litigation costs.
- Helps in the scalability of the business.
Profito Global helps their clients to draft a customer agreement after understanding the requirements and the working of the company. They also analyse the varied business needs and the features of the goods or services sold by the company. Preparation of a customer agreement requires the professionals to have in-depth market knowledge, which is assured by the Profito Global experts.
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Is registration of customer agreements mandatory?
No, it is not mandatory to register the customer agreement.
When does a customer agreement become valid?
A customer agreement becomes valid when both the parties agree to the terms and conditions of the agreement.
Is the customer agreement legal?
When both the parties agree to the terms and conditions, then it becomes a legally binding contract.
What are the disadvantages of not adopting a customer agreement?
The cons of not structuring a customer agreement are:
- Non-compliance with contractual obligations
- An increase of ambiguity in the terms and conditions of the setup can lead further to litigations and penalties.
- Additional costs and time on due diligence between the customer and the business entity.