A Step-by-Step Guide to Creating a Procurement Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Creating a procurement agreement is an essential part of any business transaction. It outlines the scope of the transaction, including the goods or services being purchased, their price and payment terms, delivery dates and any other requirements that must be met. A well-drafted agreement also provides both parties involved with a level of protection should disputes arise.

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But how do you create such an agreement? And where can you access a suitable template? Fortunately, the Genie AI team has created a step-by-step guide that enables anyone to draft and customize high quality legal documents without needing to pay for costly legal advice.

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At Genie AI we understand that having a legally binding procurement agreement is vital for protecting the interests of both parties involved in the transaction - buyers and sellers alike - as well as providing a foundation to resolve any disputes which may arise during its course. Our guide helps anyone understand what such an agreement should include and how it can be tailored to their individual needs.

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Genie AI’s free procurement agreement templates draw on millions of data points collected from our community library: market standard contracts which are continually updated based on customer feedback and industry best practices. Whether buying or selling goods or services, our library offers contract templates suitable for all transactions; from retail sales agreements to service level agreements (SLAs) ensuring every document takes into account local laws and regulations wherever applicable.

Through using this guidance there’s no need for an individual or business to have a Genie AI account, we simply want to provide help in creating successful transactions!
So if you’re looking for help drafting your own procurement agreement then why not read on below for our step-by-step guide - get started today!

Definitions (feel free to skip)

Applicable Laws and Regulations: A set of rules and regulations that must be followed when executing a legal agreement.
Governing Jurisdiction: The geographic area or legal system in which a particular agreement is legally binding.
Legal Counsel: A qualified professional with expertise in legal matters who can provide legal advice.
Internal Approvals: A process of obtaining permission from within an organization to proceed with an agreement.
Dispute Resolution Mechanisms: Strategies used to resolve disagreements or conflicts between two or more parties.

Contents

• Defining the scope of the procurement agreement
• Conducting interviews to identify project requirements
• Creating a project brief document
• Understanding the legal framework of the agreement
• Identifying applicable laws and regulations
• Identifying the governing jurisdiction
• Consulting legal counsel
• Identifying the parties involved in the agreement
• Confirming contact information
• Confirming the roles and responsibilities of each party
• Drafting the agreement
• Identifying the terms of the agreement
• Writing out the terms
• Creating any necessary documents or forms
• Negotiating the terms of the agreement
• Discussing potential changes to the agreement
• Reaching a mutual agreement
• Approving the agreement
• Obtaining internal approvals
• Obtaining the other party’s approval
• Executing the agreement
• Signing the agreement
• Distributing copies of the agreement
• Modifying the agreement
• Identifying the need for changes
• Discussing potential changes to the agreement
• Reaching a mutual agreement
• Terminating the agreement
• Identifying the need for termination
• Discussing the terms of the termination
• Reaching a mutual agreement
• Dispute resolution mechanisms
• Identifying applicable dispute resolution mechanisms
• Drafting dispute resolution clauses
• Inserting the dispute resolution clauses into the agreement

Get started

Defining the scope of the procurement agreement

• Define the scope of the project and the procurement agreement. This should include the specific services or products that are being procured.
• Identify any stakeholders involved in the procurement process and define their roles and responsibilities.
• Create a timeline for the procurement process, including any deadlines that need to be met.
• Identify any legal or contractual requirements that may need to be fulfilled for the procurement agreement.
• Outline any evaluation criteria that will be used to assess potential suppliers.

When you have completed the above steps, you can check off this step and move on to the next step of conducting interviews to identify project requirements.

Conducting interviews to identify project requirements

• Identify key stakeholders, who should be included in the interviews
• Schedule interviews with each stakeholder and determine the best format for conducting interviews
• Prepare a list of questions to ask stakeholders and ensure that all stakeholders are asked the same questions
• Record the answers to each question for each stakeholder
• Analyze the results of the interviews to identify all relevant project requirements
• Once all interviews have been conducted and the requirements have been identified, you can move on to creating a project brief document.

Creating a project brief document

• Gather all project requirements from the interviews conducted
• Create a project brief document outlining the scope, objectives, timeline and budget for the project
• Include any additional project details gathered from the interviews
• Have all stakeholders review the project brief document and make any necessary changes
• Once the project brief document is agreed upon, sign it off and move to the next step
• You will know you can move on to the next step when the project brief document is approved and signed off by all stakeholders.

Understanding the legal framework of the agreement

• Analyze the project brief document to determine the legal framework that applies to the procurement agreement
• Research applicable laws and regulations that may affect the agreement
• Identify any potential risks or liabilities associated with the agreement
• Consult with legal professionals to ensure the legal framework is taken into account with the agreement
• Once you have identified and analyzed the legal framework, you can move on to the next step of identifying applicable laws and regulations.

Identifying applicable laws and regulations

• Review applicable federal, state, and local laws and regulations that may affect the agreement
• Investigate the regulations of the jurisdiction where the agreement will be enforced
• Research the requirements that must be met under the applicable laws and regulations
• Determine if there are any specific contractual requirements that must be included in the agreement to comply with applicable laws and regulations
• Consult with legal counsel to ensure that the agreement is compliant with applicable laws and regulations
• Once you have identified the applicable laws and regulations and consulted with legal counsel, you can move on to the next step of identifying the governing jurisdiction.

Identifying the governing jurisdiction

• Research the applicable laws and regulations identified in the previous step to determine the governing laws, regulations, and jurisdiction for the procurement agreement.
• Check with the relevant government or other authority to confirm the governing jurisdiction.
• Once you have identified the governing jurisdiction and confirmed it with the relevant authority, you can move on to the next step.

Consulting legal counsel

• Research the applicable laws and regulations in the governing jurisdiction identified in the previous step.
• Consult with a qualified attorney to ensure that any agreement you draft is compliant with local laws and regulations.
• Ask your attorney to review any potential agreement to ensure all parties are adequately protected and that all necessary elements are included.
• Once you have consulted with your attorney and you are satisfied that the agreement meets all legal requirements, you can check off this step and move on to the next step.

Identifying the parties involved in the agreement

• Review any existing contracts or agreements that may be part of the procurement process
• Determine the parties involved in the agreement and their roles
• Obtain contact information for each of the parties to have on record
• When you have identified the parties and have their contact information, you can check this off your list and move on to the next step.

Confirming contact information

• Gather all contact information for each party involved in the agreement
• Make sure all contact information is up-to-date and accurate
• Send a confirmation email to each party to verify their contact information
• Once each party has replied to the confirmation email, you can move forward to the next step
• Ensure that all contact information is stored securely in a safe location

Confirming the roles and responsibilities of each party

• Meet with the other party to discuss and agree on what each side will be responsible for
• Discuss and determine who will be responsible for purchasing, delivery, payment, and other details
• Record the outcome of the discussion in a document
• Once both parties have agreed to the roles and responsibilities, the document should be signed by both parties
• After the document has been signed and dated, you can check this step off your list and move on to drafting the agreement.

Drafting the agreement

• Outline the agreement in writing, including the parties, the goods or services to be procured, the price and payment terms, the delivery schedule, and other relevant details.
• Include any other information that is necessary and relevant to the agreement.
• Make sure both parties are in agreement with the terms of the agreement as outlined.
• Once both parties sign and initial the agreement, you can check this step off your list and move on to the next step.

Identifying the terms of the agreement

• Identify all parts of the agreement that must be included in the procurement contract, such as the scope of work, payment terms, timeline, and any additional expectations.
• Collaborate with the other party to ensure that all expectations are clearly outlined and agreed upon.
• Once all the terms have been identified and agreed upon, you can move on to the next step.

Writing out the terms

• Draft out both parties’ responsibilities in detail
• Include a timeline for when each responsibility must be completed
• Specify any consequences for failing to meet the agreement
• Have both parties review the agreement and make any necessary changes
• Once both parties agree to the terms, have the agreement signed by all involved
• After the agreement has been signed, make sure to save a copy for yourself
• You will know you can check this off your list and move on to the next step when both parties have agreed to the terms and signed the agreement.

Creating any necessary documents or forms

• Consult with legal counsel to determine if any forms or documents are needed for the procurement agreement
• Work with legal counsel to draft and finalize any necessary forms or documents for the agreement
• Ensure that all forms or documents are reviewed and approved by both parties before moving on to the next step
• When all necessary forms and documents are created, reviewed, and approved, you can move on to the next step of negotiating the terms of the agreement.

Negotiating the terms of the agreement

• Determine the scope of the agreement and the estimated cost
• Identify the timeline for completing the agreement
• Discuss and agree on payment terms
• Identify any additional conditions or requirements
• Negotiate any proposed changes to the agreement
• Finalize the agreement

When the negotiated terms have been agreed upon and documented, you can move on to the next step.

Discussing potential changes to the agreement

• List any potential changes to the agreement that need to be discussed
• Discuss any differences of opinion and potential solutions
• Reach a consensus on potential changes and accept any amendments to the agreement
• Make a record of the changes and update the agreement to reflect them
• Check off this step and move on to the next step when all potential changes have been discussed and agreed upon.

Reaching a mutual agreement

• Reach out to the other party to discuss and negotiate the terms of the agreement
• Make sure that all parties involved understand and agree to the terms
• Work with the other party to make sure that any changes to the agreement are reflected in the document
• Once both parties have agreed and signed off on the agreement, you have reached a mutual agreement
• You can check this step off your list and move on to the next step of approving the agreement.

Approving the agreement

• Ensure that all parties involved have signed the agreement and that all signatures are legally binding
• Make sure that the agreement is in compliance with all relevant laws, regulations, and policies
• Have the agreement reviewed by the appropriate legal department
• Obtain the approval of the executive management team or board of directors, if necessary
• Once all necessary approvals and signatures have been obtained, the agreement is ready to be implemented and all parties can take action in accordance with the terms of the agreement
• You can check this step off your list once all necessary approvals and signatures have been obtained and the agreement is ready to be implemented.

Obtaining internal approvals

• Gather the necessary signatures from your organization’s internal stakeholders
• Contact the internal stakeholders needed to approve the agreement and explain why their approval is necessary
• Prepare a list of items or documents that need to be signed
• Send the agreement and the list of items or documents to the internal stakeholders
• Wait for approval from all internal stakeholders
• Once all approvals are obtained, you will know you can move on to the next step of obtaining the other party’s approval.

Obtaining the other party’s approval

• Send a copy of the agreement to the other party for review and approval
• Wait for a response from the other party, ensuring that they have read the agreement and agree to its terms
• If the other party requires any changes or modifications to the agreement, discuss them and make any necessary changes
• Once both parties have agreed to the terms of the agreement, each party must sign the document
• When both parties have signed the agreement, you can check this off your list and proceed to the next step of executing the agreement.

Executing the agreement

• Review the agreement for any discrepancies between the original proposal and the finalized document
• Ensure that all parties have signed the document to make it legally binding
• Make copies of the signed document for all parties
• Distribute signed copies of the agreement to all parties
• Record the date the agreement was executed in all versions of the document
• Make sure that all parties have received the finalized version of the agreement
• You will know that you have completed this step when all parties have signed the document and all parties have received their signed copies.

Signing the agreement

• Obtain the signatures of all parties involved on the agreement.
• Ensure that each party has read and understands the agreement before signing.
• Have witnesses sign the agreement if applicable.
• Once all signatures have been obtained, you can check this step off your list and move on to distributing copies of the agreement.

Distributing copies of the agreement

• Make two to three copies of the signed agreement
• Ensure that all of the copies are legible
• Distribute the copies of the agreement to the appropriate parties, such as the supplier, or internal stakeholders
• Make sure that each party receives a copy of the agreement
• Check off this step when all parties have received a copy of the signed agreement.

Modifying the agreement

• Carefully review the agreement, noting any changes that need to be made
• Identify any language that needs to be added, removed, or revised
• Work with all parties involved to agree on any changes, modifications, or additions to the agreement
• Make the requested changes to the agreement and have all parties involved sign off on them
• Once all changes have been agreed to and signed off on, the agreement is ready to move to the next step
• You will know you are ready to move to the next step when all changes have been agreed to and signed off on.

Identifying the need for changes

• Review the current agreement to identify areas for improvement or changes
• Analyze the agreement for any potential gaps or issues that need to be addressed
• Check for any recent changes to relevant laws or regulations that need to be taken into consideration
• Identify any additional stakeholders or parties that need to be included in the procurement agreement
• When you have identified the areas that need to be addressed, you can move on to the next step of discussing potential changes to the agreement.

Discussing potential changes to the agreement

• Set up a meeting with all the parties involved in the agreement
• Discuss the potential changes that need to be made
• Determine who will be responsible for making the changes
• Ask questions to ensure everyone is on the same page
• Reach a mutual agreement on the changes needed to be made
• When everyone is in agreement and all questions have been answered, this step is complete and you can move on to the next step.

Reaching a mutual agreement

• Clarify any lingering questions or issues between both parties in the agreement
• Gather the necessary signatures from both parties to sign the agreement
• Exchange a fully executed copy of the agreement
• Once both parties have signed the agreement, the agreement is binding and enforceable
• You can check this off your list and move on to the next step when both parties have signed the agreement and exchanged fully executed copies.

Terminating the agreement

• Agree on the terms of the termination and document them in writing
• Notify the other party of the termination and the agreed-upon terms
• Make sure to identify any outstanding obligations and how they will be handled
• Ensure that all applicable laws and regulations are followed when terminating the agreement
• When all steps have been completed, the termination will be deemed successful

You will know that you can check this step off your list and move on to the next step when all of the above steps have been completed and documented.

Identifying the need for termination

• Identify any issues that have led to the need for termination and assess the situation
• Evaluate the current contract and consider whether the terms of the agreement can be revised to address the issue, or if it needs to be terminated
• Consider the implications for both parties and the risks associated with terminating the agreement
• Research any applicable laws or regulations that may have an impact on the termination
• When you have identified the need for termination and have gathered the relevant information, you can move on to discussing the terms of the termination.

Discussing the terms of the termination

• Clarify the reasons why the contract needs to be terminated
• Negotiate the terms of the termination, such as any applicable notice period
• Discuss any financial obligations and/or liabilities associated with the termination
• Ensure that all parties understand the terms of the termination
• Draft a termination agreement stating the terms and conditions of the termination
• Have all parties sign the termination agreement
• When all parties have signed the agreement, this step can be checked off and you can move on to the next step.

Reaching a mutual agreement

• Negotiate the terms of the agreement until both parties are in agreement.
• Discuss any questions or concerns that either party may have.
• Once all questions and concerns have been addressed and a mutually beneficial agreement has been reached, both parties should sign the agreement and keep a copy for their records.
• You will know that this step has been completed when both parties have signed the agreement.

Dispute resolution mechanisms

• Review contract details and analyze any potential risks that may arise
• Discuss the type of dispute resolution mechanisms both parties agree on, such as arbitration, litigation, or negotiation
• Make sure both parties are aware of the dispute resolution process and document the details in the contract
• Once both parties have agreed on the dispute resolution mechanisms, include the details in the procurement agreement
• Confirm that all details have been addressed and both parties understand the terms of the dispute resolution before signing the agreement

Once both parties have agreed on the dispute resolution mechanisms and the details have been documented in the contract, you can move on to the next step of identifying applicable dispute resolution mechanisms.

Identifying applicable dispute resolution mechanisms

• Research applicable dispute resolution mechanisms such as arbitration, litigation, and mediation
• Consult with a lawyer to understand the differences between/advantages of each option
• Consider which of the dispute resolution mechanisms is most likely to be accepted by all parties involved
• Decide which dispute resolution mechanism best fits the needs of the situation
• Once you have identified the applicable dispute resolution mechanisms, you can check this off your list and move on to the next step.

Drafting dispute resolution clauses

• Research the applicable dispute resolution mechanisms for the agreement
• Draft clauses for the chosen dispute resolution mechanism
• Ensure that the clauses are clear, comprehensive and enforceable
• Review the clauses with the other party for any additional points to discuss
• Make necessary changes to the clauses and ensure that the other party is in agreement
• You’ll know you can check this off your list when the dispute resolution clauses have been drafted, edited, and agreed upon by both parties.

Inserting the dispute resolution clauses into the agreement

• Read through the dispute resolution clauses you have drafted
• Ensure that all of the clauses are appropriate for the agreement
• Make any necessary adjustments to the clauses
• Insert the dispute resolution clauses into the agreement
• Check that all the clauses are correctly and accurately inserted
• When you’re satisfied that all the clauses have been correctly inserted, you can check this step off your list and move on to the next step.

FAQ:

Q: What are the differences between UK, USA and EU procurement agreements?

Asked by Jessica on July 14th, 2022.
A: The main differences between procurement agreements in the UK, USA and EU are the regulations that govern them. In the UK, procurement agreements are regulated by the Public Contracts Regulations 2015. In the USA, the primary regulations are determined by individual states, while in the EU they are governed by the Public Sector Directive 2014/24/EU. Each jurisdiction has different rules and regulations that must be adhered to when drafting a procurement agreement, so it is important to understand the local requirements before creating one.

Q: Is a procurement agreement legally binding?

Asked by John on December 10th, 2022.
A: Yes, a properly drafted procurement agreement is legally binding. Such an agreement should include all relevant details regarding both parties’ obligations and responsibilities, as well as any potential remedies for breach of contract. This gives each party clear expectations and requirements to follow so that each is held accountable for their part of the contract.

Q: Should I consider additional clauses for my procurement agreement?

Asked by Lauren on April 3rd, 2022.
A: It depends on your particular situation and needs. Depending on your industry or sector, you may need additional clauses in your procurement agreement such as non-disclosure agreements (NDAs), indemnification clauses, or dispute resolution clauses. Additionally, it is important to consider any specific legal requirements that may apply to your industry or sector when drafting a procurement agreement.

Q: How do I ensure my procurement agreement is enforceable?

Asked by Jack on June 8th, 2022.
A: To ensure your procurement agreement is enforceable, it should include all relevant details including a description of goods or services being provided, payment terms, termination conditions, legal remedies for breach of contract, etc. Additionally, it should be written in clear language that both parties can understand and abide by. Finally, all parties should sign the agreement in order to make it legally binding.

Q: What happens if one party breaches a procurement agreement?

Asked by Emma on August 11th, 2022.
A: If one party breaches a procurement agreement then there may be legal or financial implications depending on the type of breach and any applicable laws or regulations that govern it. It is important to have clear remedies outlined in the contract before signing so that all parties know what could happen if they fail to meet their obligations under the contract. For example, if one party fails to pay an invoice then the other party may be entitled to take legal action to recover damages or terminate the contract entirely.

Q: How can I protect my intellectual property in a procurement agreement?

Asked by David on October 5th, 2022.
A: To protect your intellectual property in a procurement agreement you should include an Intellectual Property Rights clause which outlines who owns any intellectual property created as part of the contract and how it can be used or licensed for use by other parties. Additionally, you may wish to consider adding a Non-Disclosure Agreement (NDA) which will protect any confidential information shared between parties during the course of their dealings with each other.

Q: Is there any way to mediate disputes arising from a procurement agreement?

Asked by Ashley on November 19th, 2022.
A: Yes – most procurement agreements will include some form of dispute resolution clause which outlines how disputes between parties should be handled. This could involve mediation through an independent third-party such as an arbitrator or mediator who can help both sides come to an amicable solution without needing to resort to legal action. Alternatively, you may choose to include a clause that requires both parties to try and resolve their disputes through negotiation before taking any further action such as going through court proceedings or arbitration hearings.

Q: What happens if I change my mind about entering into a procurement agreement?

Asked by Brian on February 26th, 2022.
A: It is important to read through your proposed procurement agreement carefully before signing it so you understand exactly what you are agreeing to and whether it meets your needs. If you change your mind about entering into a procurement agreement then you can simply choose not to sign it – however this could cause delays or difficulties if there were already arrangements in place regarding goods/services being supplied between both parties which would need to be revoked or amended in order for either party not to be bound by them anymore.

Q: Are there any specific laws that apply when creating a US-based procurement agreement?

Asked by Amanda on May 15th, 2022.
A: Yes – US-based procurement agreements are subject to both federal and state laws depending on where they take place and who is involved in them (e.g., federal government agencies). For example, federal laws such as The Federal Acquisition Regulation (FAR) apply when contracts involve federal government agencies whereas state laws may apply when contracts involve private entities operating within certain states (e.g., Uniform Commercial Code). It is therefore important to understand all relevant laws that may apply before creating a US-based procurement agreement so that all parties are aware of their rights and obligations under the contract.

Q: What types of clauses should be included in my SaaS-based procurement agreement?

Asked by Matthew on September 24th, 2022.
A: When creating a SaaS-based procurement agreement it is important to include clauses related specifically to software-as-a-service (SaaS) models such as service levels & availability guarantees; license & ownership rights; support & maintenance provisions; pricing & payment terms; termination & renewal provisions; security & data privacy requirements; and dispute resolution processes & procedures amongst others depending on your particular needs & circumstances. Each clause should clearly outline specific rights & responsibilities of both parties so that they understand their obligations under the contract before signing it off and entering into an arrangement with each other accordingly

Example dispute

Suing a Company for Breach of a Procurement Agreement

• The plaintiff may bring a claim in civil court alleging that the defendant breached the procurement agreement.
• The plaintiff must show that the defendant failed to perform its obligations under the agreement. This can include failing to deliver goods or services, failing to pay for goods or services, failing to meet deadlines, or any other breach of the agreement.
• The plaintiff may be able to seek damages for any losses that occurred as a result of the breach.
• The plaintiff can also seek injunctive relief, which is an order from the court requiring the defendant to take certain steps to rectify the breach.
• If the plaintiff can prove that the breach was intentional or reckless, they may also be able to seek punitive damages as a way of punishing the defendant.
• If the defendant is found to have breached the agreement, the court may order the defendant to pay the plaintiff’s attorney fees.
• Settlement may be reached between the parties outside of court. This could include the defendant agreeing to pay damages or take steps to rectify the breach.

Templates available (free to use)

Master Procurement Agreement

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