Part of the supplier management process is the establishment and maintenance of standard terms and conditions for contracts with suppliers. This appendix is a list of summarized issues that should be covered by such standard terms and conditions:

Warranties

This should specify minimum warranties for all delivered goods and services. All software should be warranted to be shipped free of viruses. Goods should be warranted to be fit for their intended use and free of hazards to the health of people and IT organization's property.

Payment Terms

This specifies how long after the receipt of an invoice by the IT organization that a supplier is supposed to be paid. This should always be specified. Some related details that are often specified are where invoices should be sent, the currency of payment and the form of payment (check, bank draft, wire transfer, …).

Governing Laws

This specifies the set of laws that will govern the contract (i.e. the laws of the state of California). This should always be specified. Some related details that ore often specified are an arbitration procedure to be used to resolve disagreements prior to filing suite in a court of law and in which court of law such suites will be filed.

Delivery of Goods

These are general requirements for how, when and where goods are to be delivered.

Indemnification

Suppliers should hold the IT organization harmless against all all bad acts or negligence on the part of the supplier by paying any judgments against the IT organization that arise out of such action. In particular, suppliers should hold the IT organization harmless against any claims that the supplier's goods or services infringe a third party's intellectual property rights.

Nondisclosure

Suppliers should be prohibited from disclosing the IT organization's confidential information or trade secrets.

Termination

This should describe when the IT organization can terminate a contract with a supplier and how the liabilities of the IT organization are limited when it does terminate a contract. The IT organization should have the right to cancel contracts for convenience after giving notice to suppliers;

Bankruptcy

The IT organization should have the right to cancel the contracts without further liability in the event that the business entity that the IT organization serves becomes subject to bankruptcy proceedings.

Taxes

If the IT organization is required to pay taxes related to the delivered goods or services, the tax should become the obligation of the supplier.

Electronic Communication

This should specify how electronic orders, EDI or other forms of electronic communication may be used.

Ownership

This should specify when and where goods sold by the supplier become the property and responsibility of the IT organization;

Consultants

This should specify that consultants or subcontractors hired by the IT organization to have the right to use software licensed to the IT organization;

Transfer License Ownership

The IT organization should have the right to transfer software licenses to another legal entity. This may sound unimportant, but if the business entity that the IT organization belongs to ever spins off a part of itself as a separate legal entity, without this right new licenses may need to be purchased from a weak negotiating position.

Transfer License Hose

The IT organization should have the right to transfer software licenses from one computer to another.

Backups

The IT organization must have the right to make backup copies of software.

Source Code Escrow

The IT organization should require suppliers of software who do not provide source code to establish a source code escrow. This means that the software supplier will provide a copy of the source code to a trusted third party who will release the source code to the IT organization if the supplier goes out of business or becomes unable to maintain the software for any other reason.

Relocation of Goods

The IT organization should have the right to relocate goods after the IT organization has possession of them.

Telecommunication Charges for Support

Suppliers should be responsible for telecommunication-related charges connected with support from suppliers.

Single Point of Contact

For suppliers who are providing professional or project based services, the supplier should be required to designate a person who will be the primary point of contact for issues related to the service or project.

Intellectual Property

Intellectual property whose creation is paid for by the IT organization should be the property of the IT organization.

Hiring

Suppliers should be prohibited from hiring employees of the IT organization or of the businesses that the IT organization serves.

Contract Terms are Confidential

Suppliers should be prohibited from disclosing the terms of their contract with the IT organization.

Marketing Restrictions

Suppliers should be prohibited from using their relationship with the IT organization to sell or market their goods or services to other parties without the permission of the IT organization.

Independent Contractor

It should be stated that the supplier is an independent contractor, rather than an employee or partner of the IT organization.

Product Defects

If a supplier discovers that any product it provides to the IT organization is defective or poses a hazard to the health of people or the IT organization's property, the supplier should be required to notify the IT organization immediately.