Vendor Agreement vs Service Agreement
Vendor Agreement vs Service Agreement — goods supply vs services compared
Overview
Vendor Agreement governs the supply of goods or products. Service Agreement governs the provision of services. While they share common elements (payment, termination, dispute resolution), the key provisions differ — Vendor Agreements focus on delivery, quality, and warranties for goods; Service Agreements focus on scope, deliverables, and quality standards for services.
Head-to-Head Comparison
| Factor | Vendor Agreement | Service Agreement | Winner |
|---|---|---|---|
| Subject Matter | Goods / Products / Materials / Hardware | Services / Consulting / IT / Professional work | Tie |
| Key Clause: Quality | Warranty on goods, defect liability period | Service Level Agreement (SLA), quality standards | Tie |
| Risk of Loss | Passes on delivery (FOB, CIF terms) | Risk relates to work quality, not physical transfer | Tie |
| GST Treatment | GST on goods (0–28%) | GST on services (usually 18%) | Tie |
| TDS Applicability | TDS if business + payment above threshold | TDS under 194C (contracts) or 194J (professionals) | Tie |
| Termination Clause | Notice period + return of goods provision | Notice period + payment for work done | Tie |
Data updated for FY 2025–26. Regulations may change — consult a professional before deciding.
Which Should You Choose?
Choose Vendor Agreement if…
Use a Vendor Agreement for any supply of physical goods, raw materials, manufactured products, or technology hardware.
Get Vendor AgreementChoose Service Agreement if…
Use a Service Agreement for consulting, IT services, maintenance, marketing, legal, or any professional services engagement.
Still not sure which to choose?
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Talk to an Expert — FreeFrequently Asked Questions
Common questions about Vendor Agreement vs Service Agreement
Service Level Agreement (SLA) is a clause defining measurable quality standards for services — uptime for IT services, response time for support, delivery timelines for creative work. SLA breach triggers penalties (price reduction, compensation) or termination rights.
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