Drop Shipping Services Agreement Template

Introduction

This Drop Shipping Services Agreement (the “Agreement”) is made and entered into as of [date] by and between [Supplier’s name], a [Supplier’s legal entity type] organized and existing under the laws of [Supplier’s jurisdiction] with its principal place of business at [Supplier’s address] (the “Supplier”), and [Retailer’s name], a [Retailer’s legal entity type] organized and existing under the laws of [Retailer’s jurisdiction] with its principal place of business at [Retailer’s address] (the “Retailer”).

1. Definitions

Drop – Shipping: The process by which the Supplier, upon receiving an order from the Retailer, directly ships the ordered products to the Retailer’s customers.
Products: The goods and items that the Supplier agrees to drop – ship for the Retailer as specified in Exhibit A attached hereto.
Order: A request from the Retailer to the Supplier for the drop – shipping of Products to a specified customer of the Retailer.

2. Scope of Services

Order Processing: The Supplier shall receive Orders from the Retailer, either through electronic means or as otherwise agreed. The Supplier shall promptly process these Orders and ensure that the Products are prepared for shipment.
Inventory Management: The Supplier shall maintain an accurate inventory of the Products. The Supplier shall provide the Retailer with real – time inventory updates, at least [frequency] (e.g., daily), so that the Retailer can accurately represent product availability to its customers.
Shipping: The Supplier shall package and ship the Products to the Retailer’s customers in a timely manner. The Supplier shall use the shipping methods and carriers as mutually agreed upon by the parties. The Supplier shall provide the Retailer with tracking information for each shipment within [time frame] (e.g., 24 hours) of shipping.
Custom Branding: If agreed upon, the Supplier shall include custom branding materials (such as packing slips, inserts, or labels) provided by the Retailer in the shipments.

3. Product Pricing and Payment

Product Pricing: The Supplier shall sell the Products to the Retailer at the prices set forth in Exhibit A. The Supplier reserves the right to adjust the prices of the Products upon [notice period] (e.g., 30 days) written notice to the Retailer.
Payment Terms: The Retailer shall pay the Supplier for the Products and shipping costs within [payment terms] (e.g., 30 days) of receiving an invoice from the Supplier. The Supplier shall issue an invoice to the Retailer for each Order within [time frame] (e.g., 24 hours) of shipping the Products.

4. Intellectual Property

Ownership: The Retailer retains all intellectual property rights in its brand, trademarks, and any custom branding materials provided to the Supplier. The Supplier shall not use these intellectual property rights for any purpose other than the performance of its obligations under this Agreement.
Infringement: The Supplier warrants that the Products it provides do not infringe upon any third – party intellectual property rights. In the event of a claim of infringement related to the Products, the Supplier shall indemnify and hold the Retailer harmless from all losses, damages, and expenses.

5. Confidentiality

Confidential Information: Each party acknowledges that it may have access to the other party’s confidential information, including but not limited to customer lists, product pricing, and business strategies. Each party shall keep such confidential information strictly confidential and shall not disclose it to any third party without the prior written consent of the other party.
Exceptions: Confidential Information shall not include information that is publicly available, was already known to the receiving party prior to the disclosure, or is required to be disclosed by law.

6. Term and Termination

Term: This Agreement shall commence on the effective date and shall continue for a period of [term length] (e.g., one year). Unless either party gives written notice of termination at least [notice period] (e.g., 60 days) prior to the expiration of the term, the Agreement shall automatically renew for successive [renewal period] (e.g., one – year) periods.
Termination: Either party may terminate this Agreement immediately upon written notice if the other party materially breaches any provision of this Agreement and fails to cure such breach within [cure period] (e.g., 30 days) after receiving written notice of the breach.

7. Liability and Indemnification

Limitation of Liability: In no event shall either party be liable to the other party for any indirect, incidental, consequential, or punitive damages arising out of or in connection with this Agreement, even if the party has been advised of the possibility of such damages.
Indemnification: Each party shall indemnify and hold the other party harmless from and against any and all claims, losses, damages, liabilities, and expenses (including reasonable attorneys’ fees) arising out of or in connection with its breach of this Agreement or its negligence or willful misconduct.

8. Governing Law and Dispute Resolution

Governing Law: This Agreement shall be governed by and construed in accordance with the laws of [governing jurisdiction].
Dispute Resolution: Any dispute arising out of or in connection with this Agreement shall be resolved through arbitration in [arbitration location] in accordance with the rules of [arbitration organization]. The decision of the arbitrator shall be final and binding on both parties.

9. Entire Agreement

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, relating to the same.

10. Amendments and Waivers

No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by both parties.

Exhibits

Exhibit A: List of Products and Pricing

Supplier’s Signature: ____
Date: ____
Name: ____

Retailer’s Signature: ____
Date: ____
Name: ____

Frequently Asked Questions

What if the Supplier runs out of stock of a particular product?
The Supplier is required to provide real – time inventory updates to the Retailer. In case of stock – outs, the Supplier should immediately inform the Retailer so that the Retailer can communicate with its customers. The Supplier should also work on restocking the product as soon as possible.

Can the Retailer change the custom branding materials during the term of the agreement?
Yes, but the Retailer should provide the Supplier with reasonable notice (e.g., [notice period]) to ensure that the Supplier can make the necessary adjustments in its packaging and shipping processes.

What happens if a customer returns a product?
The Agreement should be updated to include a clear returns management process. Generally, the Retailer should inform the Supplier of the return. The Supplier may be responsible for receiving the returned product, inspecting it, and providing a refund or replacement as per the Retailer’s instructions.

Can the Supplier use a different shipping carrier than the one agreed upon?
The Supplier should not use a different shipping carrier without the prior written consent of the Retailer. However, in case of unforeseen circumstances (e.g., carrier strikes), the Supplier should inform the Retailer immediately and use a comparable alternative carrier.

How are disputes over product quality resolved?
If there are disputes over product quality, the parties should first attempt to resolve the issue through good – faith negotiations. If the issue cannot be resolved, it may be subject to the arbitration process outlined in the Agreement.

Can the Retailer add new products to the agreement?
Yes, but the parties should amend Exhibit A to include the new products and their pricing. The Supplier may also need to evaluate its ability to drop – ship the new products and may require additional lead time for setup.

What if the Retailer fails to pay the Supplier on time?
The Supplier may charge a late payment fee as specified in the Agreement. If the Retailer continues to default on payments, the Supplier may have the right to terminate the Agreement after providing proper notice and an opportunity to cure.

Are there any restrictions on the Supplier’s use of the Retailer’s customer information?
Yes, the Supplier is bound by the confidentiality provisions of the Agreement. The Supplier can only use the customer information for the purpose of fulfilling the Orders and shall not share it with any third party without the Retailer’s consent.

Can either party assign this agreement to another party?
Generally, neither party may assign this Agreement without the prior written consent of the other party. However, in certain circumstances (e.g., a corporate merger or acquisition), the parties may agree to an assignment.

How often can the Supplier change the product prices?
The Supplier can change the product prices upon [notice period] written notice to the Retailer. The frequency of price changes should be reasonable and in line with market conditions.