OwnerContractor, Vendor relationship

Therelationship between a contractor and a vendor is described as theprocess by which a business or organization enters into legalagreements with suppliers. Nearly all companies engage in contractualrelationships, and recently there are emerging trends that maydisrupt how such contracts were operated before. The most commonemerging trend, in the contractual management industry, is businessesbuilding a contract management team. Such a team has theresponsibility of tackling the contractual agreements, which existbetween the firm and third parties. In the past, many companies usedto assign only one person or to have the business owner take care ofany issues concerning agreements. Nowadays, such trends, on howindividuals and businesses are contracting with third parties, arecontinuously changing. This is attributed to the fact that a contractmanagement team appears to be more vigilant as compared to assigningthe whole process to one or two individuals.

Abusiness having a contract management team has a lot of benefits,such as ensuring that the process is handled by a group of qualifiedpersonnel. Appointing a contract management team means that thecompany has the best-qualified people necessary for efficient andeffective handling of any given tasks. A contract management teamensures that professionalism prevails, and that everything is done ina proper manner. Having a contract management team, also, reduces theexpenses of having to get the services from a third party. Most largebusinesses that do not have contract management teams contract suchservices from other firms, and the process can prove to be costly inthe long run. Thus, having a contract management team means that thebusiness will be able to reduce operational costs while improving itsprofit. A contract management team, further, has the advantage ofsaving time, which otherwise would have been spent outsourcing helpfrom third parties. In any business, time is of important aspecthence, any delays could mean that the business is losing money. Incases where the business owner decides to enter into the contractpersonally, they may not have time to scrutinize the terms andconditions, and such a mistake can be costly. Having a contractmanagement team in place means that such mistakes are avoided andthat the team will have time to scrutinize the contract [ CITATION Ayş06 l 1033 ].

However,a contract management team come along with some setbacks, such asbeing expensive especially, for small businesses. Such businessesfind it hard to have contract management teams in place since theyare not economically viable. Only big businesses can be able to havecontract management teams since they need to sign contracts moreoften. Having a contract management team can also lead to moreexpenses for businesses regarding salaries and operational costs.Thus, before a business engages in the process of forming a contractmanagement team, it must make sure that the process will increase thecompany`s revenue, either in the short term or long term. Sometimes,having a contract management team means that decisions will takelonger to be arrived at thus, it can lead to slower decision-makingprocesses.

Owner-contractor,vendor relationship can be classified as a sub-recipient since it isgiven to a third party under the contractual agreement, and itinvolves a binding agreement between the two parties. The agreementis also legal meaning hence, any breach of the contract might resultinto a legal battle if one party sues the other [ CITATION Ayş06 l 1033 ].


Toptal, A. (2006). Contractual agreements for coordination and vendor-managed delivery under explicit transportation considerations. Naval Research Logistics , 397–417.