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Case Study: Vendor Agreement with Performance-Linked Payment Triggers

Case Study: Vendor Agreement with Performance-Linked Payment Triggers

A D2C brand engaged a logistics partner for pan-India delivery with aggressive SLAs.

Challenge: Frequent delays, lack of accountability, and payment disputes due to vague service definitions.

Approach:

  • Performance matrix: Defined delivery timelines, penalties, and incentives in a quantified annexure.
  • Payment triggers: Linked payouts to verified delivery performance; embedded audit rights.
  • Termination clause: Included cure periods and exit rights for repeated SLA breaches.

Outcome:

  • Operational discipline: Vendor improved delivery metrics to avoid penalties.
  • Financial control: Brand paid only for verified performance.
  • Dispute reduction: No payment conflicts post-implementation.

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