The email from my lawyer started with "We need to talk about your DMC contract." That's never good.
I'd signed an agreement with a Southeast Asian DMC six months earlier. Standard stuff, I thought—net rates, payment terms, the usual. Except buried in Section 7.4(b) was a clause I'd completely missed: I was personally liable for client cancellations, even if the DMC's own cancellation policy allowed refunds.
When my client cancelled their Maldives honeymoon due to a family emergency (two weeks before departure, well within the cancellation window), the resort refunded the DMC. But the DMC kept my payment and demanded I still pay them the full amount—SGD 8,000.
My contract said they could. I had no recourse.
That's when I learned to actually read supplier contracts. Here's what I look for now.
The Payment Terms That Destroy Cash Flow
Most agents focus on rates and commissions. Fair enough—those are visible. But payment terms can kill your business just as dead, just slower.
Prepayment Requirements
Red flag: "Payment due in full 30 days before service delivery."
Think through the math. Client books a Singapore package for 90 days out. You pay the supplier 60 days out. Client cancels at 35 days. Who's out the money while you fight for a refund? You are.
I now refuse contracts requiring payment more than 14 days before service delivery unless:
- Rate discount exceeds 20% (compensates for cash flow risk)
- Supplier has proven track record of prompt refund processing
- Service value is under SGD 1,000 (manageable risk)
Better terms: "Payment due 7 days before check-in" or "Payment due upon confirmation for bookings within 14 days of service." These align payment with client payment timing.
Payment Processing Fees
Some contracts include: "Credit card payments subject to 3.5% processing fee."
Sounds reasonable until you calculate it. On a SGD 10,000 booking, that's SGD 350 straight off your margin. If you're working on 15% margins, that processing fee just ate 23% of your profit.
What I negotiate instead: "Wire transfer at no fee, credit card at 2% maximum, or net payment terms for established partners."
Many suppliers will waive processing fees entirely if you commit to minimum volume or consistent payment history.
Cancellation Policies That Don't Match Reality
This is where I got burned hardest, and where most agents leave themselves vulnerable.
The Mismatch Problem
Here's what commonly happens:
- Hotel's policy: Full refund if cancelled 7 days before check-in
- DMC's policy with you: Non-refundable once confirmed
- Your policy with client: Refundable up to 7 days before (matching what you think the hotel offers)
Client cancels 10 days out. Hotel refunds DMC. DMC keeps your money per contract terms. You're stuck refunding your client anyway (customer service) while being out the full amount.
I now demand: "Cancellation terms must match underlying supplier terms, or agent receives pass-through of any refunds received from suppliers."
If a DMC won't agree to this, I don't work with them. Period. This clause alone would've saved me SGD 8,000.
Force Majeure Loopholes
Watch for: "Force majeure events may result in non-refundable cancellations at supplier discretion."
COVID taught everyone about force majeure. But some supplier contracts define it so narrowly that obvious catastrophes don't qualify, or they give the supplier total discretion on whether to issue refunds.
I saw this happen: Massive flooding in Thailand made hotel inaccessible. Hotel closed for safety. Supplier claimed it wasn't force majeure under contract terms, refused refund. Agent ate the cost.
Better language: "Force majeure includes natural disasters, government travel restrictions, venue closures, and similar events preventing service delivery. In such events, agent receives full refund of any amounts supplier recovers from underlying service providers."
Commission vs Net Rate Traps
This distinction seems simple but hides several traps.
Commissionable Rate Surprises
Contract says: "15% commission on published rates."
Sounds good. Then you discover the "published rate" they're using is their inflated rate sheet, not market rates. Your 15% commission works out to 8% below market pricing.
Always ask: "15% commission on what baseline? Provide last season's rate sheets for comparison."
I caught this with a Dubai hotel contract. Their "published rate" was 40% above what they were actually selling rooms for. My "15% commission" was worthless.
Net Rate Modification Clauses
Some net rate contracts include: "Supplier reserves right to adjust net rates with 30 days notice."
You've quoted clients, marketed packages, built itineraries around specific pricing. Then supplier raises rates 25%. You either eat the cost or disappoint clients.
What I insist on: "Net rates guaranteed for bookings confirmed during validity period, regardless of service date. Rate changes apply only to new bookings made after notification date."
This protects confirmed bookings from retroactive price increases.
Liability Clauses That Go Too Far
Every supplier contract limits their liability. Reasonable—they can't control everything. But some go way too far.
Zero Liability Clauses
Watch for: "Supplier assumes no liability for service quality, accuracy of information, or fitness for purpose."
This means if they book you into a "5-star beach resort" that turns out to be a 2-star motel in an industrial area, you have zero recourse. If their transfer doesn't show up and your clients miss their flight, not their problem.
I won't sign contracts with blanket zero-liability terms. Minimum acceptable: "Supplier liable for direct damages resulting from gross negligence or willful misrepresentation, up to total booking value."
Unlimited Agent Liability
The flip side: "Agent assumes full liability for all claims arising from services provided, including third-party claims."
Your client slips in a hotel bathtub (hotel's fault) and sues. This clause makes you liable even though you have zero control over hotel maintenance.
Better language: "Each party liable only for claims arising from their own negligence or breach of contract. Supplier maintains liability insurance for services provided."
Also verify the supplier actually carries insurance. Ask for certificate of insurance. If they can't or won't provide it, that's a massive red flag.
Allocation and Inventory Games
These clauses affect whether you can actually deliver what you're selling.
Non-Guaranteed Allocation
Contract states: "Inventory allocation subject to availability at time of booking confirmation."
Sounds obvious—of course it's subject to availability. But the devil's in timing.
You send a booking request. Supplier takes 48 hours to respond. By then, hotel sold out. Supplier shrugs—inventory was subject to availability, right?
What I negotiate: "Supplier confirms availability status within 4 business hours. If confirmed as available, allocation held for 24 hours pending payment."
This creates accountability. They can't confirm availability then claim it sold out minutes later.
Peak Season Allocation Priorities
Some contracts say: "During peak periods, allocation prioritized based on supplier discretion."
Translation: Your volume doesn't matter. Your relationship doesn't matter. They'll sell to whoever they want, and you might get nothing.
I learned this during Singapore F1 weekend. Despite being told I had "preferred agent status," my room requests went unfilled while the supplier sold to others.
Better terms: "Peak season allocation guaranteed up to [X] room nights quarterly for agents meeting minimum volume commitments. Priority allocation based on historical booking volume."
Get your guaranteed allocation in writing, with specific numbers.
Exclusivity Clauses That Limit Your Business
Some suppliers want to lock you in. Be very careful here.
Destination Exclusivity
"Agent agrees to book all [destination] services exclusively through Supplier for contract duration."
Seems reasonable if they're offering great rates, right? Until their service quality drops, their rates become uncompetitive, or they start having availability issues. Now you're contractually stuck with them while competitors eat your lunch.
I only consider exclusivity if:
- Contract term is 6 months maximum (easier to exit if needed)
- Rate guarantee is in writing and competitive
- Performance standards are specified with exit clauses if not met
- Compensation justifies exclusivity (minimum 20% better margins than non-exclusive terms)
Even then, I negotiate: "Exclusivity applies only to comparable services. Agent may source specialty or custom services not available in Supplier's portfolio from alternative sources."
Client Ownership Claims
Really problematic: "Clients introduced through Agent remain Supplier clients. Supplier may market directly to these clients."
You've spent money acquiring clients. Now your supplier is going to poach them? Absolutely not.
Insist on: "Supplier agrees not to solicit, market to, or accept direct bookings from clients introduced by Agent for [24] months following last Agent-facilitated booking."
Your client relationships are your business assets. Protect them contractually.
Automatic Renewal Traps
This one catches agents constantly.
"Contract automatically renews for successive one-year terms unless terminated with 90 days written notice before expiration."
You sign a one-year contract in January 2024. It expires January 2025. But if you don't send written termination notice by October 2024, you're locked in until January 2026.
I missed this once. Wanted to leave a supplier relationship that had deteriorated. Realized in December I was stuck for another full year because I'd missed the October notification deadline.
What I do now:
- Set calendar reminders 120 days before contract expiration
- Negotiate: "Contract renews annually only upon mutual written agreement" (no automatic renewal)
- Or at minimum: "30-day termination notice requirement" (not 90 days)
Better yet, start with shorter initial terms. One-year contract with option to extend beats three-year contract with early termination penalties.
Technology and Data Usage Terms
Modern B2B platforms like DMCQuote make these clauses increasingly important.
Data Ownership and Usage
Watch for: "Supplier may use Agent booking data for marketing, analytics, and business development purposes."
Your booking patterns reveal your business strategy. Which destinations are growing for you, which client segments you target, what your pricing looks like. That's competitive intelligence.
I insist on: "Agent booking data remains Agent's property. Supplier may use data only for fulfilling services and aggregate anonymized analytics. No client-level data shared with third parties."
System Access and Integration
If using a supplier's booking platform: "Agent granted access to Supplier system subject to terms and conditions. Access may be terminated at Supplier discretion."
You've built your entire operation around their platform. Trained staff on it. Then they terminate your access in a dispute. Now what?
Negotiate: "Platform access continues through contract term. Termination requires 30 days notice and export of all Agent booking data in standard format."
This ensures you can transition to alternative systems without losing historical data or ongoing bookings.
Currency and Exchange Rate Provisions
Especially important for international suppliers.
Contract states: "Rates quoted in USD. Payments accepted in USD or local currency at Supplier's exchange rate."
Their exchange rate is always worse than market. I've seen suppliers charging 5-8% above spot rates on currency conversion.
What I require: "Payments in agreed currency only (USD). If local currency payment required, exchange rate must be within 1% of daily central bank reference rate."
Or simply: Pay in the contract currency and handle exchange through your own bank at better rates.
The Contract Clauses You Actually Want
Enough about red flags. Here are clauses I actively seek and negotiate:
Performance Guarantees
"Supplier guarantees confirmation response within 24 hours, availability accuracy of 95%+, and client satisfaction rating of 4.0+ average. Failure to maintain these standards for two consecutive quarters gives Agent option to terminate without penalty."
This creates accountability. Suppliers who won't agree to measurable performance standards probably can't meet them.
Transparent Rate Auditing
"Agent may request verification of underlying supplier costs for net rate bookings. Supplier will provide documentation within 5 business days."
I've used this clause twice when net rates seemed suspiciously high. Both times, supplier couldn't justify their markup. Both times, I renegotiated better terms.
Preferred Partner Benefits
"Upon reaching [volume threshold], Agent receives: guaranteed peak season allocation, dedicated account manager, priority customer service, invitation to FAM trips, quarterly rate review."
Get the benefits of partnership in writing, with specific volume thresholds. Don't rely on verbal promises.
What to Do Before Signing Anything
My pre-signature checklist:
- Read the entire contract: Obvious, but most agents don't. Every word matters.
- Search for these terms: "liability," "cancellation," "termination," "payment," "automatic renewal," "exclusivity"
- Compare to your client terms: Can you deliver what you're promising clients within supplier's terms?
- Calculate worst-case costs: If everything in the cancellation/liability clauses happened, what's your maximum loss?
- Request modifications: Don't accept first-draft terms. Everything is negotiable.
- Get legal review for large commitments: Contracts over SGD 50,000 annual volume or multi-year terms justify lawyer fees
- Document verbal agreements: "Per our call, confirming [terms] will be added to contract Section X"
When to Walk Away
Some contract terms are deal-breakers. I won't sign if contract includes:
- Personal liability for corporate obligations
- Unlimited indemnification clauses
- No termination rights regardless of supplier performance
- Refusal to match cancellation terms with underlying suppliers
- Blanket permission to change terms without notice
- No liability whatsoever for service failures
If supplier won't negotiate on these fundamentals, that tells me how they'll treat me throughout the relationship. Better to find different partners.
Managing Multiple Supplier Contracts
I currently have active contracts with 12 suppliers across different destinations. Here's how I stay on top of them:
- Contract database: Spreadsheet tracking all key terms, renewal dates, volume commitments, notice requirements
- Calendar alerts: Reminders 120, 90, and 60 days before any action deadlines
- Annual review: Every January, review all contracts against actual usage. Renegotiate or terminate underperforming relationships
- Performance tracking: Monthly tracking of whether suppliers meet contractual service standards
This sounds like a lot of admin work. It is. But it's prevented multiple SGD 5,000+ problems and identified SGD 15,000+ in better terms through proactive renegotiation.
The Real Cost of Bad Contracts
That SGD 8,000 cancellation hit I mentioned at the start? Just the direct cost.
Real costs included:
- Damaged client relationship (they eventually came back, but it took time)
- Reputation hit in my community (client told others about the situation)
- Lawyer fees for trying to contest the contract (unsuccessful)
- Mental stress and distraction from business development
- Damaged relationship with DMC (eventually exited that partnership)
Total real cost? Probably SGD 15,000+ when accounting for lost business and opportunity cost.
Now I treat contract review as seriously as I treat client acquisition. One bad contract can undo months of successful sales.
Before you sign your next supplier agreement, spend an extra hour reading it carefully. Look for the red flags I've outlined. Negotiate terms that protect your business. And never, ever assume "it's just standard terms."
Standard for whom? Standard contracts protect suppliers, not agents. Your job is making sure you're protected too.
