Supply Agreement Sample Format

What is the  Supply Agreement?

An agreement between a supplier and a buyer stating the terms and conditions of the supply and purchase of products a Supply Agreement. The agreement settles the obligations of both parties and lays down the definite path of future transactions or purchase order and payments.

The agreement also provides the outcomes in case of a dispute between the parties and the procedures to resolve the same. Both the parties should carefully review the supply agreement to ensure that the agreement must mention their needs and requirements are unambiguous. The agreement protects the rights of both parties and avoids future confusions regarding the transactions. The terms of the agreement mutually agreed by the parties thus must be detailed and thorough.

What Should the Supplier Look for in the Agreement?

1. The payment method must be set up properly. The submission of invoice, dates, and mode of payment. In case of late payment, what penalty may be levied?
2. In what circumstances if the right to terminate the agreement available.

• How long shall be the notice period and the period within which accounts be settled?

1. What warranties are being provided?

What Should the Purchaser Look for in the Agreement?

1. The quality of goods that shall be received, in case the goods don’t meet the specification then what shall be the course followed.
2. If the number of goods can be altered as per the need and demand. Will that require a modification in the agreement or a simple notice to the supplier?

• If there is a limitation of liability for the supplier and how much is the purchaser covered as per the agreement.

1. The provisions for in case of delay in payment and penalty/ fee upon the amount
2. Termination clause

What constitutes the Supply Agreement?

1. Details of both the parties involved with the registered address
   1. If acting through an authorized representative, then the details of the authorized representative must be mentioned.
2. It may contain some definitions and interpretation of the terms contained in the agreement.
3. Tenure of the agreement
   1. If for a specific year or till a particular date
   2. If can be renewed and terms of renewal
4. The description of goods provided
   1. Samples, if any
   2. Drawings, if any
   3. Advertising brochures, if any
   4. In event of a defective good consignment, what course be adopted
5. The Provision of the delivery of goods
   1. When shall the first consignment be delivered
   2. Changes in the delivery date when requested
   3. Which party to bear the cost of transportation
   4. Fee attracted from the delay in delivery
   5. Force majeure events
6. Payment for the goods
   1. How and when the invoices are generated
   2. Mode of payment
   3. Fee attracted in case of late payment
7. Warranties provided by the Supplier
8. Title to the goods and risk upon them shall lie on which party
9. Provisions if any Intellectual Property Rights are involved with the goods
10. If the parties can sub-contract or assign the duties and obligations under the contract
11. A confidentiality clause may be included so as to safeguard the supplier’s interests
12. Termination clause
    1. If can be terminated by parties on happening of an event
    2. A reasonable notice to be provided to the other party
    3. The time period within which the accounts require to be settled
13. If any amendments allowed under the agreement, if yes then how
14. Governing Law and the Jurisdiction, in event of a dispute arising between the parties
    1. Dispute resolution process also may be mentioned.

What are Advantages of a Supply Agreement?

• The Supply Agreement is helpful to the parties as they can get rid of similar purchase orders being a delay with repeatedly. Supply agreements also aid the parties by making the pricing and payment patterns consistent.
• The parties are able to go ahead with the transaction with a security of an enforceable Agreement in place between them
• Planning ahead becomes convenient for both the parties.

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