Clarity for both parties
The Supply Agreement is an agreement in which a supplier agrees to supply certain goods and/or services to a buyer, whether or not exclusively. On the (international) market, a Supply Agreement (in the form of a framework agreement) is often practical because it lays down once-only the conditions under which your customer can purchase products or services from you. Often on the basis of a so-called (rolling) forecast, your customer can then order the products or services via a purchase order and you can take this into account in your (production) planning. If you include a minimum purchase obligation, you are also assured of minimum sales.
When do you conclude a Supply Agreement?
You enter into a Supply Agreement when you regularly supply products or services to another party (the Supply Agreement takes on the character of a framework agreement), when you supply a product or service with a high risk content or a high price (e.g. machines) or when you wish to enter into a special relationship with your customer in any form.
For a single delivery of (non-risk or expensive) products or services, it is often more practical to refer your customers to your general terms and conditions of delivery by means of an offer. However, this reference must meet certain formal requirements and you must then have tailor-made general terms and conditions of delivery at your disposal. See our page about general terms and conditions.
What does the Supply Agreement say?
In the Supply Agreement you include which products you deliver, how often and when you deliver the products, what these products have to comply with, at what price and payment conditions you deliver the products, which delivery conditions apply (e.g. incoterms), which warranties apply to the products and to what extent your liability extends. Depending on your payment terms, it may also be wise to include a retention of title in the Supply Agreement. In this way you remain the legal owner of the delivered products until you have received full payment for the delivered products. Furthermore, you can also include other conditions in the Supply Agreement, such as that the customer has an obligation to purchase, has to perform an incoming inspection test or other quality assurance agreements (also often to be included in a separate quality assurance agreement).
In addition, it is also very important that the Supply Agreement states the circumstances under which the agreement may be dissolved.
Do you need assistance in drawing up a Supply Agreement?
Would you like support in drawing up and negotiating a workable and legally clear Supply Agreement? Or are you dealing with a dispute about or termination of a Supply Agreement? Our lawyers will be happy to assist you. Please feel free to contact us for more information.