Supply Agreements

As a result, a large proportion of companies are attentive (to varying degrees) to their delivery terms, whether they are generic terms and conditions used for each transaction, or broader “specific” supply agreements designed specifically for a given transaction. However, a much smaller proportion of enterprises pay the same attention to the supply conditions of others. The lack of vigilance in setting up supply relationships can have disastrous consequences if companies unreasnowingly accept unfavourable contractual terms. In general, it`s a good problem to have a customer who wants more than you can deliver, but not if you`re delivering an unlimited amount of parts at a below-market price or if the customer`s requirements exceed the forecast and you need to invest to keep up. The contract should therefore limit the maximum quantity you have to deliver for a certain period of time, or at least give you more time to “mount” the quantities. Warranties are assurances from one party to another that certain matters are true and correct or that the supply of goods or services meets certain criteria. Warranties may be implied by law. For example, the Trade Practices Act 1974 (Cth) implies certain guarantees that the goods delivered are fit for purpose and that the services are provided with the necessary diligence and skill. I am often asked by clients to check business contracts on supply relationships. I usually classify these documents as either: some master forms grant the customer a unilateral right of indefinite duration to renew the contract, whether the supplier accepts or not. This could be catastrophic for a supplier if it comes with an obligation to deliver parts at a fixed price.

Never agree to grant a unilateral renewal right to a customer unless the contract in question does not impose any obligation on you. 1. Who is related and who is not? It is typical for a master form to require a supplier to supply certain parts at specified prices for the duration of the contract, but rarely a master form will offer an obligation for the customer to purchase parts. Therefore, if the agreement remains unchanged, the agreement imposes on the supplier a unilateral obligation of delivery and only gives the customer the opportunity to purchase. There are a number of “usual” topics that are usually covered by delivery contracts. The supply contract protects the rights of both parties. The customer knows what awaits him with regard to the goods received and how they are delivered. In exchange, the supplier knows what the customer probably needs and how the payment will be made.. .

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