Supplier contracts

Supply relationships tend to grow out of a first order and a price list rather than a negotiated contract. Years later the business depends on that supplier for a component, a raw material or a service it cannot easily replace, and the terms that govern it are whatever was printed on the back of an order confirmation. That works until a delivery is late, a batch is faulty, prices jump, or the supplier decides it no longer wants the business.

Securing supply is less about the price agreed than about what happens when supply fails, and a contract written with that in mind reads very differently from a price list. Advice on supplier contracts looks at:

• the rules on framework agreements, call-off orders and the moment a purchase order becomes binding;
• the rules on delivery terms — where risk passes, who insures the goods in transit, and what counts as delivery;
• the rules on specifications, inspection on receipt and the notice a buyer must give of a defect;
• the rules on remedies for a faulty or late delivery — repair, replacement, a lower price, or buying elsewhere at the supplier’s cost;
• the rules on minimum purchase commitments and exclusive supply, and on the dependence they create on both sides;
• the rules on price changes, indexation and renegotiation when costs shift after signature;
• the rules on force majeure and hardship, and on who bears a disruption further up the supply chain;
• the rules on protection against the sudden end of an established supply relationship, even without a written contract.

Our lawyers can support you with this.