Posted by Minna Boyle on 4 December 2018
Supply Agreements are important for suppliers and customers who want to solidify their business deals. Similar contracts include Sale Agreements, Distribution Agreements and Reseller Agreements. For suppliers, these agreements will secure your revenue streams and protect your liability. For customers, the agreement will ensure that you are supplied with the right goods or services, at the right time.
Why Do I Need A Supply Agreement?
If you’re running a business that involves sale, supply, distribution or resale of goods, it’s always a good idea to have a contract in place. It will help clarify what the role and responsibilities of you and your customer are and reduce the chance that a dispute will occur. It can also help to limit your liability if something goes wrong, secure your revenue streams and provide other important protections and limitations specific to your business.
How Do I Use It?
Supply Agreements are sometimes written as a formal contract to be signed by both the supplier and the customer. This is especially common if you have an ongoing, high value arrangement, such as a long-term Reseller Agreement. However, it’s often easier to have your Supply Agreement written in a way that it can just be attached to the back of an invoice, form or a proposal, and are drafted so that your customer can accept the terms without need to sign it.
Rather than having a signing block, the agreement often includes a sentence that says something like: “You will be taken to have to have accepted these terms and conditions if you order, accept or pay for any goods provided by us after receiving or becoming aware of these terms.”
Supply Agreement Example
Lauren sells jumping castles wholesale to a range of jumping castle hire companies. When a hire company hires some jumping castles from Lauren, Lauren writes an invoice with the number of jumping castles purchased and the price. The Supply Agreement is attached to the back of the invoice. The Supply Agreement sets out that the hire company is entitled to a full refund if the jumping castle is faulty. However, the hire company cannot claim a refund if the company damages the jumping castle by not following the instructions on the product, or if the jumping castle is damaged by one of the hire company’s customers.
Lauren also sells jumping castles wholesale to some retail stores. Lauren attaches a Reseller Agreement to the invoice. The Reseller Agreement sets out the terms of the sale as well as certain obligations on the retail store, such as to sell the jumping castles in the same packaging and condition as how Lauren delivers them.
What’s In A Supply Agreement?
Here are the sorts of issues that are typically covered in a Sale, Supply, Distribution or Reseller Agreement.
- DESCRIPTION OF THE GOODS – Make sure you are clear about exactly what is being sold.
- PAYMENT – What is the price and how are payments made?
- DELIVERY – How will the goods be delivered to the buyer?
- DISPUTE RESOLUTION – What happens if there is a dispute? Is there a process that needs to be followed before the dispute is taken to court (eg mediation)?
- WARRANTIES – A Supply Agreement will often contain some warranties about the quality of the goods being provided. Certain guarantees regarding sale of goods are also automatically provided to consumers under the Australian Consumer Law.
- LIABILITY – To what extent your business be liable if something goes wrong or someone suffers loss as a result of the sale?
Need Help With A Supply Agreement?
Putting together a contract can seem like a daunting process, as it’s hard to know what you should put in it and how to word it. It’s a good idea to invest in a lawyer to assist you with this process, as this one-off cost can help prevent disputes, misunderstandings and save you from problems and headaches in the long run.
At Sprintlaw, we have a team of experienced lawyers who can assist with your Sale, Supply, Distribution or Reseller Agreements and other legals your business may need help with. Get in contact with one of our consultants for a no-obligation chat about how we can help.