Supply Agreements for Products / Services

Blacks Solicitors’ Commercial Law team is highly skilled in drafting and reviewing bespoke Supply Agreements that govern important relationships for business owners.

All businesses and industries require goods and/or services in order to function. From manufacturing companies who require raw materials to transform into finished products, to tradesmen who require tools in order to provide their services.

Whilst many businesses and suppliers enjoy good working relationships, the advantages of having a properly drafted Agreement in respect of the supply of goods or services can’t be underestimated.

Not only will the document provide clarity to the parties as to their rights and obligations, but it will also provide adequate mechanisms and processes to deal with, and resolve, any issues which may arise (including any disputes).

For a recipient of goods or services the benefits may include:

• A fixed price structure which can’t, subject to the Terms of the Agreement, be changed without prior notice
• An objective standard against which the quality of the goods or services can be measured and subsequently rejected

For a supplier of goods or services the benefits may include:

• The granting of exclusivity, allowing the supplier to be the sole and exclusive supplier of the goods or services to the recipient for a specified period of time
• A limitation on its liability arising out of, or in connection with, the provision of the goods or services (in particular for any failure to comply with any agreed standards)

Frequently Asked Questions

Can I use a “standard” Supply Agreement?

Whilst a “standard” Agreement may be used for the supply of goods or services, they are often fraught with danger.

By their nature these Agreements are very general and therefore will not necessarily accurately capture the nature of the parties’ relationship or their intentions. Furthermore, where the supply of the goods or services is complex or the value is particularly high, a “standard” Agreement will not be sophisticated or detailed enough to provide the parties with adequate protection.

A specifically drafted contract will ensure that the Terms of the Agreement are appropriate, accurate and comprehensive enough to cover any and all pertinent issues which arise pursuant to the supply of the goods of services.

What are Liquidated Damages and can I include them in my Supply Agreement?

Liquidated Damages are damages, at a fixed amount, which are payable by one party to the other in the event that there is a breach of the Agreement.

Its purpose is to allow one party to recover the fixed amount in the event of a breach without having to pursue a traditional contract claim, during which it must be shown that there is a breach of contract and a loss suffered as a result of the breach.

Whilst Liquidated Damages can be extremely beneficial it is important to ensure that the fixed amount is a genuine pre-estimate of the claiming party’s loss as a result of the breach. If a Court finds that this is not the case, then it will interpret the Liquidated Damages Clause as a Penalty Clause and render it unenforceable.

Great care must therefore be taken when deciding the amount of any Liquidated Damages which may be included in any Agreement, and appropriate advice must be sought.

For more information on the above, or to find out how Blacks’ Commercial Law team can assist you with a Supply Agreement, please email or call us today on 0113 207 0000.