SUPPLY AND SERVICE AGREEMENTS

If you supply goods to customers (whether a business or a consumer) it is important that you have a supply agreement in place that you can use when engaging with clients. If you don’t you run the risk that the terms of any agreement could be misinterpreted, and this increases the likelihood of a dispute later on.

For those businesses that supply both services and goods you would need a contract that caters for both. In some situations, you may need two contracts, one for the sale of the goods and one for the associated service. Such agreements can be complicated so it is important to obtain expert legal assistance when preparing them.

Supply and services agreements should include the following:

• Scope or specification of the service or goods. You should ensure the parties are clear on the scope and limitations of the service and/or goods being offered. These should be clearly recorded in the agreement.
• The parties. Sounds simple but sometimes it can be quite complicated as to who the parties are to the agreement. It is therefore important to record who the contracting parties are at the outset.
• The price. Is the contract for a fixed price or is the price based on time spent and materials? What happens if the supplier’s costs increase due to factors outside of its control? It is important to not only detail the price of the goods or service being provided but if there is a chance that the supplier’s costs could increase there should be a mechanism to pass this cost on to the buyer.
• Time and place of delivery / performance? Are the goods to be delivered at a particular address on a particular date? Is the contract supposed to be performed on or by a certain date? The agreement should clearly record the time and place for delivery of goods or performance of services.
• Limiting liability. A supplier may want to limit their liability for damages. The supplier can limit their liability for certain losses and damages however such limitations need to be clearly recorded in the agreement. It is worth noting that you cannot limit liability for death or personal injury caused by negligence.
• Is the contract for a fixed period or is it a rolling contract? The duration of the contract needs to be clearly recorded.
• In addition to duration the parties should consider when an agreement can be terminated and what for. A one-off contract may not need such careful consideration whilst a long-term contract will require consideration as to such terms as notice period and events of default.