This product supply agreement is between
The Supplier owns or controls the right to manufacture, market, distribute, and sell, and wishes to supply to the Buyer, and the Buyer wishes to purchase, the products set forth in Exhibit A (the "Products").
From time to time, the parties may enter into various agreements under which the Buyer will purchase and Supplier will furnish additional products, and the parties want to establish purchasing procedures and the terms governing these transactions.
The parties therefore agree as follows:
1. PURCHASE AND SUPPLY.
The Buyer shall buy
The Buyer shall inspect each delivery of Products received from the Supplier, and notify the Supplier of any defects within
The Supplier shall deliver the Products to a location designated by the Buyer (the "Delivery Point"). The Supplier assumes responsibility for the Products, and all risk of damage, loss, or delay of the Products, until the Products are delivered at the Delivery Point. Once the Products are at the Delivery Point, the Buyer assumes all responsibility for and risk of damage to those Products.
The Supplier shall supply the Products to the Buyer at the prices specified in the price list in Exhibit A. The price of each Product includes packaging costs, all applicable taxes, customs duties, export duties, or similar tariffs or fees that the Supplier may be required to pay or collect in connection with the performance of its obligations under, or in furtherance of, this agreement. The Buyer will not be charged for insurance or storage of the Products.
The Supplier shall send invoices to the Buyer, and the Buyer shall remit payments to the Supplier, at the addresses listed in this agreement. The Buyer shall remit those payments within
If either party terminates this agreement because of the other party's default, the nonbreaching party, in addition to all rights it has under this agreement,shall have the right to exercise all remedies available at law or in equity. All rights and remedies are cumulative, and the election of one remedy shall not preclude another. Any termination will be without prejudice to accrued rights. Specifically, a termination due to default of delivery or payment for the Products required under this agreement will not affect or terminate the rights and obligations of the parties that have accrued under this agreement before or after that default.
A party will not be considered in breach of or in default because of, and will not be liable to the other party for, any delay or failure to perform its obligations under this agreement by reason of fire, earthquake, flood, explosion, strike, riot, war, terrorism, or similar event beyond that party's reasonable control (each a "Force Majeure Event"). However, if a Force Majeure Event occurs, the affected party shall, as soon as practicable:
No amendment to this agreement will be effective unless it is in writing and signed by a party or its authorized representative.
If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this bill of sale on the date stated opposite that party's signature.
Date: _________________ |
By:__________________________________________ |
Name: |
|
Date: _________________ |
By:__________________________________________ |
Name: |
[PAGE BREAK HERE]
EXHIBIT A
PRODUCT AND PRICING LIST
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PRODUCT NAME | PRICE |
1. |
$ |
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Globalization has had a tremendous impact on trade and business all over the world. New products flood the market every year, and before a product reaches the public, it may pass through the hands of international manufacturers, distributors, retailers, or buyers. Thus, It has become increasingly important to ensure each party’s rights and responsibilities are established at the beginning of a business relationship so any items transported can move smoothly through the process.
A product supply agreement or product supply contract establishes the terms on which a seller will supply products to a buyer. The agreement must be clearly written to ensure that products will reach the hands of the consumers quickly and with little complication. A well-drafted agreement will help ensure that all parties’ business requirements are satisfied on a timely and complete basis.
This article contains everything you need to understand to complete your product supply agreement. Successful business deals begin with good documentation, so it is important to have a written agreement handy.
Before signing, both parties should determine exactly what the agreement's goals are. If you are the supplier, decide how many product items you can realistically provide to the buyer within the designated time.
If you are the buyer, decide how many product items you realistically need for your business within the designated time. A good agreement accurately captures the parties' intentions. Before finalizing the draft, ensure the parties are on the same page.
A supply agreement is usually effective for a specific period of time. Sometimes, however, it can be drafted to continue indefinitely (i.e., with no particular end date). For example, you can set the duration of your agreement to one year, and if you’re happy with the supplier, you can extend it after discussion.
A product supply agreement should include both price and payment terms. For short-term agreements, it is often better to agree to a set price. For long-term agreements, it may be better to provide details about changing prices at regular intervals.
For example, a long-term contract could specify a discount from the supplier’s pricing list. Alternatively, the parties could set a price in a schedule to the agreement and agree that it may be changed at any time.
Before entering into an agreement in which a supplier agrees to deal with a buyer exclusively (i.e., not to give products to any other company for sale), make sure both parties understand the supplier’s business. Suppose the supplier offers a unique product or service, and the buyer’s competitors need that unique product or service to compete in the market. In that case, the parties may be unable to have an exclusive deal. This may be considered illegal if it restricts competition.
Give each party time to review the supply agreement. They must ensure that all discussed and agreed-upon terms and conditions are mentioned and clauses aren’t misinterpreted.
The parties must sign two copies once the supply agreement is ready after the changes. The buyer keeps one copy of the agreement, and the supplier retains the other.
Depending upon the complexity of the supply agreement, if the supplier or purchaser wishes to have a witness, then the needed arrangements should be made during the signing ceremony.
You can appoint an attorney to help you draft a document that meets your needs.
The following instructions will help you understand the terms of your product supply agreement.
This section identifies the document as a product supply agreement. You need to provide the effective date (the date when the contract was signed) and the details of the parties involved in the agreement. If applicable, mention what type of organization(s) they are.
In a product supply agreement, the “supplier” is the party who agrees to supply the products, and the “buyer” is the party agreeing to purchase them.
The “whereas” clauses, referred to as recitals, define the world of the agreement and offer key information about the parties. Describe the supplier’s business in general terms here. Also, give a detailed product list that the supplier will be selling to the buyer. Be specific. If there are serial numbers or titles to the items, include those as well.
The time period during which the products are supplied is called the “term.” The term starts on the date when the agreement is signed. Provide the number of years you want the initial term to run.
In this clause, you can also mention whether you want the supply agreement to be renewed automatically at the end of the initial term. If you include this clause, consider how long you want additional terms to be. Depending on your arrangement, this can be the same as the initial term, longer or shorter. In an auto-renewal agreement, you must also give an advance written notice to stop a renewal term from taking effect.
This section states the supplier’s promise to sell and the buyer’s promise to buy the products in supply agreements.
It is the buyer’s promise to buy at least a certain amount of products within a given time frame. Enter this number or quantity and the time within which the buyer must buy them. Depending on your agreement, this can be days, months, or years. You can also designate how this supply of products will be measured (e.g., in units, pounds, volume, cost, etc.).
This clause states that if the buyer doesn’t buy the minimum quantities and those amounts are available, it must pay the supplier a certain amount. Provide the amount and deadline by which it must be paid.
This provision is for “liquidated damages,” which is simply an agreement by the parties to set a specific damages amount in case of a breach. This can be any reasonable amount.
This part states that if the supplier doesn’t supply the minimum quantities, it must pay the buyer a certain amount. Enter this amount and the time frame within which it must be paid.
In supply agreements, this provision provides certain exceptions to the buyer’s requirement to buy from the supplier. These can be:
This section allows the buyer to examine the products received and determine whether they are acceptable. Give the buyer the time period to perform such an audit. Under this section, the supplier agrees to replace the defective product or refund the cost of such product if the buyer finds it unacceptable.
In this section, the supplier promises not to deliver defective products and gives assurance that the products will be of the assured quality. If the products happen to have any defect after their shipment, the supplier promises to repair or replace such products. There may be a specific period for which such defects should be reported to the supplier. For example, if the buyer receives a defective product but reports it after six months of the receiving date, then it might be considered as an invalid request.
During such an event, the supplier party expressly disclaims that the quality standards weren’t compromised from their end. Such defects might have happened either from manufacturing facilities or during transit.
This provision requires the buyer to make written requests before the products will be supplied. If this is a long-term contract that requires multiple deliveries, having this provision helps. However, if your arrangement includes only a small number of deliveries, it can be outlined in the supply agreement.
This part states that if your arrangement requires a purchase order to place orders, the buyer is allowed to cancel or change the orders if it provides advance notice.
This section provides the details regarding the delivery of products such as:
Use this section also to define each party’s responsibility during shipping, e.g.,
In this part, enter the applicable prices for the products sold (and supplied) under the product supply contract. Be sure to indicate if these prices may change over the term. According to the terms of this section, the prices include all taxes and fees, so keep that in mind as you negotiate the prices for the products.
This section specifies how many days after receipt of the supplier’s invoice the buyer has to pay the amounts owed. Give the number of days you and the other party have agreed to.
Here the supplier expects the buyer to safeguard their intellectual property and keep trade secrets private. If the supplier owns any intellectual property (e.g., trademarks, copyrights, designs, drawings, etc.), including provisions spelling out ownership rights in that property is a good idea.
This provision requires the buyer to use the supplier’s intellectual property on the products and the supplier to help the buyer’s staff use the supplier’s trademarks or name. However, the buyer is not given any direct or indirect ownership rights to the supplier’s intellectual property. The buyer is only granted the right to use the supplier’s property.
This optional provision allows the supplier to require the buyer to keep information mentioned in the agreement private. Both Parties are required to keep information about the products confidential as well.
This clause states that the agreement can end before time if certain actions or material breaches occur. For example, if the buyer doesn’t pay the supplier and continuously defaults on the payments, the supplier has the right to end the agreement. The parties should also notify each other of the intent to terminate the agreement and its reason.
Define each party's rights if either party defaults under the supply agreement.
Contracts may contain a clause known as "force majeure" that releases parties from liability for unforeseen and unavoidable disasters that disrupt the planned course of events and prohibit parties from carrying out their duties. These provisions typically cover both human-caused and natural calamities, such as war and man-made illnesses, and disasters like hurricanes, tornadoes, and earthquakes. During such instances the parties should give a written notice as soon as possible.
Such notification helps the parties prepare for contingencies and promotes business relationships.
This provision allocates responsibilities between the parties if problems arise in the future and protects each party from the financial consequences of the other’s illegal or harmful conduct.
For example, if the supplier fails to produce products of the agreed quality or sells defective products, the buyer will not be held responsible for any issues arising.
The supplier is also protected if the buyer doesn’t meet its obligations under the conditions of the agreement.
This commonly used optional provision requires the parties to resolve disputes in arbitration (rather than in the courts). There may be local restrictions (or limitations in your industry) about using these clauses, so reviewing laws governing arbitration in your area and your field is a good idea.
This part explains that if the involved parties get acquired by a new company or the ownership gets transferred to their successors or heirs, then all the rights and obligations will also be transferred to the new company or successor.
Here, the parties agree to sign the agreement according to the terms and conditions mentioned in the document as a whole.
This section indicates that any changes to the document are only effective if prior written consent is taken from the involved parties.
This section lists the addresses to which all official or legal correspondence should be delivered. Provide the mailing address for both the supplier and the buyer.
This clause allows the parties to choose the applicable law regarding the product supply contract. Once the state and local laws are decided, those applicable laws shall govern and interpret the agreement.
This section protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law prohibits arbitration clauses, it will not undo the entire agreement. Instead, only the section dealing with arbitration would be invalidated, leaving the remainder of the document enforceable.
If the parties involved are based in different locations, this clause allows them to sign the agreement using electronic devices or electronic signatures.
The parties state that they have entered into the agreement voluntarily, without relying on any promises, and that they understand its contents.
This section states that the headings at the beginning of each section are meant to organize the document. The headings should not be used to interpret the agreement.
A product supply agreement can be long and exhaustive, and creating an agreement from scratch can be tiresome. A product supply agreement template helps you create your supply agreements much quicker and easier. LegalZoom provides a comprehensive agreement template that is easy to use and readily available.
A product supply agreement ensures that both parties understand their rights and obligations. With careful drafting, your product supply agreement will lay the foundation for a profitable (and long-lasting) relationship between supplier and buyer.
A product supply agreement, sometimes called a supply agreement, defines the rights and responsibilities of a company that will supply goods (usually a manufacturer or wholesale distributor) and another that will receive them to sell at retail.
A supply agreement clarifies the terms of product orders and secures the inventory needed to keep sales flowing. It helps to set and maintain the supply in the time frames and inventory amounts that are best for both businesses.
The information you'll need to have handy to complete your supply agreement are: