(Delayed Payment, defective goods, delay in supply are the common issues arises between the manufacturer and supplier which can be eradicated by supplier agreement)
What is Supplier agreement?
A supplier agreement is an agreement between the manufacturer (buyer) and the supplier for supply of material. This supplier agreement makes the buyer and seller understand the terms and conditions for the supply of material. The supplier agreement ensures the quality of the product, time of delivery, quantity and pricing. This helps to have a tension free business. This is also called vendor contract.
When you need a supplier agreement
Whenever you need to purchase a product from a external seller (supplier), you need to sign a properly drafted legal agreement. The agreement will make your relationship with your vendor stronger. A oral agreement will create unnecessary legal consequences.
Why you need a Supplier Agreement?
To execute the project plan onetime
To achieve the desired quality
This avoids unnecessary Court Litigations
Legal binding agreement as proof over law
This will make you to move to the next level in business as you put yourself into the commitment
The last & most important factor is money; a strong supplier agreement provive outstanding onetime.
Important elements in supplier agreement
- Product description: This specifies the quality, quantity and other descriptions about the products that sought to be supplied.
- Time : Time includes the date of supply of the products. Further it also includes the Time and spells of payment. The supplier has to supply within the stipulated time in order to avoid any legal consequences. Always the delayed delivery will put the manufacturer face certain loss.
- Payment and pricing : The most important clause in the eyes of a supplier. This says when the money to be released. If any default happens, the supplier can approach the court or arbitration.
- Freight charges : It has to be mutually agreed by both the parties about the fright charged.
- Technology rights : Nothing but the IP rights, it has to be very clearly mentioned about the ownership of the technology. And it should also clearly state is there any transfer of technology.
- Indemnity : One party should not suffer loss because of the other parties negligence/mistake.