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When to use Agreements rather than Terms and Conditions

Applying Agreements instead of Terms and Conditions

Standard terms and conditions can be a useful starting point for negotiating a supply agreement, but they are unlikely to be detailed enough, so you might have to negotiate a specific agreement.

Manufacturing agreements

If you are entering into a long-term purchasing agreement under which you will buy goods from another business and then use them in your manufacturing process to produce your own finished goods for sale, you should use a bespoke set of terms and conditions of purchase to form the core of the agreement, ensuring that they adequately deal with the various situations which can crop up in this type of purchase situation.

If any of the goods that you purchase are defective, that can negatively impact on the quality or safety of your own manufactured product, with possible serious implications. The subject of such defects therefore needs to be covered fully in the purchase agreement.

The Consumer Protection Act 1987 allows actions for negligence to be brought against you as a manufacturer if your products cause death, personal injury or damage to private property as the result of any defect in your product. If goods used in your manufacturing process are responsible for the resulting defect, it may be possible for you as manufacturer to take legal action against your supplier of those goods. Additionally you should ensure that your terms of purchase allow you to return any goods that are in any way defective or are not in accordance with their specification.

Resale agreements

Reselling goods or services can lead to various complications if there are any problems following the resale. The supplier and the reseller purchasing from them should both ensure that they protect their respective legal position and interests by including relevant terms and conditions in the agreement between them. Occasionally, an intellectual property ("IP") dispute can see a reseller being sued by a third party owner of IP for products sold by the reseller to its customers. Conversely, a supplier may face legal action from a third party owner of IP as a result of misleading marketing by the reseller. It is far better to agree in the reseller agreement at the outset on allocation of liability (as between the supplier and reseller), and/or the responsibility and means for resolving such issues so that disputes can be avoided or more easily resolved later on.

Supplying a system

Certain business agreements may involve both the supply of goods and of services in order to build some kind of “system” which could, for example, be a complex piece of machinery which needs to be built on site, perhaps even integrated with other machinery. It’s important to ensure that you have terms and conditions which deal with both the goods which are being supplied and the services which are being delivered. Although it’s possible to have two separate agreements, you can also combine these, consolidating the various terms and making it easier to refer to them in case anything goes wrong.

A variety of Terms and Conditions relevant to your particular business can be downloaded from our Business Documents Folder. Click on any headings under "Related Documents" below for further information.

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