Simpler trading arrangements
Are you looking to make managing arrangements with your repeat business
customers easier? Do you want to easily avoid ambiguity about terms and
conditions that apply to your dealings with them? A “framework” arrangement
might be the solution.
What is a “framework agreement”?
A “framework” or “call-off” arrangement between you, as a supplier, and
your trade customer could take the form of a master agreement which sets
out how they can place an order and all of the terms which will apply to
that order. But it does not also require them to actually place an order,
either at the outset or subsequently. To that extent signing up to a
framework agreement does not create any obligation on the customer. It is
only as and when they choose to place an order during the term of the
Agreement that there is a binding contract for you to supply, and for them
to pay for, the particular type and quantity of goods or services covered
by the order. Such a “framework” or “call-off” agreement is sometimes also
known as a “master ordering agreement” or “blanket purchase agreement”.
These expressions are often used interchangeably to mean the same thing.
What is the purpose and advantage of having a “framework agreement”?
Suppliers of goods or services will often set up such a facility with
business customers in order to provide an easy mechanism for them to use
when, from time to time, they place an order with the supplier for the same
(or similar) type of goods or services.
Using such a “framework” makes the process easier for you and your customer
because you both agree in advance on all terms to apply to both the
ordering process and to each sale resulting from that process. You will not
also have to discuss or agree terms to apply each time they wish to place
an order: you and they will have done so previously.
You will benefit by saving on the administrative time that you would
otherwise need to spend on negotiating terms and on processing non-standard
paperwork, e.g. your customer’s own purchase order or other form, each time
they wish to purchase a certain type or range of goods or services from
you. It will also be quite clear that the agreed standard terms will apply
to every order for the goods or services and that none of your own or your
customer’s standard or other terms will apply instead or as well, thereby
avoiding any legal argument as to which terms apply. There is also a
benefit to your customer in that the arrangement saves time and they know
in advance all of the terms that will apply to any orders.
New framework documents in new subfolder
This month we have therefore added to our Commercial Agreements Group a new
Framework Agreement Documents subfolder. It includes two new Framework
Agreement templates one for goods and one for services.
Each can be used with one of the two template Schedules (goods or services,
as appropriate) which we have also included in the new subfolder. The
Schedules each contain a set of standard supply terms, one for goods, one
for services. Whenever your customer requires goods or services of the type
covered by that set of terms, they can place an order under the Framework
Agreement’s standard ordering procedure. Each such order will then be
deemed to be on the terms of the Agreement and its Schedules.
Further framework documents
We are considering adding one or more further sets of framework agreements
to our Business folder, including one for various IT Services. As and when
we add any more framework documents, we will let you know.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific