Sale and Supply of Goods Agreements
Long term supply of goods relationships will generally ultimately involve the goods supplied being either resold or incorporated into other goods as part of a manufacturing process.
The Supply of Goods Agreements in this subfolder address both situations, each containing clauses tailored either to the resale of goods or to their inclusion in finished products. The terms of each supply agreement govern the specification and supply of goods and how the customer may use those goods.
Standard terms and conditions may provide a useful starting point in negotiations for supply agreements. Suitable document templates can be found in the Supply of Goods Terms of Business subfolder.
Sale and Supply of Goods Agreements is part of Business . Just £38.50 + VAT provides unlimited downloads from Business for 1 year.
Frequently Asked Questions
I have agreed to supply a customer with goods over the long term. Do I need more than standard terms? +
Usually yes. Standard terms of business are built for individual sales, so a continuing supply relationship is better served by a supply agreement that fixes the specification, forecasting and ordering, pricing and price reviews, delivery and how either side can bring the arrangement to an end. That certainty protects both sides over the life of the deal. Standard terms can still be a useful starting point for the individual orders placed under it.
What is the difference between supplying goods for resale and supplying goods to be built into another product? +
The commercial use is different, so the contract terms differ. Where goods are supplied for resale, the agreement focuses on how the customer may market and onsell them. Where goods are incorporated into a manufacturing process and become part of a finished product, the agreement deals with specification, use in production and quality control instead. This sub-folder has a version tailored to each situation, so pick the one that matches how your customer uses the goods.
How can I control what my customer does with the goods I supply? +
Set it out in the supply agreement. You can specify the agreed specification, restrict how the goods are used or resold, require quality and storage standards and control the use of your branding. Because a business supply contract gives you real freedom of terms, the controls that bind the customer are largely the ones you write in. The supply agreements here include clauses governing the specification and permitted use of the goods.
Should I keep ownership of the goods until I have been paid in a supply agreement? +
It is worth doing. A retention of title clause lets you keep ownership until payment, which is valuable in a long-term supply deal where large amounts can be outstanding at any time. Section 19 of the Sale of Goods Act 1979 allows this, but it only helps while the goods are still identifiable and have not been used or built into other products. In a manufacturing supply, plan for the point at which your goods lose their identity.
Are standard terms of business enough, or do I need a full supply agreement? +
It depends on the relationship. For occasional or one-off sales, standard terms of business are usually enough and are quicker to put in place. For a committed, repeating supply arrangement, a full supply agreement gives both sides more certainty on volumes, price and exit. A common approach is a supply agreement as the framework with your standard terms governing each individual order. Suitable standard terms are in the Supply of Goods Terms of Business sub-folder.
