General Supply Agreement

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Introduction

When a business wishes to ensure a constant and reliable supply of raw materials, commodities, goods or materials, it usually elects to enter into a framework agreement with a supplier. This type of agreement allows both parties to better plan their supply and transformation activities. The following document provides the legal and financial framework of such an operation. This standardized document can be used with two other documents, namely the purchase order issued by a potential customer (see document G02.320 of the Business Precedents) and a delivery note issued by the supplier (see document G02.330 of the Business Precedents).

Description

The General Supply Agreement is the legal instrument which evidences the transaction by which a person, called the CLIENT, agrees to purchase, from a second person called the supplier, goods on an ongoing basis for a fixed period of time in exchange for payment.

Use

We recommend the use of this framework document to govern and define the relationship between client and supplier resulting from a sale which requires successive execution. The agreement may cover the supply of raw materials, perishable goods, products, materials, merchandise and so on. This framework document helps to govern not only the qualitative and quantitative supply, but also the transport and delivery of the goods purchased under the contract. In this type of contract, the obligations of the parties can be performed in several steps or on a continuous basis. This contract differs from the purchase order (see G02.200) in that it provides the basis for a continuing relationship between the CLIENT and supplier, compared to the purchase order which governs a one-time purchase. It allows the supplier to get more funding for its activities because it can demonstrate to investors and bankers a constant source of income.

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