Free Supply Agreement Template
A supply agreement defines the terms of transactions between a buyer and seller of goods or services. This article explains a supply agreement and when businesses should use one.
What is a Supply Agreement?
A supply agreement is a legally binding contract between a buyer and seller, establishing a business relationship for the seller to provide goods or services to the buyer on an ongoing basis. These agreements outline all the critical details of the arrangement so both parties understand the expectations. These details include the scope of work, pricing, quality standards, delivery schedules, payment terms, confidentiality, liability, dispute resolution, and more.
Supply contracts help vendors and clients work together efficiently while protecting each party’s interests in case issues arise. They provide certainty around availability, costs, and other specifics that are essential when relying on a supplier over an extended period. For recurring purchases of products, materials, or services, a well-structured supply agreement is recommended to govern every aspect of the business partnership.
When to Use a Supply Agreement Template
When an organization routinely purchases goods or services from another company, executing a supply agreement is advisable to document the relationship formally.
For example, a manufacturer that regularly buys certain raw materials from the same supplier should have a supply contract to establish ongoing pricing, delivery terms, quality control standards, and other expectations. This agreement provides legal protections for the buyer if materials are not delivered on time or do not meet specifications.
A supply agreement template also helps when hiring a vendor or independent contractor to handle IT support, software development, marketing, consulting, and other services. Defining project scope, timelines, access to proprietary information, payment terms, ownership of intellectual property, and liability limits in an agreement sets clear boundaries for the engagement. Requiring e-signatures finalizes the document quickly so work can commence.
Whether purchasing products, materials, or professional services repeatedly, utilizing a supply agreement ensures that customer and provider interests are secured as transactions continue for months or years.
What Should Be Included in a Supply Agreement
A comprehensive supply agreement clearly defines all critical aspects of the business relationship so both buyer and seller understand the expectations.
Party Information
The first section should identify the two parties entering the supply arrangement by providing complete legal names, addresses, and contact information.
Listing the official names and details of the companies demonstrates that this is an official contract between two distinct entities. It also enables direct communication using phone numbers and emails if issues arise.
For example, a supply agreement between a small retailer and a wholesale distributor would specify:
Buyer:
Jeff’s Golf Supplies, Inc.
125 Main St.
Columbus, OH 45202
Phone: 614-555-0124
Email: [email protected]
Seller:
Taylor Wholesale Distribution LLC
250 Oak Rd.
Cincinnati, OH 45201
Phone: 513-555-0147
Email: [email protected]
Clearly defining this information right up front ensures no confusion on who the two parties in the legal agreement are.
Scope of Agreement
The scope sets expectations on the nature of goods or services supplied under the contract. This agreement should specify the included products, materials, or work activities and any limitations or exceptions.
For example, a tech company hiring an external marketing firm may specify that the scope only includes content creation, social media management, and analytics reporting. All media buying, SEO, and website development work would be explicitly excluded from the scope and require separate agreements.
Supply Details
Outlining supply details is essential for the buyer to understand what is being purchased. Important information to include:
- Specifications of products or services being delivered – Quantity, size, materials used, certifications, and capabilities.
- Quality control standards to be met and process for inspection/rejections
- Packaging and labeling expectations
- Any related accessories, tools, parts, and documentation to be provided
The more clarity supplied on what the seller must deliver, the less chance of misunderstandings, which could disrupt the business relationship.
For example, a contract manufacturing agreement would carefully detail component materials required, product testing procedures, acceptable defect rates,and packaging restrictions, so expectations are straightforward for both manufacturer and purchaser each time an order is placed.
Ordering Details
Transparent ordering processes prevent confusion by establishing the following:
- Standard procedures for placement: Minimum lead times, approved request methods (email, portal, etc.)
- Cancellation windows: How late an order can be amended or retracted
- Forecast expectations: For vendors to properly plan, this outlines regular estimate updates the buyer should provide on anticipated future orders.
- Customization and storage options: Can products/services be customized, personalized, or stored long-term?
- Dispute terms on order inaccuracies: Process to resolve incorrect, damaged, or incomplete orders.
Carefully articulating ordering protocols aligned with the vendor’s manufacturing and distribution capabilities enables a smooth sequence for sourcing additional goods or services. Outlining timelines, communication flows, accountability, and correction plans prevent buyer/seller disputes later.
Delivery Details
Clearly articulating delivery schedule expectations prevents issues down the line, outlining:
- Exact location(s) for delivery/shipments
- Party responsible for freight/shipping costs and logistics
- Shipping documents required (packing slip, waybill, etc.)
- Transfer of ownership: When do products become property/responsibility of the buyer
- Processing damaged/rejected goods, including who pays the freight for returns
For example, a supplier of retail products would specify that they handle all shipping costs to the buyer’s warehouse door using a common carrier. However, the buyer is responsible for rejected item return costs.
Duration of Agreement
The duration frames the overall length of the business relationship by establishing:
- An effective start date
- An end date or renewal clauses
- Any extension options: Can the buyer unilaterally extend?
A defined term prevents open-ended supply commitments but allows flexibility to continue a productive relationship. Month-to-month renewals, multi-year options, or automatic yearly extensions provide continuity.
Pricing, Invoicing, & Payment Terms
Financial elements that should be detailed:
- Product/service pricing: Unit costs, volume discounts, fees, etc.
- Billing frequency and payment terms: Net 30, Net 60, etc.
- Invoice delivery method: Paper or e-invoices
- Applicable tax responsibilities
- Late fee penalties, interest charges for past due payments
Also, outline:
- Benchmarking price adjustment process: Cost review to markets
- Change order processes: Alterations from original pricing
- Currency to be used for billing and payment
Ensuring clear capture of all financial expectations aligns accounts receivable teams. This enables the seller to accurately track payments and follow up on delinquent invoices. It also helps buyers properly accrue vendor liabilities.
Liability
Since business relationships can sometimes sour, limiting future liability risk is critical such as:
- Business loss protections: Lost profits, recovery of indirect damages
- IP indemnification: Who claims damages from IP breaches
- Insurance requirements: Minimum liability coverage amounts
- Product defect responsibilities: Who pays the resulting damages
Capping liability exposure protects parties in a worst-case breakdown. However, some reasonable responsibility demonstrates good faith that all operations will meet agreement standards.
Confidentiality
With sensitive information shared, including a confidentiality agreement, prevents future issues such as:
- Defining what is considered confidential (financials, intellectual property, operational data, etc.)
- Limits on sharing confidential information internally or externally
- Processes upon supplier agreement termination: Return or destruction of materials
- Liability and remedies for breaches: Damages, legal responsibility
Proper confidentiality protections align with any existing non-disclosure agreements, ensuring vendors can safely access necessary internal information for effective work but not misuse it externally later on.
Modification & Termination
Outlining an amendment process ensures changes adhere to proper approvals, typically requiring:
- Written notice to all parties on proposed modifications
- Timeline to respond/negotiate changes
- Authorized sign-offs before becoming binding
Separately, termination clauses allow dissolution if the partnership sours:
- Advance notification days/months
- Ability to terminate for cause (like an unremedied material breach)
- Effect on open orders and confidentiality post-termination
- Formal mechanisms to modify or exit the supplier agreement provide stability in the relationship.
Signatures
The signatures physically execute the supplier agreement, typically structured:
- Date signed
- Signee name and title
- Legal company name
- Signature capture
Also include:
- Number of company witnesses needed
- Expected process if digitally signing
Securing authorized signatures binds both parties to the full contractual terms outlined. Digital signature services like Signaturely securely capture government-valid e-signatures from each party quickly.
Benefits of Using a Supply Agreement Template
Supply agreements provide valuable structure, consistency, and legal protection for recurring purchase relationships between companies. Benefits of using a product supply agreement template include:
- Savings in legal fees: Templates enable creating contracts without paying lawyer bills, saving potentially thousands of dollars.
- Rapid setup: Input specifics for each unique arrangement versus drafting custom wording.
- Clarity around responsibilities: Template sections prompt defining processes from ordering to delivery, pricing terms, quality control, and more.
- Risk management: Components like liability limits, confidentiality rules, and intellectual property protections help prevent future issues.
- Consistent legal protections: Contracts activate helpful clauses like requiring written notice on modification approvals, governing law jurisdiction, dispute resolution processes, and breach of business agreement penalties.
A solid agreement template allows for swiftly structuring a legally binding B2B partnership with confidence instead of an informal gentleman’s agreement vulnerable to misaligned expectations or outright disputes. Leveraging an expertly crafted industry-standard agreement template saves money and removes the hassle of reliable transactions.
Download our free example
Supply Agreement Template
We’ve got your back here at Signaturely, and we’re ready to help make stress-free contracts a reality. Forget the confusing paperwork and overwhelming legal jargon – get easy, breezy contract templates in minutes with our free template.
How to Create a Supply Agreement With Signaturely
Signaturely’s intuitive platform makes it easy to create professional supply agreements in just a few clicks. To do this, simply:
- Select the supply agreement template in Signaturely
- Drag and drop in your company logo
- Input basic information like partner details and a description of products/services being provided
- Further, customize template clauses as needed directly within Signaturely
- Send out for legally valid e-signatures from all parties
Once executed, Signaturely stores signed agreements with robust security compliance for evidentiary purposes if needed later.
With simple creation, real-time tracking, and centralized access to signed contracts, Signaturely keeps supply agreement processes organized so you can focus on building strong supplier relationships.
FAQs About Supply Agreements
Below are a few of the most frequently asked questions about supply agreements.
How do you write a supply agreement?
When writing a supply agreement, it’s advisable to follow a structured template that clearly outlines all the critical components of the agreement. Key sections should include the scope of the agreement, which details the specific goods or services to be provided, ordering procedures, pricing and payment terms, and liability rules.
It’s also important to include clauses on confidentiality to protect any sensitive information exchanged during the course of the agreement. Other essential sections are delivery terms, quality assurance processes, and a clear definition of the parties involved. The supplier agreement should be concluded with a section for signatures, solidifying the commitment of both parties to the terms laid out in the document.
What is an agreement for the supply of materials?
An agreement for the supply of materials is a legally binding contract in which a buyer commits to a purchase agreement on certain products, components, or raw materials from a supplier on a regular basis. This agreement typically specifies the types of materials to be supplied, the quantities, delivery schedules, pricing, and payment terms. It may also include clauses relating to the quality of the materials supplied and what happens in the event of non-compliance.
What is the basic contract of a supplier?
At its core, this contract includes a detailed definition of the services or goods to be provided, the timing of deliveries, pricing details, and quality standards that the supplied goods must meet. Payment terms, which could include payment schedules and conditions for payment, are also a critical part of this contract. Other important aspects often included are clauses on dispute resolution, termination of the agreement, and any warranties or guarantees.
What is a supply chain agreement?
This broader agreement goes beyond a supplier contract to coordinate multiple entities like manufacturers, warehouses, distributors, and retailers to optimize a complete end-to-end workflow.
What You Need to Remember About a Supply Agreement Template
Well-structured supply agreements clearly define expectations, ensure consistent product/service availability and pricing, reduce risks for both parties and enable resolving issues quickly through binding rules. Using a free template to craft your supplier agreement can elevate your service provider’s effectiveness and paves the way to strict compliance.
Free Supply Agreement Template
SUPPLY AGREEMENT
PARTIES
- This Supply Agreement (hereinafter referred to as the “Agreement”) is entered into on ________________ (the “Effective Date”), by and between ________________________, with an address of ________________ (hereinafter referred to as the “Supplier”) and ________________with an address of ________________ (hereinafter referred to as the “Buyer”) (collectively referred to as the “Parties”).
SCOPE
- The Supplier agrees to provide the Buyer with [description of the goods or services to be supplied], hereinafter referred to as the “Products”, in accordance with the terms and conditions outlined in this Agreement. The Supplier shall ensure that the Products meet the specifications, quality standards, and quantities as agreed upon by both Parties. Any modifications to the scope of supply must be mutually agreed upon in writing by both Parties.
PRODUCTS
- The Supplier agrees to supply the following products
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
- ________________________________________________________________________
EXCLUSIVITY / NON-EXCLUSIVITY
- The Parties agree that this Agreement [is/is not] exclusive, meaning that the Supplier [is/is not] restricted from supplying similar products to other clients during the term of this Agreement. The Buyer acknowledges that the Supplier may engage in similar business activities with other parties and agrees not to restrict or limit the Supplier’s ability to do so.
ORDERS
- The Buyer shall submit orders for the Products in writing, specifying the type, quantity, and requested delivery dates. The Supplier agrees to promptly acknowledge receipt of each order and accept it in writing or notify the Buyer of any inability to fulfill the order. The Supplier will make commercially reasonable efforts to fulfill accepted orders according to the specified delivery dates. The Buyer may cancel orders with written notice before shipment, and any cancellation after shipment may incur costs to the Buyer. Any amendments to orders require mutual agreement in writing between the Parties.
PRICING
- The pricing for the Products shall be as follows: [Specify pricing details, such as unit prices, bulk discounts, etc.]. Prices shall remain fixed for the duration of this Agreement, unless mutually agreed upon otherwise in writing. The Buyer agrees to pay all invoiced amounts within [number] days of receipt of the Supplier’s invoice. Prices are exclusive of any applicable taxes, which shall be borne by the Buyer. The Supplier reserves the right to adjust prices upon [specific circumstances for price adjustment, e.g., inflation, cost increases, etc.], with [number] days’ written notice to the Buyer.
INVOICING AND PAYMENT TERMS
- The Supplier shall issue invoices to the Buyer upon delivery of the Products or as otherwise agreed upon by the Parties. Invoices shall detail the quantity, description, and agreed-upon price of the Products, along with any applicable taxes and shipping costs. Unless otherwise specified herein, payment for invoices shall be due within [number] days from the date of receipt of the invoice. The Buyer shall make all payments in the currency specified in the invoice, via [accepted payment methods, e.g., bank transfer, check, etc.]. Late payments shall incur interest at the rate of [specified interest rate] per annum, calculated from the due date until the date of payment. In the event of a dispute regarding an invoice, the Parties shall work together in good faith to resolve the dispute promptly. Failure to make timely payment may result in suspension of delivery or termination of this Agreement by the Supplier.
OWNERSHIP AND RISK CLAUSE
- Title and risk of loss for the Products shall pass from the Supplier to the Buyer upon delivery of the Products to the Buyer’s designated delivery location as specified in this Agreement. Until such delivery, the Supplier shall bear the risk of loss or damage to the Products. The Buyer shall inspect the delivered Products promptly upon receipt and notify the Supplier of any discrepancies or damages within [number] days of delivery. The Buyer acknowledges that any acceptance of the Products by its representatives or agents constitutes acknowledgment of satisfactory delivery and conformity with the terms of this Agreement, unless otherwise notified in writing.
TERMINATION
- Either Party may terminate this Agreement upon [insert notice period] written notice to the other Party for any reason. The terminating Party shall provide written notice specifying the effective date of termination.
- The Parties shall cooperate to ensure a smooth transition of responsibilities, including the transfer of any necessary assets, accounts, or materials. Additionally, both Parties shall promptly return any property or Confidential Information belonging to the other Party. Termination shall not affect any rights or obligations accrued prior to the effective date of termination.
FORCE MAJEURE
- Party shall be liable for any failure or delay in performing their obligations under this Agreement due to circumstances beyond their reasonable control, including but not limited to acts of God, war, terrorism, government actions, natural disasters, or epidemics. If a Force Majeure Event occurs, the affected Party shall promptly notify the other Party and make reasonable efforts to mitigate the impact. The affected Party’s obligations shall be suspended during the Force Majeure Event, and the time for performance shall be extended accordingly. If the Force Majeure Event continues for [insert duration], either Party may terminate this Agreement upon written notice to the other Party.
RENEWAL OF AGREEMENT
- The Parties agree that this Agreement, prior to its termination, is subject to renewal provided that both parties submit a signed addendum agreeing to the renewal.
AMENDMENTS
- The Parties agree that any amendments made to this Agreement must be in writing where they must be signed by both Parties to this Agreement.
- As such, any amendments made by the Parties will be applied to this Agreement.
SEVERABILITY
- In an event where any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then the remaining provisions will remain to be enforced in accordance with the Parties’ intention.
DISPUTE RESOLUTION
- Any dispute or difference whatsoever arising out of or in connection with this Agreement shall be submitted to [insert means] (Arbitration/mediation/negotiation) in accordance with, and subject to the laws of [insert applicable law].
GOVERNING LAW
- This Agreement shall be governed by and construed in accordance with the laws of [insert applicable law].
SIGNATURE AND DATE
- The Parties hereby agree to the terms and conditions set forth in this Agreement and such is demonstrated throughout their signatures below:
SUPPLIER |
BUYER _______________________________ |
DATE
_______________________________
|
DATE
_______________________________ |
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