02 May The supply contract

In this week’s post we will analyze one of the star figures within the contracts concluded into in the business field: the supply contract.

It is part of the family of the so-called collaboration agreements and could be defined as the contract under which one of the parties (“the providing party”) is bound to deliver to the other (the supplied) a material good or service on an ongoing basis in time, in exchange for a benefit or payment.

It responds to a “need-satisfaction” relationship between the parties, since it will guarantee, on the one hand, that the supplied is provided with goods or services on an ongoing basis, thus avoiding the proliferation of purchase contracts. Said in a simple way, a supply contract is nothing more than a set of purchase contracts that take place over time

On the other hand, the supplier is guaranteed to market his service or good during a time that may be determinate or indeterminate by what the parties have agreed

A key and distinctive fact of these contracts is the need for this supply to be made on a ongoing basis and repeated over time. It shall not be an exceptional supply, because in these cases we would face with a concrete service provision contract or purchase agreement

With regard to its nature, it should be taken in account that we are dealing with an atypical contract, what means that in relation to its regulation, we shall pay attention first to what the parties have agreed on it, and subsidiarity the provisions of Civil Code (Art 1445 and followings) or Commercial Code (art 325 and followings), if the supply has a commercial nature

From the above explained, it is deduced that capital importance ow writing correctly the contract. In the current business world there are increased the so-called “standard supply contracts”. They try to include in the contract the most important aspects in a general and not adapted manner, which ends up translating into practice the proliferation of conflicts and contingencies, which they could have been avoided if it had been written according to the characteristics of each supply: product supplied, participating parties, transport risks etc.

Key aspects: Unfortunately for many of our readers, there is no concrete answer that tells us what exact clauses are necessary to achieve the perfect supply contract. Each supply will present different conditions, requirements and risks, which shall be analyzed in detail.

Once the specific characteristics of the supply have been analyzed, the contract shall be drawn up and will include such important aspects as: the conditions of supply, the price of the product and its form of payment, transportation and responsibilities, obligations of the parties or resolution of conflicts among others.

In short, it is a great variety of clauses that could hardly be summarized in a few lines without knowing the conditions and characteristics of the supply to be provide

In Navarro Llima Abogados we have a team of highly qualified lawyers specialized in corporate law with experience in the signing of supply contracts both nationally and internationally.

Javier Navarro Lacambra

lawyer