What is it?

A supplier agreement is the contract between the supplier of a product or service and the person or company who is purchasing that product or service.

Application for small business people

Supplier agreements are frequently utilised by small business people, whether they are purchasing goods from a supplier or they are supplying goods to a purchaser. The supplier agreement works to clarify the relationship and provide certainty about the continued availability of the item or service in question.

Supplier agreements are beneficial for purchasers as they serve to guarantee a steady delivery of a particular product, at an agreed price, for a specified period. In some cases, the purchaser will be able to negotiate a discounted price in return for a long-term commitment to the supplier. It is important that the purchaser understands the market and the enduring demand for the product before signing such an agreement.

Supplier agreements are also beneficial for suppliers as they enable them to establish the quantity of the product that needs to be provided to purchasers on a regular basis. This information can then be used when dealing with third-party manufacturers if required. Supplier agreements also help suppliers and manufacturers quantify the demand for the product and its future viability.

6 key things to consider

Some of the key elements to consider when entering into a supplier agreement include

  1. What exactly are the products and/or services being supplied?
  2. What are the payment terms and conditions?
  3. What is the term of the agreement?
  4. Are the parties permitted to deal with other companies in relation to the same product or service, or is it an exclusive relationship?
  5. What is the process if one part wants or needs to terminate the agreement early?
  6. Who is liable for any defects or complaints made about the product or service?


Joe Kafrouni
Legal Practitioner Director
Kafrouni Lawyers


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