Before you sign a supplier agreement: what to look for

A supplier agreement rarely matters while everything works. It matters when something does not. A handful of clauses decides who carries the risk when that happens, so they are worth reading before signature.

What is actually being promised

Look for a written scope: deliverables, quantities, quality standards, acceptance criteria, and who decides whether work has been accepted. A vague scope is the most common cause of a commercial disagreement.

Price, changes and extras

Check whether the price is fixed, indexed or revised, how a change to the work is priced and approved, and what happens to costs you did not anticipate. Ask for change requests to be agreed in writing before the extra work is done.

Deadlines, and what happens when they slip

Check the delivery dates, whether they are binding, and what remedies exist for delay. Read your own obligations too: a supplier can often rely on your late input or late payment to excuse its own delay.

Liability, insurance and indemnities

Find the limit of liability — a fixed amount or a multiple of fees — see which losses are excluded, and check whether the supplier carries insurance for the work. Where a supplier's failure could expose you to a claim from your own customer, ask what they will cover.

Ending the arrangement

Look at the term, renewal, notice periods, and whether you can exit for underperformance. Then check what happens on termination: handover of files, data and materials, and any exit costs.

Governing law and where disputes are heard

Check which country's law governs the agreement and which court or arbitration body decides disputes. In cross-border arrangements, this clause can change the cost and length of a disagreement more than any other.

Keeping the file in order

Keep signed versions and every amendment, record approvals and change requests, and note who is allowed to agree a change. Keep the contract file for the length of the arrangement plus the period in which a claim could still be brought.

How we can help

We review supplier and service agreements before signature, flag the points worth negotiating, and help you keep the contract file in order during the arrangement. Our work is consultancy: where a reserved legal service is needed, we coordinate with an independent advocate who contracts with you directly.