A supplier agreement answers four questions: what are you buying, when does it arrive, what condition does it need to be in, and what happens when supply fails. Read those four first. Everything else follows.
The 9 clauses that matter
1. Product specification
Exactly what you're buying: part number, grade, tolerances, packaging. A supplier agreement without a spec is a supplier agreement without recourse. If the goods don't match a spec you can point to, "wrong" is a matter of opinion.
2. Quantity and forecasting
How much are you buying, on what schedule? Is there a minimum order commitment? Are you giving the supplier a rolling forecast (say 6-12 months of expected volume) or firm POs only? Locked-in minimums are a two-way risk: you're stuck buying if demand drops, and they're stuck supplying if you grow.
3. Price and price adjustments
Fixed price for the term, or subject to adjustment? Adjustment clauses should name the trigger (raw material index, currency shift, published inflation rate) and cap the change. Open-ended "supplier may adjust price with 30 days notice" is not really a fixed price.
Price-adjustment clause with no cap and no defined trigger. The supplier can raise prices whenever costs move against them, but has no obligation to lower prices when their costs fall. Push for a symmetric formula or a defined index.
4. Delivery terms (Incoterms)
Where does the goods move from seller to buyer, and who's responsible at each stage? Use a standard Incoterm (FOB, CIF, DAP, EXW). Each defines exactly who pays freight, who insures, and who bears risk of loss in transit. Without an Incoterm, expect arguments.
5. Delivery schedule and remedies
What's the delivery lead time from PO? What happens if a shipment is late or short? A good agreement lists specific remedies: refund, replacement, credit, or the right to buy from a substitute supplier at the original supplier's cost.
No consequences for late or incomplete delivery. If the supplier misses, you're stuck with general legal remedies (slow and unpredictable). Push for written remedies and a defined threshold for material breach.
6. Quality standards and inspection
What quality standard applies (ISO, industry-specific, buyer's inspection criteria)? Do you have the right to inspect on delivery? How long do you have to reject non-conforming goods (usually 5-30 days)? What happens if you accept and later find defects (warranty period)?
7. Warranty
Standard supplier warranties: goods conform to spec, are fit for purpose, don't infringe third-party IP, and are free of defects for a defined period after delivery (often 12 months). Watch for warranty disclaimers that gut the promise.
8. Force majeure
What extraordinary events excuse late or missed performance? A good clause names specific events (natural disaster, war, pandemic, government action), requires prompt notice, and requires the affected party to mitigate and resume when possible. A vague force majeure clause is a loophole.
9. Termination
How does the contract end? For convenience (with notice, usually 90-180 days), for cause (material breach), for insolvency? What happens to in-flight POs and paid-for-but-not-delivered goods?
Clauses hiding in "general terms"
The 60-second checklist
- Is there a specific product spec you can enforce?
- Are quantities, minimums, and forecasts clear?
- Is the price fixed or subject to adjustment (with a cap)?
- Is there a standard Incoterm for delivery?
- What are the remedies for late or short delivery?
- What are the quality standards and inspection rights?
- Is there a real warranty period?
- Is force majeure defined narrowly with notice requirements?
- Can you terminate with reasonable notice?
Upload the supplier agreement, get a clause-by-clause plain-English read in about an hour with the risks flagged. $1 to try. Not legal advice: a structured second opinion before you sign or take it to a lawyer.