Supply Agreements

When Do You Need a Supply Agreement?

A dedicated Supply Agreement is particularly important when:

• You have a key supplier whose failure to deliver would significantly impact your business
• You’re a supplier whose business depends on a small number of major customers
• You’re entering into a long-term or high-value supply arrangement
• You need certainty over pricing, volumes or delivery schedules
• You want to secure priority supply or exclusivity
• Quality and specification are critical
• You need back-to-back protections to manage risk along the supply chain

What Should a Supply Agreement Cover?

Our Commercial Team will work with you to draft or negotiate a Supply Agreement that addresses:

• The goods  and/or services— A clear description and specification of what’s being supplied
• Pricing — Fixed or variable pricing, price review mechanisms, and how increases will be handled
• Ordering and forecasting — How orders are placed, minimum order quantities, and any forecasting or call-off arrangements
• Delivery — Delivery schedules, lead times, delivery location, and what happens if delivery is late
• Risk and title — When ownership and risk of loss or damage in goods passes from seller to buyer
• Quality and inspection — Quality standards, inspection rights, and how defective goods and services are dealt with
• Warranties — What the supplier guarantees about the goods and services (e.g. conformity with specification, fitness for purpose, compliance with law)
• Liability — Caps on liability, exclusions, and indemnities (particularly for defective or non-conforming goods)
• Intellectual property — Ownership of any IP in the goods, tooling, or packaging
• Confidentiality — Protecting commercially sensitive information shared between the parties
• Insurance — Requirements for the supplier to maintain adequate insurance
• Force majeure — What happens if events beyond either party’s control (such as natural disasters, pandemics, or supply chain disruptions) prevent performance
• Term and termination — Duration of the agreement, renewal provisions, and grounds for early termination
• Remedies — What you can do if the supplier breaches the agreement (e.g. reject goods, claim damages, terminate)
• Dispute resolution — How disagreements will be resolved
• Governing law — Which country’s law applies to the agreement

Buying and Selling: Different Perspectives

If you’re the buyer, you’ll want strong protections around quality, delivery, pricing certainty, and your ability to reject non-conforming goods or terminate the agreement if performance falls short.

If you’re the seller, you’ll want to manage your exposure — limiting liability, securing payment terms, protecting your IP, and retaining flexibility around pricing and delivery commitments.

Our team acts for both buyers and sellers, and we understand the commercial pressures on both sides of the supply relationship.

Back-to-Back Protections

Many businesses sit in the middle of a supply chain — buying goods or materials from one party and supplying to another. In these situations, it’s critical that your contracts are aligned so that you’re not exposed to liabilities upstream that you cannot recover downstream (or vice versa). Our team can review your supply chain contracts together to identify gaps and ensure your risk position is consistent.

International Supply

If you’re buying from or selling to suppliers overseas, additional considerations apply, including:

• Incoterms — Internationally recognised terms that define responsibilities for shipping, insurance, customs and risk
• Currency and exchange risk
• Import/export compliance — Including customs duties, sanctions, and export controls
• Governing law and jurisdiction — Which country’s law applies and where disputes will be heard
• International data transfers — If personal data crosses borders

How We Can Help

At Nelsons, our Commercial Team advises businesses on all aspects of supply chain contracting. Whether you need a new Supply Agreement drafted, an existing agreement reviewed, or help negotiating better terms with a supplier or customer, we provide practical, commercially aware advice that protects your business.

We’re based in Derby, Leicester and Nottingham, but we advise businesses throughout the UK and beyond.

Call us: 0800 024 1976  Submit an enquiry: Complete our online enquiry form