Why Use a Supply Contract

09 December 2010

The purpose behind a supply contract is so your project can have a reliable source of raw materials and in the desired quantity, so the project plan can progress as scheduled. The reason the supply of materials that are stated in the contract can be so heavily relied on is because this is a legal document.

The supply contract is not like the supply agreement many businesses used to use in the past. Many companies have made agreements with others to supply goods or services. Unfortunately, when they do not follow through with this agreement, the receiving company can take no legal course to pursue any damages that are caused by the delay.

The supply contract is a formal document that is legally binding by all parties that agree to it and sign it. If for any reason one party does not hold up to their end of the agreement, they can be held financially responsible for any losses their failure has caused.

The construction of a supply contract can be done by any knowledgeable person. For companies that have a project management program on their server, there is a template already there waiting to be used. This can help guide a user to include what is necessary so this document can be used as it is intended to be.

The contents of a supply contract should include a complete description of the deliverables that are to be provided by the third party vendor. There should also be specified if any training is necessary for using the deliverable and what exactly is going to be provided.

The supply contract will also include the full responsibilities of both parties that are signing the document. This should be in plain language so there is no ambiguity.

The scheduling of the deliverable, along with the terms of the invoicing, should also be present in the supply contract. This way, both sides know what is going to be delivered, along with when the payment for the goods will be made.