This Annual Supply Framework Agreement (the "Agreement") is entered into as of the date last signed below (the "Effective Date") between:
Supplier: _____________________________________________ (the "Supplier"), incorporated under the laws of _____________ with registered address at _____________________________________________.
Buyer: _____________________________________________ (the "Buyer"), incorporated under the laws of _____________ with registered address at _____________________________________________.
This Agreement builds upon the first successful commercial transaction between the Parties completed on _____________ and is intended to establish the terms governing the continuing supply relationship for the contract year commencing _____________ and ending _____________ (the "Contract Year"), subject to annual renewal in accordance with clause 11.
1. Purpose and Framework
This Agreement establishes a structured annual supply framework governing the commercial relationship between the Supplier and the Buyer for the supply of the goods or services described in Schedule A (the "Products") during the Contract Year.
This Agreement is a framework instrument. Individual consignments of Products shall be ordered by way of Purchase Order issued by the Buyer and acknowledged by the Supplier, each of which shall incorporate the terms of this Agreement by reference.
In the event of any conflict between the terms of this Agreement and the terms of a Purchase Order, the terms of this Agreement shall prevail unless the Purchase Order expressly states otherwise and is countersigned by both Parties.
2. Products
The Products subject to this Agreement are described in Schedule A, including their technical specification, quality standard, packaging requirements, and applicable certifications. Any change to the Products, their specification, or applicable certifications shall require written agreement by both Parties before implementation.
3. Annual Volume Commitment and Forecast
The Buyer commits to purchasing a minimum aggregate quantity of _____________ of Products from the Supplier during the Contract Year (the "Annual Minimum Commitment" or "AMC"), subject to: (a) the Products conforming to the Specification throughout the Contract Year; (b) the Supplier meeting its delivery obligations; and (c) no Force Majeure Event affecting the Buyer's ability to place or take delivery of orders.
The Buyer shall provide the Supplier with a rolling _____ -month purchase forecast, updated monthly on or before the _____ day of each calendar month. The forecast shall show anticipated monthly purchase volumes by Product type.
The first _____ months of the forecast shall be indicative only and shall not constitute a binding purchase commitment. The following _____ months of the forecast shall be binding and shall constitute a minimum firm purchase commitment for the relevant months.
If the Buyer anticipates that the AMC will not be met due to circumstances within its control, it shall notify the Supplier as soon as reasonably practicable. The Parties shall then negotiate in good faith regarding any commercial adjustment or carry-forward arrangement.
4. Pricing and Annual Price Review
The base price for each Product for the Contract Year is set out in Schedule B (the "Contract Year Price"). All prices are in _____________ and are exclusive of applicable taxes, duties, and shipping costs unless otherwise stated.
The Contract Year Price shall be fixed for the duration of the Contract Year, subject only to the adjustments permitted by clause 4.3.
If the Supplier's raw material costs increase by more than _____ per cent against the baseline documented in Schedule B, the Supplier may request a price adjustment by giving not less than _____ days' written notice, accompanied by documentary evidence of the cost increase. Any adjustment shall be limited to the documented cost increase and shall require the Buyer's written agreement, which shall not be unreasonably withheld.
On or before _____ days prior to the end of the Contract Year, the Parties shall meet or correspond to agree the Contract Year Price for the following Contract Year. If agreement is not reached by the renewal date, the existing Contract Year Price shall continue to apply on a month-to-month basis until a new price is agreed or either Party terminates this Agreement on _____ days' written notice.
5. Volume Incentive Tiers
Where the Buyer's aggregate purchases in the Contract Year exceed the AMC, the following volume incentive tiers shall apply as a retrospective credit to the Buyer, calculated at year-end:
Tier 1: Purchases exceeding AMC by up to ____%: ___% retrospective credit on excess volume.
Tier 2: Purchases exceeding AMC by _____% to _____% : ___% retrospective credit on excess volume.
Tier 3: Purchases exceeding AMC by more than _____% : ___% retrospective credit on total year volume.
Credit notes shall be issued by the Supplier within _____ days of the end of the Contract Year and shall be applied against the Buyer's next outstanding invoice(s).
6. Payment Terms
Payment terms for the Contract Year are: _____________________________________________.
All invoices shall reference the applicable Purchase Order number and shall be submitted within _____ business days of shipment.
Interest on overdue amounts shall accrue at _____ per cent per annum above _____________ base rate from the due date until actual payment.
7. Delivery
Delivery shall be on the Incoterms specified in Schedule A. The standard lead time for each Product type is set out in Schedule A.
The Supplier shall notify the Buyer immediately if any Purchase Order cannot be fulfilled within the agreed lead time, specifying the revised delivery date. Time for delivery is of the essence.
If the Supplier fails to deliver on time without a Force Majeure cause, the Buyer shall be entitled to liquidated damages of _____ per cent of the value of the delayed consignment per week of delay, up to a maximum of _____ per cent of such value.
8. Quality and Audits
The Supplier shall supply Products that conform to the Specification throughout the Contract Year. The Supplier shall maintain a quality management system appropriate to the Products and shall provide evidence of such system on request.
The Buyer shall have the right to conduct an annual quality audit of the Supplier's production facility at a mutually agreed date, with not less than _____ days' prior notice. The audit shall be conducted at the Buyer's cost unless it reveals a material non-conformity with the Specification, in which case costs shall be borne by the Supplier.
The Supplier shall promptly notify the Buyer of any quality issue, non-conformity, or product safety concern relating to the Products, and shall cooperate fully with any investigation or corrective action required.
9. Intellectual Property and Confidentiality
All intellectual property rights in the Specification, designs, or proprietary materials provided by the Buyer to the Supplier remain the exclusive property of the Buyer. The Supplier is granted a non-exclusive licence to use such materials solely for the purpose of manufacturing the Products for the Buyer.
Each Party shall keep strictly confidential all non-public information received from the other Party in connection with this Agreement, and shall not disclose such information to any third party without prior written consent. This obligation shall survive termination for three (3) years.
10. Compliance
The Supplier shall comply with all applicable laws, including export control regulations, environmental legislation, health and safety requirements, and anti-bribery legislation.
The Supplier shall not use forced, child, or trafficked labour in any part of its supply chain and shall provide evidence of compliance with applicable ethical sourcing standards on request.
The Buyer shall comply with all applicable import regulations, duties, and licensing requirements in its jurisdiction.
11. Term and Annual Renewal
This Agreement shall apply to the Contract Year specified in the preamble and shall expire at the end of the Contract Year unless renewed.
On or before _____ days prior to the end of the Contract Year, either Party may propose renewal of this Agreement for a further Contract Year by providing written notice. If the other Party accepts within _____ days, the Parties shall negotiate the terms (including AMC, pricing, and any amendments) for the renewed Contract Year and execute a new Annual Supply Framework Agreement or a written amendment to this Agreement.
If renewal is not agreed prior to the end of the Contract Year, existing Purchase Orders acknowledged before the expiry date shall continue to be fulfilled in accordance with this Agreement.
12. Commission and Facilitation
Where this Agreement was facilitated by a trade facilitator or commercial agent (the "Facilitator"), the commission arrangement applying to transactions under this Agreement is as follows: _____________________________________________. The Buyer and Supplier both acknowledge the Facilitator's role and confirm that the commission obligation on repeat orders under this Agreement was established at the time of the initial introduction and remains in force for the duration of the tail period agreed with the Facilitator.
13. Force Majeure
Neither Party shall be liable for failure to perform its obligations to the extent caused by a Force Majeure Event. The affected Party shall notify the other within _____ business days of the onset of the Force Majeure Event and shall use reasonable efforts to mitigate its impact. If a Force Majeure Event continues for more than _____ days, either Party may terminate any unfulfilled Purchase Orders without liability, and shall negotiate in good faith regarding any carry-forward of the AMC.
14. Termination for Cause
Either Party may terminate this Agreement immediately on written notice if the other Party commits a material breach that is not remedied within _____ days of written notice, becomes insolvent, or ceases to carry on business. Termination shall not affect any Purchase Orders already acknowledged prior to the date of termination.
15. Governing Law and Dispute Resolution
This Agreement shall be governed by the laws of _____________________________________________.
Any dispute shall be resolved by arbitration under the rules of _____________________________________________, seated in _____________________________________________.
16. General
This Agreement constitutes the entire framework agreement between the Parties for the Contract Year and supersedes all prior discussions on the same subject matter.
Amendments must be in writing and signed by both Parties.
This Agreement may be executed in counterparts. Electronic signatures are valid.
EXECUTION
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date last signed below.
For and on behalf of the Supplier:
Authorised Signatory: _____________________________________________
Full Name: _____________________________________________
Title: _____________________________________________
Date: _____________________________________________
For and on behalf of the Buyer:
Authorised Signatory: _____________________________________________
Full Name: _____________________________________________
Title: _____________________________________________
Date: _____________________________________________
Schedule A — Product Description, Specification, Incoterms, Lead Times, and Packaging
Schedule B — Contract Year Price per Product, Raw Material Baseline, and Currency
Schedule C — Annual Minimum Commitment by Product Type and Measurement Method
Doc 18 — Annual Supply Framework Agreement — Neutral Template