Supply Agreement

A Supply Agreement is a written contract in foreign trade between a buyer and a seller for long-term, stable, or bulk supply of goods. Its core purpose is to establish an ongoing supply relationship rather than a single transaction. Use cases include long-term procurement of raw materials, OEM/ODM cooperation, and regular supply under a distribution framework. Unlike a one-time Sales Contract, a Supply Agreement usually sets out framework terms such as product specifications, pricing mechanisms, minimum purchase quantities, delivery cycles, payment methods, quality assurance, and liability for breach. Specific orders are executed through subsequent POs (Purchase Orders) or Schedules. Key points: 1) clearly define price adjustment mechanisms (e.g., raw material fluctuations, exchange rate changes); 2) specify minimum/maximum purchase quantities and handling of shortfalls; 3) quality standards and inspection clauses must be quantifiable; 4) force majeure, termination, and renewal conditions should be clear; 5) governing law and dispute resolution clauses must not be omitted. Distinction: compared with a Purchase Order (PO), a Supply Agreement is a higher-level framework; compared with a Distribution Agreement, a Supply Agreement focuses on the buyer-seller relationship and does not necessarily include resale authorization.