A Supply Agreement is no Longer a Handshake
A supply agreement is no longer a handshake made between two businesses since most of the transactions are now done online or with the use of the phone. This is one of the many ways the global market place has impacted the business world. There are still agreements made between two parties, but it is mostly just verbal or in text format today.
The use of the term supply agreement is in reference to an informal acknowledgement between two parties in what is needed by one of them with the other having the ability to provide it. This can be with supplies, raw materials or manpower. What needs to be understood, this is not generally accepted as a legal binding contract, just acknowledgement that the two sides understand the needs of the other.
There is a way a supply agreement can be made into a supply contract, but not all of them produce this as an end result. The agreement must be placed in writing with both sides acknowledging its content by signing it for it to become legally binding. Without this commitment by both sides, the agreement is just considered thoughts or the passing of information between two parties.
Some of the things missing from the supply agreement that will be in a contract are all locked up in the details. While some agreements will include many of them, most of them are not complete. The contacts have to contain what is to be supplied, when it will be delivered along with the price that has been accepted by both sides to pay for the material.
In many instances the supply agreement is used as the precursor to the contract. This allows for the two sides to work out all the required details so a business transaction can occur. It is important to note that while many people make agreements, they do so with multiple parties in an effort to get the best price or the delivery of the material when they need it.
While the supply agreement is not legally binding, many of them do proceed to becoming a contract which will be binding in the court of law.