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Understanding Supply Agreements: Key Legal Considerations for Businesses in 2025
In today’s fast-paced commercial environment, Supply Agreements are the backbone of many business operations. Whether you’re a manufacturer, distributor, or retailer, having a robust and legally sound supply contract is essential to mitigate risk, ensure continuity, and maintain strong commercial relationships.
Richard Riley, Partner and Head of Commercial at Bermans, explores the essential elements and legal implications of Supply Agreements in the business landscape of 2025.
What Is a Supply Agreement?
A Supply Agreement is a legally binding contract between a supplier and a buyer for the provision of goods or services.
It outlines the terms of delivery, pricing, payment, quality standards, liability, and dispute resolution. In England and Wales, these agreements are governed by a combination of contract law principles and statutory provisions, including the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.
Key Legal Terms and Protections
UK law implies several key terms into supply contracts. These include:
- Satisfactory quality: Goods must meet the standard a reasonable person would expect, considering the description, price, and other relevant factors
- Fitness for purpose: If the buyer makes known a specific purpose, the goods must be suitable for that use.
- Correspondence with description or sample: Goods must match any description or sample provided.
While these terms can be limited or excluded in B2B contracts, such exclusions must pass the reasonableness test under the Unfair Contract Terms Act 1977.
Best Practices for Drafting Supply Agreements
To ensure your supply contracts are enforceable and commercially effective, consider the following:
- Clearly define deliverables: Specify the goods or services, delivery timelines, and performance standards.
- Set out your payment terms: when and how you get paid will be the key concern for any supplier so ensure that payments dates and methods are clearly set out.
- Include robust liability clauses: carefully draft any warranties or indemnities that you are prepared to offer and limit liability where appropriate but ensure exclusions are reasonable and enforceable.
- Address dispute resolution: Include mechanisms such as mediation or arbitration to resolve conflicts efficiently.
- Plan for termination: Outline the conditions under which either party can terminate the agreement and the consequences of doing so.
- Review regularly: Update contracts to reflect changes in law, business needs, or supply chain risks.
Why Supply Agreements Matter
A well-drafted supply agreement not only protects your business legally but also strengthens supplier relationships and ensures operational resilience.
With increasing regulatory scrutiny and supply chain complexity, businesses in England and Wales must treat these contracts as strategic tools, not just legal formalities.
How Can Bermans Help?
Bermans offers expert legal services to assist businesses with the drafting and review of supply agreements. Our team of experienced solicitors understands the intricacies of contract law and the specific challenges posed by today’s dynamic supply chain environments.
Our team provide tailored advice to help you draft clear and comprehensive supply agreements that set out specific deliverables, timelines, and performance standards, ensuring your contracts are enforceable and commercially viable.
Contact our Commercial team.