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Supplier Agreement
"I need a supplier agreement for a 2-year contract with quarterly performance reviews, specifying delivery of 500 units per month, with penalties for delays and a 30-day payment term."
What is a Supplier Agreement?
A Supplier Agreement sets the rules and expectations between a business and its vendors in the Philippines, covering everything from delivery schedules to payment terms. It protects both parties by clearly stating what each must do, including quality standards, pricing, and how to handle disputes under Philippine contract law.
These agreements become especially important when dealing with regular suppliers or high-value transactions. Filipino businesses often customize them based on their industry needs, while making sure they follow local procurement regulations and the Civil Code requirements for valid contracts. Good supplier agreements help prevent misunderstandings and make it easier to maintain strong business relationships.
When should you use a Supplier Agreement?
Use a Supplier Agreement when starting any significant vendor relationship in the Philippines, especially for regular purchases or services worth over ₱100,000. It's particularly crucial when ordering custom materials, dealing with time-sensitive deliveries, or working with suppliers who handle confidential information.
The agreement becomes essential before making advance payments, sharing proprietary specifications, or relying on a single supplier for critical items. Filipino businesses need these agreements when sourcing regulated products, establishing long-term partnerships, or when compliance with the Government Procurement Reform Act requires detailed documentation of supplier relationships.
What are the different types of Supplier Agreement?
- Product Supply Agreement Between Manufacturer And Buyer: Detailed agreement for manufacturing relationships, focusing on production specifications and quality control
- Vendors Agreement: Simplified version for basic goods and services, commonly used by small businesses
- Agreement Between Supplier And Distributor: Specialized for distribution channels, covering territory rights and resale terms
- Non Disclosure Agreement For Suppliers: Additional protection for confidential information when sharing sensitive business details
- Agreement Between Customer And Supplier: General-purpose template adaptable for most supplier relationships
Who should typically use a Supplier Agreement?
- Corporate Procurement Teams: Lead the drafting process and negotiate terms with suppliers, ensuring alignment with company policies and Philippine procurement laws
- Legal Departments: Review and refine Supplier Agreements to protect company interests and ensure compliance with local regulations
- Vendor Companies: Sign and comply with agreement terms, deliver goods or services as specified
- Quality Control Officers: Monitor supplier performance against agreement standards
- Finance Teams: Handle payment schedules and verify compliance with agreed financial terms
- Small Business Owners: Often serve as both drafter and enforcer of agreements with their suppliers
How do you write a Supplier Agreement?
- Basic Details: Gather complete business information for both parties, including SEC/DTI registration numbers and tax identification details
- Scope Definition: List specific products/services, quantities, quality standards, and delivery schedules
- Payment Terms: Document pricing, payment schedules, and acceptable payment methods under Philippine banking regulations
- Performance Metrics: Define measurable service levels, quality benchmarks, and compliance requirements
- Risk Management: Outline warranty terms, liability limits, and dispute resolution procedures
- Documentation: Collect necessary permits, certifications, and insurance policies from the supplier
- Template Selection: Use our platform to generate a legally-sound agreement customized for your specific needs
What should be included in a Supplier Agreement?
- Party Information: Complete legal names, addresses, and tax identification numbers of both supplier and buyer
- Scope of Supply: Detailed description of goods/services, specifications, and delivery terms following Philippine Commercial Code requirements
- Payment Terms: Clear pricing, payment schedules, and currency specifications compliant with BSP regulations
- Duration and Termination: Contract period, renewal options, and grounds for termination under Civil Code provisions
- Warranties: Quality guarantees and performance standards aligned with Consumer Act requirements
- Dispute Resolution: Choice of Philippine law, venue for resolution, and arbitration procedures
- Confidentiality: Data protection measures following Philippine Privacy Laws
- Force Majeure: Circumstances excusing non-performance under local jurisprudence
What's the difference between a Supplier Agreement and an Agency Agreement?
People often confuse a Supplier Agreement with an Agency Agreement in the Philippines. While both involve business relationships, they serve distinctly different purposes and carry unique legal implications under Philippine law.
- Nature of Relationship: Supplier Agreements establish a direct buyer-seller relationship for goods or services, while Agency Agreements create a representative relationship where one party acts on behalf of another
- Legal Authority: Agency Agreements grant the agent power to bind the principal legally, which Supplier Agreements don't typically allow
- Payment Structure: Suppliers receive direct payment for goods/services, while agents usually earn commissions or fees for facilitating transactions
- Liability Framework: Under Philippine Civil Code, agents can create legal obligations for their principals, whereas suppliers are only responsible for their own deliverables
- Duration: Supplier Agreements often focus on specific transactions or periods, while Agency Agreements typically establish ongoing representative relationships
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