A long-term general purchasing agreement for the supply of strategic components, spare parts, ingredients or other products that are to be incorporated in the customer's end-product or used in its processes. Used in B2B context, for large corporates.
This model general purchasing agreement (GPA) of Weagree is divided into chapters addressing the various aspects of a (strategic) long-term supply relationship:
- Ordering, forecasting, packaging and delivery.
- Acceptance mechanism for testing deliverables.
- Development of the supplier’s product in collaboration with the customer, based on a statement of work (SOW).
- Allocation of IPR and an indemnity in case of infringing goods.
- Reporting and evaluation.
- Compliance with laws and regulations (incl. CSR and ESG clauses)
The general purchase agreement provides a complete framework for ongoing supply of goods or services (with sample clauses for forecasting, ordering and delivery of such goods). The GPA also provides a framework for allocating intellectual property rights among the parties, including a proper indemnification clause addressing infringement of third-party rights.
Also, where the supplied goods may require further development, the model contract contains a chapter that addresses aspects of such joint development projects:
- How provisions in a Statement of Work (SOW) must be interpreted (and are permitted to deviate), as such provisions sometimes tend to be agreed without involvement of legal counsel and therefore potentially without due care;
- How the SOW-specifications can be amended to provide unanticipated extra costs;
- A contractual mechanism for acceptance testing of the SOW-deliverables will lead to acceptance).
A general purchasing of this nature should probably also provide for a governance (account management) structure, to ascertain periodical evaluation of the relationship, coordinated guidance of ongoing supply and undertaken joint development projects. This reporting mechanism extends to subcontractors (and hence, more elaborate provision on subcontractors have been included, so as to avoid that a customer is not ‘out of control’ towards the supply chain of its supplier as a consequence of such subcontractor having an indirect relationship.
Per the recent developments on implementing strong requirements on compliance with CSR (corporate social responsibility) and more recently, ESG (environmental, social and governance) framework by the supplier, this general purchasing agreement contains provisions that can be modified so as to adjust it for your own ESG and CSR compliance requirements.
See also the remarks on Long-term supply agreements elsewhere on the Weagree website.