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You might like to look under FAQs first which may have the answer you need.
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We welcome dialogue and feedback including ideas for books within the contractual process, speaking and course topics .
SUPPLIERS
Question
Why do I need an Agreement?
An Agreement provides for the agreed terms to be specified and defined to minimise misunderstandings and confusion.
An Agreement also details clauses such as payment terms, delivery etc. If any issues arise the Agreement is the base to work from as to requirements.
A verbal agreement can be confusing as relying on memory is a poor substitute for written facts.
Question
Can I rely on a Verbal Agreement?
Reply
To a certain degree – usually while everything is fine. When issues arise it becomes a case of he said-she said. Difficult to resolve.
Question
Is a contract enforceable?
Reply
Yes, it is a binding legal document.
Question
How do I resolve any disagreements?
Reply
It would be best to attempt to resolve any disagreement by meeting and discussing the issues with the other party.
If matters remain unresolved then you can:
- Bring in a third party.
- Bring in a mediator
- Terminate the contract (last resort).
Question
What clauses do I need?
Reply
Some clauses to have in a contract are:
- Term
- Delivery
- Termination Clauses
- Performance Measurements
- Price
- Invoicing
- Copy of Requirements
Question
What issues do I need to consider?
Reply
- Time
- Logistics
- Delivery
- Resources
- Pricing
- Performance Measurements
- Buyer/Supplier Relationships
- Term
BUYERS
Question
Can a contract operate past stated term?
Reply
Yes. Because there is history of providing goods or services and payment made for those goods and services a contract is in place. However it would be best to renew the contract for a further term. An example is: from January (year) – December (year) to January (year) to January (year).
Question
How do I increase the scope of goods or services required?
Reply
You need to make a decision as to what is required and whether the existing supplier can manage the increase. If they can, great. If not, you need to source another supplier.
The additional services needs to be documented along with the agreed terms including price, delivery, invoicing etc.
If the services can be handled by the existing supplier then a Variation needs to be prepared which shows the additional services and pricing. It also needs to state that the original agreement’s terms and conditions remain the same.
Question
How do I manage performance issues?
Reply
A buyer needs to take responsibility for ensuring that the contract performs well and the expectations of both actually occur.|
If poor performance is occurring then the buyer needs to start asking questions as to why and to set up a meeting with the supplier to ascertain the reasons and to indicate that poor performance is not acceptable.
If the poor performance continues to occur then verbal warnings and if necessary written warnings needs to be given.
As a last resort poor performance can lead to termination of the contract. Prior to this buyers need to consider alternative suppliers.
This is a complex area and is frustrating and time consuming. However, leaving poor performance is a mistake and needs to be rectified.
Question
What issues do I need to Consider for Contracting Internationally?
Reply
Much the same as domestically but need to consider the following:
- What currency are you going to operate in.
- What legal jurisdiction are you going to operate in.
- Force Majuere clause – especially in today’s world of terrorism.
- Insurance clauses
- Constant Supply
- Delivery requirements
- Exchange Rate.
Question
How do I conduct an analysis of my Supplier Base?
Reply
It is useful to undertake an analysis of your supplier base to establish that there is a well managed category system.
The analysis will show repetitive suppliers along with yearly usage and spend. This will provide a yearly spend analysis and will show up suppliers not being used often and those with high usage.
This provides a start point to remove little used suppliers from the database.