A supply contract is the most common type of contract. Almost all companies conclude it. Despite this, the conclusion process is organized differently for everyone, however, the wording also varies. Because of this, as a rule, various questions and problems arise, entailing discrepancies in judicial practice between counterparties and even affect the payment of taxes on the transaction. Let’s look at examples of how to properly organize the process of work under a supply contract.
After all, it seems to us – the main thing is to bring everything on time, intact, and what the Customer wants. But the Customer, can be sure that you will study all his wishes, drawn up by the letter of the law (Agreement), or he can understand perfectly where the snag is, to give us actually a lot of trouble, and not the joy of implementing the agreements.
Essential conditions must be reflected in the supply agreement
If the contract meets the criteria set forth in Article 506 of the Civil Code, then this is a supply contract. In order for our contract to be properly qualified by the court, essential conditions are necessarily reflected in it. In their absence, the contract is considered not concluded and is qualified as one-time purchase and sale transactions. We will not be able to present any other conditions agreed upon with the counterparty: liability of the parties, transfer of containers, labeling of goods. Just get the money and, at best, compensation under article 395 of the Civil Code.
First of all, the essential conditions are the name of the product and its quantity, the so-called subject of the contract. We would recommend writing a common name for what you supply. For example, building materials, children’s clothing. And the assortment should be agreed upon in applications, specifications or annexes to the contract.
The second condition is the quantity of goods. So, jurisprudence allows one to completely avoid specifying the quantity in the subject of the contract. If you have an existing relationship with partners, then you can register, for example, 100 units per decade. This will be enough. It is better to agree in the contract the form by which the delivery will be carried out. This again can be in applications, specifications. We do not recommend indicating in the agreement that the approval is made by phone call. It is necessary to clearly state how long the delivery should be made after receiving the agreed application form. If you use electronic or fax channels, it is better to indicate in the contract that you are giving them legal force. Without this indication in court, if you do not get originals, it will be difficult to prove that you ordered just such a set of goods.
An essential condition is the delivery time. Judicial practice goes in different ways. One allows us to say that if the deadline is not specified, then we have general concepts about the reasonableness of the term in article 314 of the Civil Code. But this is not always beneficial, therefore, we recommend that you set a time frame. If you have clear terms for the terms, and you know for sure that the goods will be in demand before the 10th day of each month, then this is mandatory in the contract.
We can recommend to fix the liability in the contract for not sending the application, specification or application.
In the invoice reference is made to the contract
Everyone knows that in practice, most often the goods are shipped according to verbal agreements or on the waybill (waybill). Therefore, its design needs to be paid a lot of attention. In fact, if you do not make an application, then the invoice is the only document that confirms that the parties had specific agreements on the quantity and quality of the goods. Perhaps, first of all, it is necessary to reflect the assortment and quantity in the supply contract. Do not take a template sample, as it just contains a link to the application that you do not use. In the invoice itself, you must make a link to the supply contract that you entered into with the counterparty. This is a double intersection: a link in the contract to the invoice and in the invoice to the contract, together with a power of attorney, allows one or the other party to win in court for a particular consignment of goods. You need to understand: if there is no reference to the contract on the invoice, the arbitration court will consider this one-time sales transactions. Consequently, it will not be possible to collect penalties prescribed in the contract and apply the liability clause of the parties, since the invoice will not show which contract it belongs to. Be sure to check for a signature on the document. As a rule, it is signed not by the director, but by a proxy. Therefore, it is necessary to make sure that the power of attorney, especially if it is not of the standard form, when the passport details of the authorized person are provided, who are authorized by the buyer to carry out actions with inventory items and have the right to sign. Be sure to check the passport, and attach the power of attorney to our copy of the invoice.
In addition, having analyzed the judicial practice and the activities of our clients, we can say that the coordination in the specifications and applications of the name, quantity and completeness of the goods must be described in the contract. There are a number of customers who coordinate this on invoices. An invoice is a one-sided document, and we believe in our hearts that it exists only for VAT purposes. But judicial practice confirms that if you use only an invoice, then it should have a separate note that the cargo has been accepted, since it is not provided for in its form. Also, sometimes without an invoice, they transmit it according to the act of acceptance, but then this procedure for document circulation and turnover must be reflected in the contract. And in the act you must make a link to it.
Still often just agree on the score. In order to be able to defend such a situation in court, it is necessary to have an indication in the contract of the legality of these actions.
Ideally, the main supply contract describes the entire order of operations and the form of documents.
We strongly recommend you to develop your supply contract, which will reflect how in reality everything is organized, clearly regulate all procedures. Ideally, the chief accountant develops and approves instructions for managers who ship and receive goods. Naturally, they should be familiarized with these documents, preferably by signature.