When do you enter into a framework agreement?
You enter into a framework agreement when you know that you will be collaborating a lot with one particular party in the future. For example, a regular supplier for your products. The framework agreements will then include leading agreements that apply when you place an order with the supplier. The final order may deviate from the provisions of the framework agreement.
Does a framework agreement come without any binding commitments?
A framework agreement can be non-binding, but this is not always the case. A framework agreement is non-binding if it states that there is no purchase obligation. Sometimes parties benefit from more certainty, for example when they have to plan their production in advance. In that case, the framework agreement may stipulate that a number of products must be purchased within a certain period of time. This is also referred to as the minimum purchase obligation. If the customer subsequently fails to fulfil its minimum purchasing obligation, this may have consequences. For example, the lapse of an agreed discount. These matters are regulated in the framework agreement.
What does the framework agreement say?
Under the framework agreement, various orders are issued. The framework agreement states, amongst other things, every way in which this order must be placed and within which period the order must or must not be accepted. The obligations for the execution of a certain order are also included in the framework agreement. For example, how the products are to be delivered, how they are to be packaged and whether there is a possibility for the customer to return the product after inspection/check if it does not meet certain specifications.
Another important element is the fee associated with the execution of the orders/delivery of the products. This can be a fee per product or a fee per hour. The latter is especially the case when services are performed or persons are hired in as part of the assignment. Of course, the way in which this fee is paid must also be agreed upon, so this can also be found in the framework agreement.
Furthermore, there are the more general provisions which are certainly not unimportant to regulate when entering into the framework agreement, such as the protection of confidential information, regulations concerning liability, the possibility of amending the framework agreement and which (general) terms and conditions apply to the (contracts which are performed under) the framework agreement, and how the framework agreement can be terminated.
Please contact us
Would you like support in drawing up a framework agreement? Or would you like to have your framework agreement checked? Our legal experts will be happy to assist you. Please feel free to contact us for more information.