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What are the recommended provisions for a Supply Agreement?
Introduction
A Supply Agreement is a legally binding contract between a supplier and a buyer, outlining the terms and conditions under which goods or services will be provided. In Kenya, such agreements are governed by various laws, including the Sale of Goods Act (Cap 31), the Law of Contract Act (Cap 23), and relevant provisions in the Constitution of Kenya, 2010. This document will outline the recommended provisions for a Supply Agreement, citing relevant Kenyan laws and regulations.
Table of Contents
Parties to the Agreement
Definitions and Interpretations
Scope of Supply
Price and Payment Terms
Delivery Terms
Quality and Inspection
Warranties and Representations
Liability and Indemnity
Confidentiality
Intellectual Property Rights
Force Majeure
Termination
Dispute Resolution
Governing Law
Miscellaneous Provisions
1. Parties to the Agreement
Identification of Parties: Clearly identify the supplier and the buyer, including their legal names, addresses, and contact information.
Legal Capacity: Ensure that both parties have the legal capacity to enter into the agreement.
Source: Law of Contract Act (Cap 23), Section 3.
2. Definitions and Interpretations
Key Terms: Define key terms used in the agreement to avoid ambiguity.
Interpretation Clauses: Include clauses that explain how the terms should be interpreted.
Source: General principles of contract law.
3. Scope of Supply
Description of Goods/Services: Clearly describe the goods or services to be supplied.
Specifications: Include detailed specifications, standards, and requirements.
Source: Sale of Goods Act (Cap 31), Section 13.
4. Price and Payment Terms
Price: State the price of the goods or services, including any applicable taxes.
Payment Terms: Outline the payment terms, including due dates, methods of payment, and any penalties for late payment.
Source: Sale of Goods Act (Cap 31), Sections 8 and 9.
5. Delivery Terms
Delivery Schedule: Specify the delivery schedule, including dates and times.
Delivery Location: State the location where the goods or services will be delivered.
Risk and Title: Clarify when the risk and title of the goods pass from the supplier to the buyer.
Source: Sale of Goods Act (Cap 31), Sections 20 and 21.
6. Quality and Inspection
Quality Standards: Specify the quality standards that the goods or services must meet.
Inspection Rights: Grant the buyer the right to inspect the goods or services before acceptance.
Source: Sale of Goods Act (Cap 31), Sections 14 and 15.
7. Warranties and Representations
Supplier Warranties: Include warranties from the supplier regarding the quality, fitness for purpose, and compliance with specifications.
Buyer Warranties: Include warranties from the buyer regarding their ability to pay and accept the goods or services.
Source: Sale of Goods Act (Cap 31), Sections 16 and 17.
8. Liability and Indemnity
Limitation of Liability: Limit the liability of both parties for certain types of damages.
Indemnity Clauses: Include indemnity clauses to protect each party from certain risks and liabilities.
Source: General principles of contract law.
9. Confidentiality
Confidential Information: Define what constitutes confidential information.
Obligations: Outline the obligations of both parties to protect confidential information.
Source: General principles of contract law.
10. Intellectual Property Rights
Ownership: Clarify the ownership of any intellectual property created or used in the course of the agreement.
Licensing: Include any licensing terms for the use of intellectual property.
Source: General principles of contract law.
11. Force Majeure
Definition: Define what constitutes a force majeure event.
Consequences: Outline the consequences of a force majeure event, including any relief from obligations.
Source: General principles of contract law.
12. Termination
Termination for Cause: Specify the grounds for termination for cause, such as breach of contract.
Termination for Convenience: Include provisions for termination for convenience, if applicable.
Notice Period: State the notice period required for termination.
Source: General principles of contract law.
13. Dispute Resolution
Negotiation: Encourage the parties to resolve disputes through negotiation.
Mediation/Arbitration: Include provisions for mediation or arbitration as alternative dispute resolution mechanisms.
Jurisdiction: Specify the jurisdiction for any legal proceedings.
Source: Constitution of Kenya, 2010, Article 159; Arbitration Act (Cap 49).
14. Governing Law
Applicable Law: State that the agreement is governed by the laws of Kenya.
Source: General principles of contract law.
15. Miscellaneous Provisions
Entire Agreement: Include an entire agreement clause stating that the agreement constitutes the entire understanding between the parties.
Amendments: Specify the procedure for amending the agreement.
Notices: Outline how notices should be given under the agreement.
Severability: Include a severability clause stating that if any provision is found to be invalid, the remaining provisions will continue to be in effect.
Source: General principles of contract law.
Conclusion
A well-drafted Supply Agreement is essential for ensuring a clear understanding between the supplier and the buyer, minimizing disputes, and providing a framework for resolving any issues that may arise. By including the recommended provisions outlined above, parties can create a comprehensive and legally sound agreement that protects their interests and complies with Kenyan law.
Answered by mwakili.com