Commercial Contracts, Procurement and Terms of Trade

Agree on the details today that could make the difference tomorrow.

Most commercial contracts are signed in a hurry, on the other side’s paper, by someone who needs the work to start. They go into a drawer and come out when a payment is disputed, a delivery is late or a customer remembers the price differently.

We draft and negotiate commercial contracts that match how the business actually operates: how it quotes, orders, delivers, varies, accepts and gets paid. The documents allocate risk clearly, and your operational teams can use them.

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Supply, services and maintenance agreements

A supply or services agreement should answer the questions that come up in practice. What exactly is being delivered, and to what standard? How is the price set, and when can it change? Who can approve a variation, in what form, and how is it priced? When is payment due, and what happens when it is late? Agreements that leave these to goodwill work until the relationship is under strain.

We prepare and negotiate supply, services, consultancy and maintenance agreements for customers and suppliers, with service levels, acceptance, warranties and payment mechanics written so they can be applied day to day.

These are the clauses people skim and later fight over. A liability cap higher than your insurance leaves you carrying the difference. An exclusion of consequential loss may not exclude what you assumed it did. An indemnity can reach further than the parties intended. Termination clauses decide whether you can walk away from a failing contract, on what notice and with what payment owing.

We negotiate these clauses against the commercial reality of the deal: what the contract is worth, what could go wrong and what your insurance actually covers. Where we can’t get the position we recommend, we tell you what it costs to accept the one on offer.

Terms of trade only protect a business if they are part of the contract. Terms printed on an invoice after the work is done usually arrive too late. A quotation that doesn’t say how long it is open, or who carries price movements, invites an argument. When your quote says one thing and the customer’s purchase order says another, someone has to decide whose terms apply, and it is better that your documents decide it first.

We prepare terms of trade, quotations, credit applications and guarantees so the important points are agreed up front: payment terms, interest on late payment, retention of title where it is relevant, and a director’s guarantee where the credit risk justifies one. Retention of title gives real protection only if the security interest is registered correctly on the PPSR, so we deal with the PPSA side as part of the same job.

Preferred-supplier and purchasing arrangements tend to be informal, and informal arrangements tend to produce disputes about volumes, pricing and exclusivity. Distribution and agency agreements raise a further set of questions. Who owns the customer relationship? Who carries the stock and the risk? What are the targets, and what happens to stock, customers and goodwill when the arrangement ends?

We prepare and negotiate procurement, preferred-supplier, distribution, agency and licensing agreements, with close attention to exclusivity, territory, minimum commitments and exit.

A tender response is an offer, and a business can find itself bound to a principal’s terms because it tendered without qualifying them. We review tenders and expressions of interest before they go out, check what is being accepted and, where it makes sense, qualify the points that carry real risk.

Memoranda of understanding and confidentiality agreements have their own traps. An MOU described as non-binding can still contain binding obligations, and parties often behave as though the deal is done well before it is. We prepare these documents to say plainly what binds and what doesn’t, and to protect the information being shared.

Since November 2023, proposing or relying on an unfair term in a standard form contract with a small business can attract penalties, and a term found to be unfair is void. For this purpose a small business is one with fewer than 100 employees or turnover under $10 million, which covers most of the businesses you are likely to deal with. Standard terms that were fine five years ago, such as one-sided variation rights, broad termination rights and heavy penalties for late payment, deserve a second look.

We review standard form contracts and terms of trade against the unfair contract terms regime and the wider Australian Consumer Law, and redraft what needs to change.

Construction is one of our core practices, and it shows in how we draft for businesses that supply or subcontract under a head contract. The supply or subcontract terms should line up with the head contract on scope, timing, variations, payment and defects. If they don’t, the business carries the gap. We check the terms on both sides so that what you promise your customer is something your supplier has promised you.

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