Q: My business is supplying giant umbrellas to the leisure industry. I have been approached by a Turkish manufacturer looking for a UK outlet. I visited his factory and was impressed. If I enter into a business relationship with him it could make my business more cost-effective and offer growth opportunities. He wants to operate on a shipment by shipment contract basis. Would this be the best way to go?
A: It is worth bearing in mind that longer term contracts could follow if the business relationship builds. You should therefore have a clear written contract at the outset which lays out what will happen, when it will happen and the responsibilities of each party. That way it will be easier to resolve matters if difficulties occur.
Whether or not a shipment by shipment basis is appropriate for the long term will depend on many factors. However, if that is the chosen method you could always consider a Framework Agreement. Such an agreement provides for the customer to be able to order goods and/or services from time to time from the supplier under a call-off procedure, through placing individual orders.
Each of these individual orders forms part of and is subject to the terms and conditions of the master framework services/supply agreement. Individual contracts are not formed when placing individual orders. Variations of the Framework Agreement can allow for individual contracts if absolutely necessary.
Negotiating the right deal with your Turkish supplier will be key to the future success of the business. You will also need to consider whether there are any technical rules in the UK with which your Turkish goods must comply…. as well as a myriad of other considerations. Before entering into any agreements, verbal or written, you should seek advice from an experienced company and commercial lawyer.
Ronald Carter is Head of our Corporate Law team and is based in Oswestry.