Are you an SME owner or manager and would like to get the most out of the supplier contracts you manage in your daily routine? If this is your situation, this article is for you. Today we tell you the basic information you need to know about this type of contract, from the different types to the basic elements that make them up. In addition, we also give you a solution to streamline them, save time and resources.
Interested in learning more, read on to find out more!
What are supplier contracts?
As the name suggests, a supplier contract is a written agreement between a supplier and a company, in this case an SME, which establishes the basis of the relationship between the parties, including their rights and obligations.
How many types of contracts are there?
When talking about supplier contracts, we must take into account that there is no single type, just as we do not find a specific model of company that makes use of them. While it is true that in this blog article we focus on SMEs, any company can resort to this type of agreement (in fact, it is the most common).
Depending on their needs and the characteristics of their supply chain, businesses can opt for three types: fixed-price contract, cost-reimbursable contract and time and materials contract.
Here is the definition and the main aspects to be taken into account:
Fixed price contract
This is a contract by which both parties, i.e. supplier and company, establish a fixed price for the product or service. The main benefit is that the fixed amount is defined at the beginning of the commercial relationship and, therefore, there is no room for budget variations due to market fluctuations. Sounds good, doesn’t it? For that reason, the risk of the above is reduced to a minimum and it is, without a doubt, the most convenient.
Reimbursable cost contract
Through this contract, the client agrees to pay the supplier all the costs related to a given project. But it also involves a series of fees agreed between the parties. It is the most risky type of contract for the client, since all production and supply costs are awarded to him.
Time and materials contract
The latter combines elements of the two previous types, as it includes a variable part and a fixed part.
Being a contract of mixed characteristics, it has a risk of an intermediate nature. However, it is particularly useful in contexts of certain uncertainty, i.e. in situations where it is not possible to determine with certainty the time that will be spent or the resources that will be required.
What sections should they contain?
Once we have reviewed the types of the different existing supplier contracts, we cannot forget another fundamental point: what elements should they include? Well, although they generate certain doubts, there are several essential points that should appear:
- Subject matter of the contract: What can both parties, supplier and company, expect from the relationship they establish? This information is made clear.
- Rights and obligations of the parties. In the same way, the rights and obligations to which they are attached are reflected.
- Conditions of provision and/or supply. This refers to the aspects included in the contractors and suppliers manual with OSH criteria: quantities, procedures or deadlines are some of the elements covered.
- Guarantees. In addition, it is also important to add a section in which are reflected in detail, to avoid possible confusion, the consequences in the event that any of the parties fails to comply with all or part of the contract.
What is the legal framework that regulates these documents?
In Spain, supplier contracts are subject to specific regulations. Mainly, the Public Sector Contracts Law and the Civil Code for public sector contracts.
Public Sector Contracts Law
It governs contracts entered into between private corporations and public sector actors. Therefore, some of the aspects it covers are the procedures and requirements necessary for public procurement, deadlines or award criteria.
Civil Code for public sector contracts
This set of rules regulates and defines the general elements of private and public contracts in Spain, as well as the obligations and responsibilities of both parties.
Streamline the management of your contracts with electronic signatures
We have already explained the essential information you should know about supplier contracts for SMEs, but what would you think if I told you that it is possible to digitize and optimize their management? The electronic signature is a tool that allows you to do so.
But, if you want to go a step further and choose one that suits your needs, trust Viafirma, a company with 25 years of experience in the market. Our digital signature solutions are intuitive, easy to use and have great features that will help you manage the signing of agreements with your suppliers in an instant. Using it, you will reduce time, gain agility and optimize your resources. What are you waiting for?