A Master Supply Agreement governs the ongoing supply of goods between buyer and supplier, setting pricing, logistics, and quality standards. This playbook provides insights into balancing continuity of supply, cost control, and contractual accountability.
Why This Matters: Lengthy or unclear dispute processes can escalate costs, delay remedies, and strain business relationships, increasing operational uncertainty.
Negotiation strategy
If you're the Buyer:
Prioritize arbitration to ensure neutrality and efficiency. Propose a neutral venue to avoid jurisdictional bias.
If you're the Supplier:
Advocate for mediation as a first step to minimize costs. Ensure the arbitration rules are favorable and enforceable.
Essential elements
1
Mediation Process
Initial step for resolution.
2
Arbitration Rules
Guidelines for arbitration.
3
Court Jurisdiction
Fallback legal venue.
Action framework
ACCEPT
Propose edits if the venue is biased or timelines are unclear.
EDIT
Reject if only litigation is specified without alternatives.
ADD
Add mediation and arbitration clauses if absent.
PRO TIP
Always specify a neutral venue to enhance enforceability and fairness.
Example clauses
FAVORABLE
Preferred Clause
"Disputes shall be resolved through mediation, followed by arbitration under [Arbitration Institution] rules, with venue in [Neutral Location]."
NEUTRAL
Fallback Clause
"Disputes may be resolved through litigation in the courts of [Jurisdiction], if mediation and arbitration are unsuccessful."
UNFAVORABLE
Unfavorable Clause
"All disputes shall be resolved through litigation in the courts of [Party's Home Jurisdiction]."
Fallbacks
High-Risk Projects
For high-risk projects, prioritize arbitration to ensure quick and neutral resolution, avoiding lengthy litigation.
International Contracts
In international contracts, specify arbitration under international rules to ensure enforceability across borders.
Small Business Agreements
For small businesses, mediation can be a cost-effective first step, with arbitration as a backup to avoid court costs.
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