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: Overbroad warranties can lead to unlimited liability exposure and difficult-to-prove claims, increasing potential litigation costs.
Negotiation strategy
If you're the Buyer:
Limit warranties to essential, verifiable statements. Include limited warranty periods and clearly defined remedies for breach.
If you're the Supplier:
Ensure warranties are specific and time-bound to protect against undue risk. Verify compliance with applicable laws.
Essential elements
1
Essential Warranties
Limit to verifiable statements.
2
Warranty Period
Define 12-24 months duration.
3
Remedies for Breach
Specify repair, replacement, refund.
Action framework
ACCEPT
Propose edits when warranties are too broad or lack specificity.
EDIT
Reject clauses that expose to unlimited liability or unverifiable claims.
ADD
Add clauses to ensure clarity and protection against potential risks.
PRO TIP
Always tailor warranties to comply with local laws and regulations to ensure enforceability.
Example clauses
FAVORABLE
Preferred Warranty Clause
"The party represents and warrants that all products delivered will conform to the specifications for a period of 12 months from delivery."
NEUTRAL
Fallback Compliance Clause
"The party represents and warrants compliance with applicable laws and regulations as of the date of this agreement."
UNFAVORABLE
Overbroad Warranty Clause
"The party represents and warrants that all products will meet all possible standards indefinitely."
Fallbacks
High-Risk Projects
In high-risk projects, warranties should be more stringent and include additional compliance checks to mitigate potential liabilities.
International Agreements
For international agreements, ensure warranties account for cross-border legal requirements and potential jurisdictional conflicts.
Technology Transactions
In technology transactions, focus on IP warranties and ensure rights and licenses are clearly defined and verifiable.
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WEEK 1
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WEEK 2
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WEEK 3
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WEEK 4
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