I often have clients contact me seeking advice in relation to a dispute that they are having with parties that they trade with in their business, such as suppliers and customers. The first question I ask is what the terms of their trade agreement are, and often I am told that there is nothing in writing.
Any successful business should have documented terms of trade with all external parties that they deal with.
What are trade agreements?
The agreements could include:
- Supply agreements;
- Licensing agreements;
- Distribution agreements;
- Purchase agreements.
The terms of trade should be specific for each individual business, however there are a number of important matters that should be considered in any terms of trade. These include:
- The legal entity of the party that you are dealing with;
- If the legal entity is a company or trust, whether you will be obtaining personal guarantees;
- Carefully outline each party’s obligations under the agreement;
- Detail the way in which payment is to be made;
- Ensure that any retention of title issues are properly addressed;
- Deal with any intellectual property issue;
- Carefully outline the guarantor’s obligations;
- Address all legislative requirements in relation to the agreement. This will be specific for each agreement;
- Deal with any warranties or defect liability issues;
- Detail any variations to the agreement;
- Detail how the agreement can be terminated by either party;
- Detail any indemnity and liability issues;
- If there is to be any charge over property to secure payment under the agreement, ensure that this is carefully worded to comply with appropriate legislation;
- Have a dispute resolution clause;
- Detail the jurisdiction in which any disputes will be resolved and the law that applies to the agreement.
If you have any questions in relation to the preparation of these important documents, terms of trade or trade agreements, please do not hesitate to contact me.