The Preferred Supplier Agreement is a strategic commercial document used to establish and govern long-term preferential supply relationships in the Indian market. It is particularly relevant when a business wants to secure reliable, priority access to goods or services while ensuring competitive pricing and preferred status. The agreement, governed by Indian law, typically includes comprehensive terms covering supply obligations, pricing mechanisms, quality standards, and performance metrics. It addresses both the commercial aspects of the relationship and the legal requirements under Indian contract law, including compliance with the Indian Contract Act 1872 and other relevant legislation. This document is especially useful for businesses looking to streamline their procurement processes, ensure supply chain reliability, and build strategic vendor relationships while maintaining compliance with Indian legal requirements.
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1. Parties: Identification of the parties entering into the agreement, including full legal names and addresses
2. Background: Context of the agreement, relationship between parties, and purpose of establishing preferred supplier status
3. Definitions: Definitions of key terms used throughout the agreement
4. Appointment and Scope: Formal appointment as preferred supplier and scope of supply arrangement
5. Term and Renewal: Duration of the agreement and renewal provisions
6. Ordering Process: Procedures for placing and accepting orders
7. Pricing and Payment Terms: Pricing structure, payment terms, invoicing requirements
8. Delivery and Acceptance: Delivery terms, timelines, and acceptance criteria
9. Quality Requirements: Quality standards, specifications, and quality control procedures
10. Warranties and Representations: Standard warranties regarding products/services and capacity to perform
11. Performance Metrics: Key performance indicators and measurement criteria
12. Confidentiality: Protection of confidential information exchanged between parties
13. Liability and Indemnification: Allocation of risks and responsibilities between parties
14. Termination: Circumstances and process for termination of the agreement
15. Dispute Resolution: Process for resolving disputes between parties
16. General Provisions: Standard boilerplate clauses including notices, amendment process, governing law
1. Minimum Purchase Commitments: Used when buyer commits to minimum purchase volumes or values
2. Exclusivity Provisions: Include when arrangement is exclusive for certain products/territories
3. Insurance Requirements: Detailed insurance obligations when high-value or high-risk goods are involved
4. Intellectual Property Rights: Required when IP rights are involved in the supply relationship
5. Environmental Compliance: Include for industries with significant environmental impact
6. Export Control: Required for international trade or controlled goods
7. Data Protection: Include when personal data processing is involved
8. Business Continuity: Important for critical supply relationships
9. Anti-Corruption Compliance: Required for high-value contracts or government-related supply
10. Change Control Procedure: Include for complex supply arrangements requiring formal change management
1. Schedule 1 - Products/Services: Detailed list of products/services covered under the agreement
2. Schedule 2 - Pricing Schedule: Detailed pricing information, discounts, and price adjustment mechanisms
3. Schedule 3 - Service Levels: Detailed service level requirements and measurement criteria
4. Schedule 4 - Technical Specifications: Detailed technical requirements and specifications
5. Schedule 5 - Key Performance Indicators: Detailed KPIs and measurement methodologies
6. Schedule 6 - Approved Locations: List of approved manufacturing/service delivery locations
7. Schedule 7 - Contact Details: Key contact persons and escalation matrix
8. Schedule 8 - Quality Standards: Detailed quality requirements and testing procedures
9. Appendix A - Order Form Template: Standard template for placing orders
10. Appendix B - Report Templates: Templates for various required reports
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