Direct Supplier Agreement

The truth is that there are many large companies known with supplier agreements that they do not pay enough attention to. Companies write routine contracts and have them signed just to oust them and give them little attention afterwards. e. Quality or delivery issues. If the Tier 1 provider believes that it has quality or other delivery issues with the Tier 2 provider (for example. B if the Tier 2 supplier usually delivers or produces too late, but perhaps still compliant oriented parts), the Tier 1 supplier often expects the customer to intervene. The Tier 1 provider`s ability to find other sources that may pose supply problems is limited due to the nature of the direct repurchase agreement and, as such, the Tier 1 provider will look at the customer to relieve the bottleneck that may result from the direct repurchase agreement. one. Deviation in coverage. Whether the customer is not structured according to the best practices described in Part 4 below due to a lack of customer leverage or for other reasons, the customer may obtain a guarantee from the Tier 1 supplier for the part of the integrated product manufactured by the Tier 1 supplier or otherwise obtained by the Tier 1 supplier outside the Directd-Buy agreement (the “Tier 1 component”) and possibly a guarantee from the supplier Tier 2 for the oriented parts, but no warranty for the integrated product as a whole. If a defect or other warranty problem occurs, in particular where that warranty issue relates to the interaction between the covered party and the Tier 1 component, it is likely that each supplier will reject the fault of the other supplier or the customer itself and that the customer itself will be liable to its downstream buyer for all warranty obligations to which the customer has committed: It is a question of responsibility. c. Tripartite Agreement.

A third option is to enter into a tripartite agreement between the Tier 2 provider, the Tier 1 provider and the customer, wherein the parties assign the respective warranty obligations of the suppliers with respect to the integrated product. The parties may, among other things, provide a general warranty so that the Tier 2 supplier is directly responsible to the customer for the functionality of the directed parts, while the Tier 1 supplier guarantees not only the Tier 1 component, but also the assembly and “interface” of the Tier 1 components with the directed parts. While this approach is not as advantageous from the customer`s point of view as when the Tier 1 provider guarantees the entire integrated product, this approach offers the customer some protection with respect to the combination of the suppliers` respective products. c. Anti-cartel concerns. There could be cartel and abuse of position problems when a customer intervenes to arrange a relationship between two suppliers, if those suppliers are competitors, particularly when the customer dictates pricing conditions. These issues should be carefully considered by the anti-cartel lawyer in any direct selling agreement envisaged by the client. Large, complex agreements may have been added to many pages of complex SLAs, pointed out in the “Service Description” and “Vendor Responsibilities” section. . .