Contracts; Supplier

Terms of Contract

A consultant/supplier may incorporate his standard terms of agreement. This may be a general services agreement. Specific contracts may govern individual jobs and orders under the scope of the general agreement. There may be a services schedule and a schedule of fees.

It may be provided that when services are requested, the supplier may submit a statement of work or similar document describing the services and the applicable fees. The customer may be obliged to notify the service provider/supplier as to whether it accepts the statement / proposal. They may become binding under the general agreement when accepted, or if not rejected within a specified period. They may become binding if the services are commenced without objection.

Changes in the scope of services and the applicable terms may be set out in the documents for the particular job or order Daily rates may be specified to be based on a particular number of hours per day. Services requested in excess of a particular number of hours per day may be charged on a prorated basis.


Particular Jobs; Services and Payments

Service provision timelines and dates may be agreed from time to time for particular jobs. They may be subject to the availability of personnel on the supplier’s side. The supplier may provide that time is not to be of the essence in respect of the performance of any of the services. The supplier may agree to use reasonable endeavours to complete the services within the estimated time schedules.

There may be timesheets which measure the hourly rate for services provided. They may be required to be submitted and accepted by the customer to verify receipt and or acceptance of the services described.

It may be provided that the customer is to pay the fee set forth in the applicable job document or as otherwise agreed. There may be a mechanism for calculation of the fees. There may be provision for regular invoicing, commonly monthly in arrears. Value-added tax is payable at the relevant rate in addition to the invoice amount

Provision may be made for the due date for payment of the invoiced sum. Interest at a defined rate may be payable by reference to a relevant base rate. If the customer’s procedures require that an invoice be submitted against the purchase order, then the customer will be obliged to ensure that a purchase order is issued.


Customer’s Obligations

The supplier will wish to confirm the customer’s obligations in relation to the provision of the service. They may include

  • cooperation with the supplier;
  • providing the requisite information and documentation reasonably required;
  • promptly making resources available;
  • allowing access to software and hardware;
  • making appropriate staff available as are necessary to enable the contract to be executed;
  • provide suitable working space and facilities where relevant.

The customer may be made liable to compensate the supplier for any additional expense incurred as a result of failure to do the required actions or to follow supplier’s reasonable instructions.

There may be a provision for an increased price where the customer is in default. The customer’s default may be defined as any event other than that of the supplier or its subcontractors which causes any delay or cost to the supplier.

Provision may be made for a liquidated damage sum in the event that the contract is terminated by reason of the customer’s default.


Supplier’s Requirements

There may be detailed provisions regarding the provisions of the personnel and human resources required to comply with the supplier’s obligations. The failure by the supplier to provide the particular quantity of qualified personnel and resources may be a breach of contract and ultimately, a ground for termination by the customer.

There may be a clause providing that if any third party other than a subcontractor does something or omits to do something which prevents or delays the supplier in complying with its obligations, the supplier may be relieved from liability. He may be required to give notice in order for the relieving provisions to apply.

There may be provision for extension of the services delivery date, with no liability in respect of delay. There may be a consequential modification of the project timetable.


Variation of Work or Services

There may be provision for variation of the works under a job order.  There may be a request for a change by the supplier or the customer. Where the request is made by the customer, the supplier may be entitled to charge a reasonable cost for investigating the proposal, regardless of whetherl the request is agreed to or not. The existing work obligations remain unaltered.

The varied work may be required to be the subject of a new or amended order / contract. It will provide for the revised work. There may be revised fees. Fees may be chargeable at the rates set out in the general services agreement.

There may be a provision for a variation in the services, which does not require a new or amended contract. The supplier may be obliged to undertake the varied service provided that it is within the scope of the general services. There may be a mechanism for valuation and measurement of the cost of the varied works.

It may be provided that the supplier must notify the customer if he intends to make a claim for additional fees or costs as a result of a variation or default on the part of the customer.


Intellectual Property

The supplier may specify or be entitled to specify materials that it may deliver in accordance with the relevant services. The agreement may confirm the supplier’s retention of all intellectual property rights in its materials. The customer may be granted a non-exclusive, non-transferable license for limited use as is necessary for the enjoyment of the services provided.

The customer may be required to reproduce a copyright notice and legends of ownership on relevant copy material, acknowledging the supplier’s ownership of the relevant rights.

Where third party consent, usually by a licence, is required for the use of software hardware or other products, the customer or supplier may have obligations to make or cooperate in the application and to seek or obtain the relevant consent.

The customer may indemnify the supplier and its group or related companies against claims and damages arising from failure to obtain the relevant consents.


Quality of Service Warranties

The supplier may or may not modify, replace vary or negate the default statutory conditions and warranties given in respect of the provision of the services. The modification or removal of the default rights is subject to a “fair and reasonable” test.

The supplier may warrant and confirm that the services will be performed using reasonable skill and care. of a standard and quality conforming to generally accepted industry practice and standards. This largely confirms the statutory default position.

The supplier may provide that no warranty or other contractual promise express or implied by law or otherwise is given in relation to the services or otherwise. It may be provided that the (usually) limited express warranties provided are not expanded or affected and that no further obligation on the part of the supplier is to apply out of the provision of the services.

The supplier may provide that it may direct the customer to third parties having products and services which may be of interest for use in conjunction with the services. The supplier may provide that it has not independently investigated those products and services and that has no responsibility in relation to them, their suitability or otherwise. In particular, the supplier would have no liability in relation to supply of any such services by third parties.


Limitation of Liability

Limitations of liability may be provided where possible. See the other articles in relation to exemption and limitation of liability clauses. They must be clearly brought to the customer’s attention and become part of the contract. They must pass a fair and reasonable test in many cases. A limitation clause which has an economic justification is more likely to be reasonable than a complete exclusion of liability.

The supplier may provide that it is not to be liable for any consequential loss. This may be stated to cover incidental, indirect, special or consequential damages including loss of revenues, profits, even if the supplier knew or should have known of the possibility of the loss.


Various

The customer may be obliged to indemnify the supplier in respect of claims brought against the supplier alleging any materials or products provided by the supplier in accordance with the customer’ specifications, infringe any intellectual property rights.

In some cases, the supplier may agree to indemnify the customer against injury, personal injury and loss or damage to property arising out of its negligence or that its employees or agents, in consequence of its obligations under the agreement.


Protection of Proprietary Information I

The supplier may require provisions for the protection of its proprietary information. This may be defined as any information or data of a confidential nature including marketing, sales, operating, performance, material cost, know-how, business and process information, computer programming techniques and all records containing or disclosing such information or techniques.

The customer may be obliged not to disclose proprietary information as defined and to hold it in confidence. There may be an acknowledgement that the disclosure may cause economic loss to the party who owns the information.

The obligations will usually survive the expiration or termination of the agreement, even termination for default. The undertakings by each party in relation to proprietary information will commonly be reciprocal and in identical terms. Mutual undertakings are more likely to be upheld.


Protection of Proprietary Information II

In the usual way, it may be provided that the non-disclosure obligation is not applicable to information already known or which becomes public knowledge without the default of the recipient, provided lawfully or independently developed by a third party without reference to the other party’s proprietary information or disclosed pursuant to law or to a court order.

It may except information independently developed by the receiving party without reference to the other party’s proprietary information. The supplier may resist this clause given, the difficulties of proof that may arise.

Permitted disclosure for the above purpose may be subject, in some cases to giving prior notification and /or taking the requisite protective measures.

Each party may be obliged to keep the terms of the agreement or in some cases, the agreement itself confidential. There may be limited consent to certain types of necessary disclosure, in the normal course of business.


Duration and Termination

The duration of the agreement may be specified. It may be in force for a fixed period. It may endure until terminated in accordance with the provisions of the agreement. A fixed term may continue expressly o by implication after its expiry as an agreement terminable on reasonable notice. One or other party may have the option to extend or terminate the agreements. This may be subject to conditions or defined circumstances.

Either party is usually entitled to terminate the agreement for a material or serious breach by the other.  It may be terminable immediately for very serious breaches. A breach may become serious after the default continues for a period. The payment obligation may be strict. The supplier may have the right to terminate if non-payment persists beyond a specified period of time.

In most cases, a notice to remedy the breach must be given. If the other party fails to remedy the breach within a reasonable time, which is usually specified, there may be a right of termination for the innocent party by reason of the default.

The commencement of insolvency proceedings is likely to constitute grounds for immediate termination on the part of the other party. All fees outstanding to the supplier may become immediately due. The innocent party will wish to have a matured, immediately due obligation in order to make a claim in the insolvency.


Data Protection

There will commonly be provisions in relation to data protection and use. It may be provided that the supplier may process personal data in the context of or in relation to the agreement or for connected purposes. It may extend the consent to related companies and affiliates of the supplier.

The customer may undertake to obtain similar data protection consents from employees, contractors and others whose personal data are supplied in order to give full effect to the agreement It may agree to indemnify the supplier from liability by reason of its failure to do so. The clause may extend these obligations in respect of group companies. There may be a restriction on transfer of data or information generated under the agreement outside of the State.


Notices

It may be important to have a precise, verifiable method of giving notice under the agreement, particularly for key matters such as termination. It may be critical for the recipient to ensure that notice comes to the proper place.

In order to avoid disputes on the matter, provision may be made for the required form of notice to the other party. It may be provided that notice is to be given by post addressed to a particular address, e-mail to a specified address etc. or delivery to an office.

Notice given in accordance with the agreement is deemed effective. It is not necessary to prove actual notice.


Assignment

It may be confirmed that one or other or both parties is or is not entitled to assign its rights and obligations under the Agreement. It is not possible to assign or offload obligations. It may be possible to subcontract or delegate them.

Rights and obligations receivable or the benefit of the agreement may be capable of being assigned by implication in the absence of clauses which prevents it. The parties may provide that their respective rights may or may not be assigned. In many service agreements, neither party will want the other to have the ability to substitute another.

The supplier may seek the right to subcontract the performance of its obligations. It will retain responsibility for them in the absence of wording otherwise.

The customer may be able to delegate all or some obligations it may have under the agreement. The customer may wish to prohibit subcontracting on the basis that it relies on the supplier’s particular skill and reputation.


Template Clauses I

The following clauses and the issues that arise from them are dealt with in detail elsewhere

It may be confirmed that a waiver or non-enforcement of a breach by the innocent party does not constitute a waiver of the obligation or breach generally for the purpose of the agreement. In particular, it may be confirmed that it retains its rights in relation to subsequent defaults or breach.

It may be provided that during the agreement and for a period thereafter, the parties are not to solicit any of the suppliers (or customer’s) employees, agents, subcontractors or others involved in the performance of the agreement.

There may be provision for a liquidated damage sum payable or a provision for payment of the actual loss in the event of solicitation in breach of the agreement. The innocent party will want to enforce the clause by injunction. There may be causes confirming that damages would be inadequate and otherwise in support of an injunction.


Template Clauses II

It might be declared that the supplier and customer are independent parties and neither has authority on behalf of each other in any regards save as expressly provided for by the agreement.

The relevant governing law and courts with jurisdiction may be provided for. Generally, in a business to a business agreement, the choice of the parties as to the applicable law and the courts of jurisdiction, is given effect.

There may be a clause exonerating both parties from noon-performance for causes beyond the control or reasonable control of the other. It may be specified that delaying or preventative factors such as fires, insurrection, riots, government action, delays in transportation, inability to obtain supplies, legal requirements, regulations etc. excuse non-performance.

On the other hand, the excusing factors may be defined narrowly, so that the supplier takes the risk on the issue concerned.

It may be confirmed that the agreement complies with the entire agreement within the parties and that all previous agreements have no effect. If there is an earlier confidentiality or non-disclosure agreement, it might be confirmed to continue.

The services may be specified in a schedule. They may be subject to change and amendment from time to time in accordance with a procedure.

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