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A Supply Chain Agreement sets out the rules and responsibilities between companies that work together to deliver products or services. It covers how goods move from manufacturers through distributors to end customers, including quality standards, delivery timelines, and pricing terms that comply with Indian contract law.

These agreements help businesses protect themselves from supply disruptions while meeting regulatory requirements under India's Contract Act of 1872. They typically include provisions for inventory management, payment schedules, and dispute resolution mechanisms. Manufacturing hubs in states like Gujarat and Maharashtra often use these contracts to structure their supplier relationships and maintain smooth operations.

Put a Supply Chain Agreement in place before starting any significant supplier relationship, especially when ordering critical components or materials worth over ₹1 lakh. This becomes essential when working with multiple vendors across different Indian states or dealing with time-sensitive manufacturing schedules.

The agreement proves particularly valuable during supply chain disruptions, quality disputes, or payment conflicts. Manufacturing companies in sectors like automotive, pharmaceuticals, and electronics need these agreements to maintain GST compliance and protect against supplier defaults. It's vital to have one ready before scaling up operations or entering new market segments.

• Basic Supply Chain Agreements focus on straightforward vendor relationships with standard delivery and payment terms
• Manufacturing Supply Chain Agreements include detailed quality control protocols and production specifications required by Indian manufacturing regulations
• Distribution Supply Chain Agreements outline territory rights, minimum purchase commitments, and compliance with state-specific trade laws
• International Supply Chain Agreements address customs requirements, currency considerations, and cross-border logistics under FEMA guidelines
• Service-Based Supply Chain Agreements cover SLA metrics, performance standards, and specialized terms for service providers

• Manufacturers and Suppliers: Sign and comply with delivery schedules, quality standards, and pricing terms as primary parties to Supply Chain Agreements
• Corporate Legal Teams: Draft, review, and negotiate agreement terms to protect company interests and ensure regulatory compliance
• Supply Chain Managers: Oversee implementation and monitor performance metrics outlined in the agreements
• Quality Control Officers: Enforce product specifications and testing requirements specified in the contract
• Finance Teams: Handle payment terms, credit arrangements, and financial compliance aspects under GST regulations

• Company Details: Gather complete legal names, GST numbers, and registered addresses of all parties involved
• Scope Definition: Document specific products, quantities, quality standards, and delivery schedules
• Payment Terms: Outline pricing, payment schedules, credit terms, and bank account details
• Compliance Requirements: List applicable industry regulations, quality certifications, and state-specific trade rules
• Risk Management: Define liability limits, insurance requirements, and dispute resolution mechanisms
• Performance Metrics: Specify KPIs, reporting requirements, and consequences for non-compliance

• Parties and Scope: Complete legal names, addresses, and detailed description of goods/services covered
• Contract Terms: Duration, renewal conditions, and termination rights as per Indian Contract Act
• Delivery Specifications: Timelines, locations, and Incoterms for shipment and acceptance
• Price and Payment: Detailed pricing structure, GST implications, and payment schedules
• Quality Standards: Product specifications, testing protocols, and compliance requirements
• Dispute Resolution: Arbitration clause, governing law, and jurisdiction details
• Force Majeure: Events excusing non-performance under Indian law

A Supply Chain Agreement differs significantly from a Supply Agreement in several key aspects, though they're often confused. While both deal with the transfer of goods, Supply Chain Agreements cover the entire network of relationships and processes, from raw materials to final delivery. Here are the main distinctions:

• Scope and Complexity: Supply Chain Agreements manage multiple parties, logistics, and interconnected processes, while Supply Agreement typically covers a straightforward buyer-seller relationship
• Duration and Flexibility: Supply Chain Agreements include provisions for long-term relationships and process modifications, whereas Supply Agreements often focus on specific transactions or fixed-term arrangements
• Risk Management: Supply Chain Agreements incorporate broader risk mitigation strategies across multiple touchpoints, including inventory management and quality control systems
• Compliance Requirements: Supply Chain Agreements address multiple regulatory frameworks across different stages of the supply chain, including interstate commerce rules and industry-specific standards