Features of the contract for the supply of goods

May, 18 2021

Contents:

The regulation of supply contracts has one feature, which is that the Civil Code of the Russian Federation classifies this type of contracts as one of the types of contracts for the sale of goods.

Two types of standards are applied to contracts for the supply of products that regulate their work:

  • General.
  • Special.

The former control the moment of drawing up and concluding the purchase and sale agreement, the latter are responsible for signing the product supply agreement.

Article 506 of the Civil Code of the Russian Federation states that a supplier engaged in entrepreneurial activity in the field of the economic market is obliged to transfer the purchased products to the customer within the specified time. In this case, the buyer can use the goods exclusively when selling within the framework of his business; it is unacceptable to take them for personal or home use.

This is considered one of the main features of the contract for the supply of goods – it is concluded exclusively for the purpose of subsequent sale within the framework of one’s own business.

Terms of the contract

There are three essential terms of the delivery contract:

  • Name and number of goods;
  • Payment method;
  • Delivery time.

In case of disagreement, should be used Article 507 of the Civil Code of the Russian Federation. It provides for a special procedure for resolving such situations.

Form of contract

A supply contract is a written agreement between the buyer and the supplier, which specifies the obligations to transfer the goods, accept them, and pay for them. The structure and content of the deal depends on the outcome of the transaction and the effectiveness of cooperation between the two parties.

The Civil Code of the Russian Federation does not provide an individual form for a supply contract, so its content and design must meet the general requirements that the legislation imposes on various forms of deal:

  • the introductory part, which will indicate the names of the participants in the deal;
  • subject of the contract. Here it is necessary to fully register the name and description of the product, the quantity of products supplied and in what time it should be carried out. Article 455 of the Civil Code of the Russian Federation states that the subject can be both products that are available, and goods that will be produced in the future on an individual order;
  • rights and obligations of each party. From this section it depends on how accurately all the requirements of the buyer and supplier will be met. This point is important in case of disputes, the information provided will significantly affect the protection of rights and interests.

Sometimes one of the parties may have conflict situations with third parties, which will affect the ability to fulfill obligations. This point is regulated by Article 462 of the Civil Code of the Russian Federation, which states that the supplier is obliged to take part in resolving the buyer’s conflicts if they concern his interests. This rule also applies in the opposite direction.

For example, the goods were withdrawn from the buyer due to the circumstances existing even before the transaction was concluded. In this case, the seller can compensate the counterparty for the losses, or it can try to prove that the buyer initially knew about the existence of such circumstances.

Also, the supply contract prescribes the following aspects:

  • information about the quality of the goods;
  • delivery dates and periods;
  • payment schedule to adhere;
  • the order of delivery, who and how will ship the products to the buyer;
  • the cost of each unit of goods or the whole lot;
  • calculation procedure;
  • terms of acceptance of products and the procedure for actions that the buyer must take when detecting defective or low-quality goods;
  • the responsibility that both parties will bear for non-performance of their obligations.

Terms of delivery

The terms and periods of delivery of goods are regulated by Article 508 of the Civil Code of the Russian Federation. If at the conclusion of the contract the exact number of batches and the delivery time were not determined, the supplier is obliged to deliver the goods in equal quantities every month. If a different value is required, it is important to discuss these issues before drawing up and signing contract.

In some cases, a product release schedule is attached to the contract. The possibility of early delivery should be discussed directly with the receiving party and carried out only if it agrees.

Article 509 of the Civil Code of the Russian Federation prescribes the norms of legislation indicating that the shipment of products is carried out by direct transfer of the delivery to the buyer, or to the person specified in the contract instead of him. This is a significant feature that is taken into account when fulfilling obligations under the concluded contract.

The receiving party also has responsibilities. To prevent conflicts, the buyer is obliged to provide all the conditions for accepting the goods:

  • immediately inspect all delivered products for defects or defects, as well as possible shortages;
  • check the exact quantity;
  • make sure that the delivered product meets all the requirements specified in the contract.

If any defects or discrepancies in the quantity have been identified, the receiving party must immediately send a written notice to the supplier.

Essential terms of the agreement

Sometimes the supplier does not notify the buyer when sending a low-quality product or of an inappropriate quantity. In such case, the receiving party has the right to demand the proper performance of the obligations. If there is no response, the buyer has the right to take the following actions:

  • demand a reduction in the purchase price of the delivered goods;
  • request to eliminate all defects or replace the batch free of charge within a certain period of time;
  • demand reimbursement of expenses that will be spent on self-elimination of defects.

These rules apply if minor defects have been identified that can be corrected without unnecessary claims. In the event that serious violations and extremely inappropriate quality of the goods were revealed during the inspection, the buyer has the opportunity to do the following:

  • renounce their obligations under the contract and demand compensation for the products already paid for;
  • require a complete replacement of the entire delivery with one that will comply with all the facts specified in the contract.

It is worth noting that a significant defect is considered only one that cannot be eliminated independently. Or one that will require serious financial investments that are disproportionate to the price of the product itself. Can be requested a complete replacement if the defect has been identified repeatedly or manifests itself even after elimination.

It is not uncommon for cases when the goods arrive in an improper form or the complete set does not fully or partially correspond to the products specified in the supply contract. The receiving party should immediately notify the supplier of the problem and the need to solve it.

Rights and obligations of the parties

At the legislative level, the buyer has the right to refuse to pay for the delivered products if they do not fully meet the requirements set out in the contract or have shortcomings that cannot be eliminated independently. Also, can be requested a refund for an item that has already been paid for.

Unilateral refusal to perform obligations under the agreement is possible only if the essential terms of the agreement are violated.

Significant violations on the part of the supplier include the following points:

  • sending goods that are of poor quality or defective;
  • violation of delivery deadlines;
  • if the supplier repeatedly delivers the defective product, even if the defects are corrected in a timely manner.

The buyer also has a number of obligations that he must not violate. For example: violations of payment deadlines.

If one of the parties has doubts about the literacy of the contract, it makes sense to seek help from lawyers working in this area. They will tell you how to properly issue the document, so in the future neither of the parties has any unforeseen situations.

Payment for the goods and its terms

In accordance with the regulations prescribed in the Civil Code of the Russian Federation, the buyer, when signing the contract, undertakes to pay for the goods in a timely manner in accordance with the prescribed cost. In some cases, both parties agree and specify in the document a certain cash transaction procedure to be followed.

There is a set of general rules for determining the term of payment for goods under a product delivery contract, they are regulated by Articles 190 and 191 of the Civil Code of the Russian Federation:

  • with an indication of a specific calendar date;
  • with an indication of the event that should occur;
  • at the end of the time period that was agreed in advance.

Both parties can agree in advance on the period in which the payment must be made. This can be an individual schedule or payment upon receipt.

Comprehensive analysis

Analysis of the delivery contract is a service provided by lawyers of third-party companies or company’s lawyers. The contract is a guarantee that the requirements of both parties will be met in accordance with the current regulations of the Civil Code of the Russian Federation. After a thorough review of the document by a lawyer, the customer and the supplier will have an understanding of the following issues:

  • what guarantees do both parties have. The transaction should not infringe on someone’s rights and act against someone’s interests;
  • what is the supplier’s responsibility for non-performance of its obligations, such as timely delivery of goods of improper quality;
  • what consequences will be for the receiving party for violating the prescribed conditions: the buyer is obliged to accept the goods in time and make the payment;
  • other terms of delivery under the contract.

It is also worth considering in more detail what the service of analyzing of supply contracts includes:

  • complete analysis of product supply contracts in accordance with the current legislation;
  • identification of financial and property risks that may arise after signing the document;
  • recommendations for both parties on which items should be added to the final version of the contract and which should be deleted;
  • advice on possible disputes, to prevent conflicts.

The delivery contract is a civil contract, which is characterized by a significant number of different features, obligations and nuances. To take into account all possible pitfalls, it is recommended to contact our specialists for a comprehensive analysis of the product delivery contract. It is considered not to neglect this opportunity, so as not to get into a difficult situation in the future.

Author of the article
Features of the contract for the supply of goods
Valentina Khlavich
Managing Partner
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