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What is a Long term supply agreement?

A Long-Term Supply Agreement is a contract between a supplier and a buyer that establishes terms and conditions for the supply of goods or services over an extended period of time. Unlike short-term supply agreements, which typically cover shorter periods or specific transactions, long-term agreements provide for a continuous and predictable supply relationship between the parties.

A Long-Term Supply Agreement provides both parties with stability, predictability, and assurance of supply over an extended period, allowing for better planning, cost control, and risk management.

Tips

• Maintain Flexibility: Build flexibility into the agreement to accommodate changes in circumstances, market conditions, or business needs.
• Clarify Supply Quantity and Schedule: Clearly specify the quantities of goods or services to be supplied and the schedule for delivery or performance.