Would you sign this SUPPLY CONTRACT?

LazyLion

King of de Jungle
Joined
Mar 17, 2005
Messages
107,590
Reaction score
10,235
Location
District 9
Got this from one of our customers...

Agreement for Raw Material Suppliers
INTRODUCTION

This document is to assist Suppliers and the management of OUR COMPANY in controlling and supervising their own work environment in order to minimise the probability of an incident which could result in injury, accident, fire, loss, contamination, and product quality or product safety.
Every employee of the company has the authority and responsibility to report to management any operation or deficiency which contravenes the items listed in this document so that remedial action may be taken. Non-compliance to our conditions will adversely affect future contracts. Serious cases of non-compliance may lead to immediate expulsion from our premises.

RAW MATERIAL REQUIREMENTS FOR SUPPLIERS
1. All deliveries to be done in closed vehicle, clean and no contamination visible.
2. The Company need a Certificate of conformance for all products on delivery.
3. All raw material must adhere to agreed specifications.
4. Any changes to agreed specifications to be communicated and approved by company.
5. In case of delivery without conformance certificate, the company will reject delivery.
6. Any rejected raw material to be uplifted within 48 hours of notification.
7. If rejected raw material is not uplifted in this time frame, the company will destroy any such material.
8. Ensure that no out of stock issues arise on prices given to try and get Company as the preferred customer.
9. Costings is based on this prices and if no raw material is available on that price, it contribute to losses for the company.
10. The company would be entitled to approach another supplier in case of late performance or non-rendering of the service by the Supplier. The Supplier would be responsible for any additional cost associated with approaching an alternate Supplier to source the Services or raw materials.
11. The company will levy a penalty on any quality issues found on products supplied to the company that causes down time, the extra cost to complete the production will be charge to the supplier, cost will be calculated and invoices raised to supplier.
12. In the case of a third party claim due to product not up to standard which create downtime on their production line or product withdrawal, our company will have no alternative to forward the claim to the original supplier due to non-conforming raw material.
13. Any claims to be investigated by all parties involved and agreed upon within 30 days of notification.
14. The supplier will provide the services to the best of its ability, with a level of skill and care appropriate to a supplier experienced and qualified to perform the services in all respects to the satisfaction of the company and in accordance with best industry practice.
15. Suppliers will remain complaint with all laws and regulations applicable to the provision of the services.

RULES FOR RAW MATERIAL SUPPLIERS ON SITE - INSTRUCTIONS TO SUPPLIERS
1. It is a condition of this contract that your workmen and any sub-contractors be covered in terms of the Compensation for Occupational Injuries and Diseases Act (130 of 1993) as amended. A copy of your registration certificate must be attached to the signed copy of this document and be handed to the person in charge of Quality Control. Furthermore the contractor certifies that such cover will not lapse during the continuation of the work.
2. Completion of our Health and Safety Questionnaire before entry into factory area.
3. There should be no nut products present in the factory at any time.
4. A contractor will only be allowed to use a cell phone or portable phone in the production area when:
* In a machinery breakdown situation.
* An environmental disaster occurs within the facility and it is an emergency.
5. No jewellery allowed including bracelets, ear rings, necklaces, piercing on any exposed parts of the body, rings or wrist watches except for medical reasons.
6. If person have artificial hair or wig, disposable hairnet must be used
7. If person wear any nail polish, nail varnish or false nails, disposable gloves must be used.
8. No sunglasses except for medical reasons
9. No caps or hats or any loose hanging clothing/blankets allowed.
10. No clothing or blankets allowed on top of protective clothing.
11. No eating, drinking or smoking allowed in Factory area, toilets or change rooms.
12. Smoking only allowed in designated outside smoking area.
13. Wash hands on entering production area
14. Adhere to companies lock out procedure at all times.
15. All work must be carried out by contractors under the close supervision of the competent contractors employees and accompanied by an employee.
16. The right for security personnel to search persons or vehicles entering or leaving the premises are reserved.
17. After completion of the work the contractor must make good and clean up the site area where work was performed. Work-sites must also be kept reasonably tidy during work operations. Ensure that a post maintenance approval certificate is signed before leaving the work site.
18. Any material left lying around at the work area after completion of a job will be removed, and the cost of removal debited against the contractors account. The company will not be responsible for the safe custody of any such material.
19. It must be noted that any reportable accident or machine failure relative to the contractor will be reported by the company to the Inspector of Machinery as required under the Occupational Health and Safety Act (85 of 1993 as amended)
20. The contractor shall ensure that all tools and materials are kept under lock and key. The contractor must ensure that employees protective clothing, tools and equipment must be clean when entering factory to prevent contamination or interfere with product quality and safety. The company is not responsible for the safety of contractors employees and/or for the loss of the contractors equipment as a result of any cause whatsoever.
21. The contractor certifies that he is aware of the onus placed on him in terms of the Occupational Health and Safety Act (85 of 1993 as amended) and that his employees have been versed in the same.
22. The contractor hereby agrees that any copyright of any work which may be liable for copyright and which is produced by or for the contractor in the course of the work to be carried out by the contractor for the company vest in the company.
23. The contractor agrees to indemnify the company in case any underground cabling/piping being damaged and further the contractor agrees to indemnify any third party as a result of consequential loss (e.g. loss of power supply/water supply at an adjacent factory).
24. Appropriate personal protective clothing(Safety boots, Dust coats/Conti Suits/Overalls, Ear plugs in noise areas, disposable hairnets and disposable gloves if applicable) and head gear must be worn and especially in areas so demarcated.
25. Contractors shall provide their own ladders, trestles, scaffolding, lifting tackle and tolls which must comply to the standards laid down in the Occupational Health and Safety act (85 of 1993 as amended).
26. On no account are contractors or unauthorised employees permitted to operate company cranes, hoists, lifts, or any other equipment including vehicles and forklift trucks. If the use of any of the above equipment is required, application must be made to the person in charge of Quality Control or Senior Management.
27. All hot work, entry into a confined space and excavation work can only be done upon receipt of a written permit from the person in charge of Quality control or Senior Management.
28. The contractor furthermore agree to the following health and safety and security rules of the Company.
*To subject himself and his employees to the security and safety rules of the company.
*No drugs or liquor will be consumed on the premises and no person under the influence thereof will be permitted to enter the premises.
* No building material or equipment will be off-loaded or placed nearer than three meters from any perimeter fence or fire hydrant.
* Should it be necessary to work after hours or over weekends, the person in charge of risk control must be timeously informed to make the necessary arrangements.

I, ________ as ____________ (Director/Contractor/Member/Owner or Job Title) do hereby declare that ______(Company Name) acknowledges having read and understood the conditions contained in this document and furthermore our employees/ sub contractors agree to abide to these conditions and rules.
SIGNATURES
________________ CONTRACTOR DATE ________________
________________ THE COMPANY DATE ________________
________________ WITNESS DATE ________________
 
This was my response....

Hi ________________:

XXX forwarded me your Contractors agreement for raw material in Excel format.
I have read through the agreement and some of the terms are fairly onerous for us to agree to.
We are not a large company and we are not a production company, we simply import and redistribute a product.
Our policy in these cases is to refuse agreement to terms which would place an undue liability on such a small company.
We freely admit that we would not be compliant with most of these requirements and we therefore submit that we many therefore not fall within the scope of provision to your company.
Our company policy in these cases is to offer a "take it or leave it" option to our customers.
We would love to continue doing business with you and will go the extra mile in ensuring that we give you the absolute best service possible.
But as any legal professional would tell you, it is not in our interests to bind ourselves to an agreement where we risk liability in areas where we are physically, financially or logistically unable to comply.
We do have, available on request, Technical Specification Sheets available from our suppliers for the products that you take from us.
I am available telephonically should you wish to clarify any of this with me.

Best Regards
Gary
 
What are they manufacturing? It seems pretty standard from what I can see. I know that any company I've worked with in manufacturing has had similar contract terms.
 
What are they manufacturing? It seems pretty standard from what I can see. I know that any company I've worked with in manufacturing has had similar contract terms.

There are PARTS of it that I recognise as standard... but some are just foolhardy for ANY ONE to agree to....

- Any rejected raw material to be uplifted within 48 hours of notification. If rejected raw material is not uplifted in this time frame, the company will destroy any such material.
- The Supplier would be responsible for any additional cost associated with approaching an alternate Supplier to source the Services or raw materials.

And this one we have had a problem with before... "In the case of a third party claim due to product not up to standard which create downtime on their production line or product withdrawal, our company will have no alternative to forward the claim to the original supplier due to non-conforming raw material." We had a customer in Cape Town that was slapped with a claim from a third party, so instead of diagnosing the problem (which turned out to be the ink supplier) they just sent the entire value of the claim to ALL their suppliers. They were found out when the two of the suppliers had the same insurance company...

And some of these terms are just stupid- like this one - Suppliers will remain complaint with all laws and regulations applicable to the provision of the services. Of course suppliers are supposed to obey the law. You don't need to tell them that, it's redundant. The law is the law.
 
There are PARTS of it that I recognise as standard... but some are just foolhardy for ANY ONE to agree to....

- Any rejected raw material to be uplifted within 48 hours of notification. If rejected raw material is not uplifted in this time frame, the company will destroy any such material.
- The Supplier would be responsible for any additional cost associated with approaching an alternate Supplier to source the Services or raw materials.

And this one we have had a problem with before... "In the case of a third party claim due to product not up to standard which create downtime on their production line or product withdrawal, our company will have no alternative to forward the claim to the original supplier due to non-conforming raw material." We had a customer in Cape Town that was slapped with a claim from a third party, so instead of diagnosing the problem (which turned out to be the ink supplier) they just sent the entire value of the claim to ALL their suppliers. They were found out when the two of the suppliers had the same insurance company...

And some of these terms are just stupid- like this one - Suppliers will remain complaint with all laws and regulations applicable to the provision of the services. Of course suppliers are supposed to obey the law. You don't need to tell them that, it's redundant. The law is the law.

I've seen much worse to be honest. I've seen contract terms where if the product is found to be defective/rejected/etc within 24 months of delivery, the supplier must uplift the remainder of the product within the company's supply and then refund the company at the same price it was purchased.
 
Gary, you're spot on in your response and on the problematic clauses. No way you should be accepting liability for third parties or consequential liability.
 
Gary, you're spot on in your response and on the problematic clauses. No way you should be accepting liability for third parties or consequential liability.

Thanks, Will wait and see what their response is.
 
This was my response....

Hi ________________:

XXX forwarded me your Contractors agreement for raw material in Excel format.
I have read through the agreement and some of the terms are fairly onerous for us to agree to.
We are not a large company and we are not a production company, we simply import and redistribute a product.
Our policy in these cases is to refuse agreement to terms which would place an undue liability on such a small company.
We freely admit that we would not be compliant with most of these requirements and we therefore submit that we many therefore not fall within the scope of provision to your company.
Our company policy in these cases is to offer a "take it or leave it" option to our customers.
We would love to continue doing business with you and will go the extra mile in ensuring that we give you the absolute best service possible.
But as any legal professional would tell you, it is not in our interests to bind ourselves to an agreement where we risk liability in areas where we are physically, financially or logistically unable to comply.
We do have, available on request, Technical Specification Sheets available from our suppliers for the products that you take from us.
I am available telephonically should you wish to clarify any of this with me.

Best Regards
Gary

Permission to borrow some parts of the response please? Very honest and fair reply.
 
It appears that there are already nut products present in the factory.
 
Not in manufacturing, but we often have to deal with ridiculous requirements (for a small company) from large corporates and SOEs - e.g. we had a case where we submitted a small invoice (~R10k) for ad hoc work and got told that we could only be paid once we'd submitted our tax clearance, letter from the bank, company HIV policy (!), health and safety plan, etc etc. None of this was mentioned up front, despite having an order from them. And every time we got all of this together and submitted the docs, they'd come back with more requirements - BEE status, letter from auditors, etc, etc. Needless to say the next time the same corporate department needed something, we told them cash up front or GTFO.
 
Top
Sign up to the MyBroadband newsletter
X