If you are making and selling wine on a B2B basis then, in order to reduce risks, you should use a supply of goods contract or standard terms of business setting out the main terms on which you will sell the wine.
If you don’t use a comprehensive written contract then you could find yourself having disagreements with your retailer or customer which could lead to loss of profit or loss of a customer. Clarity in a contract helps create certainty in a business relationship.
If you are going to have a comprehensive written supply and sale agreement then what should it include? Here are some of the main issues you should consider:
- Describe the goods in full such as year, full name, number of bottles etc
- How are orders placed and accepted? If there is a purchase order form then what information is needed to complete it? Can the purchase order be cancelled? If so, how? Will there be a minimum spend or purchase amount? How quickly can orders be satisfied? Will you have volume discounts?
- Where and how will the goods be delivered? Who is responsible for transport and transport costs? As the wine will be delivered in bottles you need to make sure that the mode of transport is suitable and that you have appropriate insurance coverage. Does title to the goods pass on delivery or on payment?
- υ What is the price and how and when is it paid? Is it inclusive of VAT, packaging, insurance and carriage? What warranties are implied by the law into the contract? Can you exclude them?
- What is your liability under the contract? Do you need to limit your liability and exclude consequential loss?
- How is the contract terminated?
If you are going to have a supply contract then have a comprehensive one tailored to your specific business. Written contracts are meant to reduce your risk so make sure they are comprehensive, clear, and legally binding. If you wish to discuss any of the issues raised in this article please contact Nicholas Johnson.