Supply contract template between two companies: the clauses that protect the supplier

For a single small order, a clear quotation and the buyer's purchase order are often enough. A written supply contract between two companies is worth the effort when the deal repeats over months, when the value is large, when you deliver on credit, when the buyer pays an advance, or when late delivery could cost you a penalty.

The contract sets the rules once. Each delivery then only needs a purchase order or a call-off that refers to it. That saves time and avoids arguing about terms on every order.

Use the template below as a list of clauses with filled examples. The names and figures are fictional. Copy the fields into your own document, adapt them to your goods, and have a lawyer review the final text. This article explains common practice for sellers; it is not legal advice.

One trap in searches: many "supply contract" templates are for manpower supply. This one is for goods.

Write whether prices are fixed for the contract term or can change, for example when a named raw material price moves by more than an agreed percentage, with notice in writing.

State prices before VAT and add VAT at 15% on the invoice. ZATCA requires a tax invoice no later than 15 days from the end of the month in which the supply took place, so count payment days from the tax invoice date, for example "30 days from the date of the tax invoice". That links your payment clock to a date you control.

If there is an advance, say how much and when, and plan the paperwork: ZATCA requires a tax invoice for an advance within 15 days from the end of the month you receive it.

Add what happens when the buyer pays late. A common supplier clause is the right to pause new deliveries after a set number of days overdue, after written notice. Ask your lawyer whether a late payment charge or keeping ownership until payment fits your case.

Name the delivery place, for example the buyer's warehouse in an industrial city, and the schedule: either fixed dates or a number of working days after each purchase order. Say who unloads and who pays for it.

Agree on the paper that proves delivery: a delivery note signed and stamped by the buyer's receiver, with the PO number, lines and quantities. Without it, every later step is harder.

Then add an inspection period, for example 5 working days after delivery. Within that time the buyer may reject goods that do not match the specifications, in writing and with reasons. If no written rejection arrives, the goods count as accepted. This clause stops open-ended disputes months later.

Say when risk in the goods moves to the buyer, usually at delivery. For VAT, ZATCA's guideline treats the date of supply of goods, under ordinary circumstances, as the date they are delivered, which is why the delivery date on your note matters.

Many buyers add a delay penalty. Do not refuse it outright; make it fair. Tie it to the late part only, state a rate per week of delay, and above all agree a maximum.

The government law gives a useful reference point. Under the new Government Tenders and Procurement Law, the delay penalty may not exceed 6% of the value of a supply contract, or 15% of other contracts (Article 70). A private buyer is not bound by this, but it shows what a public rule considers reasonable for supply.

Add the cases where the date moves and no penalty applies. The same law lists five: extra work ordered, insufficient funds on the buyer's side, delay caused by the buyer or by emergencies, reasons outside the contractor's control, and a stop order not caused by the contractor (Article 72).

In your contract, list the events you mean, such as a port closure or a supplier's factory shutdown, and require written notice within a set number of days.

Warranty: state the period, what it covers and the remedy, for example repair or replace within a set number of working days. Exclude misuse, wrong storage and normal wear. Promise what your own manufacturer gives you, not more.

Subcontracting and guarantees: some buyers copy government rules. Under the new law, subcontracting needs the entity's written approval and the main contractor stays jointly liable (Article 69), and a winning bidder provides a final guarantee of 5% of the contract value within 15 working days (Article 59). If a private buyer asks for a guarantee, agree its amount and when it is returned.

Termination: allow either side to end the contract after a written notice and a cure period, and make sure delivered goods are still paid.

Disputes: write the governing law, Saudi law, and the path: talks between managers first, then the competent court. The Ministry of Justice offers an electronic statement of claim through Najiz.

On ENTEK, suppliers can submit invoices and generate stamped commercial documents: quotation, proforma, commercial invoice, packing list, COA, MSDS/TDS and contracts. The stamp, CR and VAT numbers come from your verified company profile.

When you win an RFQ on ENTEK, you get a purchase order, which can refer to your contract. For each order: "Track order status from dispatch to delivery", and "Delivery confirmed with a customer code" gives you a record that the buyer received the goods.

On the money side, ENTEK shows what you are owed, the expected payout, what you received and the ENTEK commission, with ledger, ageing and statements. Transparent payouts, with ENTEK collecting from the buyer.

What ENTEK does not do: it does not write or review your contract terms, it gives no legal advice, and it cannot promise payment dates. Have a lawyer review your contract.