Supply Contract

SupplyContract

Howmight this contract benefit the seller?

Thecontract will benefit the seller in some ways. First, the seller willonly be obligated to deliver the quantity of products stipulated inthe contract. Therefore, the seller will not be obliged to honor anydelivery adjustments from the seller regarding product quantity.Secondly, the contract sets each delivery as a separate contract.This implies that even if the seller fails to deliver the products ina particular month, the failure will only stand as a contract breachfor that month and not the entire contract.

Additionally,the seller is not responsible for any performance failures or delaysof the product after delivering to the buyer. The seller shall bespared any liability for the buyer’s inability to use the productand will not take responsibility for any accidents or incidencesinvolving the seller and the product. The buyer has the soleresponsibility of obtaining the right labor, energy sources andintermediate products.

Thebuyer will earn interest at the rate of 1.5% per month for any delaysin payments. Further delays in payments will also require the sellerto pay cash in advance. Again, the seller is exempted from taxobligations resulting from the sale of the product, whether federal,state or local taxes.

Howmight this contract be detrimental to the buyer?

Thecontract exposes the buyer to delivery failures since failure todeliver products in a particular month does not qualify as a breachof contract. Additionally, the buyer takes full tax responsibilityfor federal, local and state taxes. The taxes are likely to increasethe cost of the products. The contract states that the seller’smeasures shall govern, except in cases of proven errors. Again, thebuyer is exposed to the risk of measurement errors from the buyer.

Upondelivery, the contract exposes the buyer to legislative risks. It isthe responsibility of the buyer to ensure compliance with state,local and federal laws when using the products. Finally, the buyerfaces increased product costs in case of delays in payments. Thebuyer incurs interest costs of 1.5% per month for any delays.Moreover, further delays will require the buyer to make payments inadvance.