A supply or services contract looks routine — until delivery slips or payment stops. Most commercial disputes do not start from a disagreement over the deal itself, but from a missing clause or wording that carries two readings. Here are the points worth your time before you sign.
1. Define the subject matter precisely
“Supply of materials” or “provision of services” are loose phrases. Specify the specifications, quantities, quality standards and any technical reference. For services, define the expected deliverables and how they are accepted, not just a description of the activity.
2. Price and payment mechanics
- Is the price fixed or adjustable? What justifies an adjustment (cost changes, statutory fees, price volatility)?
- Payment timing and its supporting documents: invoice, receipt record, completion certificate.
- Is tax included in the price or added to it? State it explicitly.
- Late payment penalty, and the right to suspend performance on default.
3. Delivery and acceptance
Specify the place and time of delivery, who bears shipping and insurance, and who carries the risk of loss before acceptance. Agree the acceptance procedure: the inspection period, how objections are raised, and what happens if the buyer stays silent after receipt.
4. Penalties and liability caps
A delay penalty protects the injured party but cuts both ways: keep it proportionate with a defined cap. Set an overall liability ceiling, and exclude indirect damages and loss of profit expressly where that is the intention.
5. Term, renewal and termination
- Does it renew automatically? What notice period is required to prevent renewal?
- The right to terminate for convenience with prior notice, and its effect on work in progress and amounts due.
- Material breach and the cure period before termination.
6. Force majeure
Define the covered events and their effect: does the obligation pause or end? For how long? A vague general clause leaves the door open to argument exactly when a crisis hits.
7. Confidentiality and intellectual property
In services contracts specifically: who owns the deliverables, designs and data after the contract ends? Can the provider reuse them as a reference or template? Put that in writing.
8. Dispute resolution
Commercial court or arbitration? If arbitration, fix the number of arbitrators, the rules, the language and the seat. And do not forget the governing law where one party is outside the Kingdom.
Before you sign
- Confirm the signatory’s authority and that the other party’s commercial registration is valid.
- Review the annexes and price schedules; they are part of the contract.
- Keep a signed copy of the final version, not drafts exchanged by message.
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This article is general information, not legal advice; the right wording depends on the nature of the deal and its parties.