Supplier agreements govern one of the most important relationships your business has. They are usually presented as the supplier's standard terms — which means they are drafted to protect the supplier, not you. Here is what to look for and push back on.
The Scope of Supply
The description of what the supplier is providing is often imprecise. Vague scope is a source of disputes about whether the supplier has delivered what was promised. Push for specificity: what will be delivered, by when, to what standard, with what acceptance criteria?
For services, is the contract for a specific outcome (a delivered website, a completed campaign) or for time and effort (a certain number of hours per month)? These are fundamentally different commercial arrangements with different risk profiles.
Service Levels and Remedies for Failure
If the supplier fails to deliver on time or to standard, what happens? Many supplier agreements are silent on this — the supplier is obliged to perform, but there is no specific remedy for failure short of a claim for damages.
Push for service level commitments with teeth: a right to withhold payment, a right to credit or service credits, a right to terminate if failures are persistent, and a reduction in the notice period required to terminate.
Automatic Renewal Clauses
Subscription-based contracts and managed service agreements frequently contain automatic renewal clauses — the contract renews for another year unless you give notice within a specified window (often 30, 60, or 90 days before the renewal date). These clauses catch businesses off guard.
Put renewal dates in your diary. If you want to exit a contract, you need to give notice within the window — not on the renewal date.
Price Escalation
Can the supplier increase their prices during the contract? Some agreements allow unilateral price increases with notice — sometimes as little as 30 days. Check whether price increases require your agreement, and if not, whether you have a right to terminate if you do not accept the increase.
Data and Confidentiality
If the supplier is handling your business data, customer data, or confidential information, the contract must include adequate data protection and confidentiality provisions. For personal data, a Data Processing Agreement (DPA) is required under UK GDPR. Without one, you are in breach of your data protection obligations.
Check: who owns the data the supplier processes? Can they use it for their own purposes? What happens to the data when the contract ends?
Exit and Transition
How do you exit the relationship, and what help does the supplier provide to transition to a new supplier? Some suppliers — particularly in software and managed services — make exit deliberately difficult. Check the notice period, any exit fees, and whether the supplier is obliged to provide transition assistance and data in a usable format.
Bonsai Law reviews supplier and service agreements for businesses across the UK. Before you commit to a long-term supplier, let us check the terms you would otherwise only read when something goes wrong.
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