Drafting an Australian B2B supply agreement
Supply agreements govern ongoing commercial relationships for the sale of goods. They must balance the Australian Consumer Law non-excludable guarantees with commercial risk allocation, and should integrate with the Personal Property Securities Act regime.
This is an 8-step workflow for drafting a B2B supply agreement under Australian law — covering goods supply, ACL obligations, PPSA registration, and payment terms.
Before you start
- Commercial terms sheet agreed in principle
- Specifications for goods and delivery identified
- Pricing, payment terms, and any escalation formula agreed
- Consideration of whether PPSA registration will be required
The workflow
Scope and products
Define the supply scope — products, specifications, volumes, and any minimum order quantities or forecasts. Attach a product schedule that can be updated by notice.
Orders and forecasts
Draft the ordering process, including acceptance of purchase orders, binding and non-binding forecasts, and any allocation mechanism in the event of shortage.
Delivery, title and risk
Set delivery terms (typically by reference to Incoterms), time for delivery, and the point at which title and risk transfer. Coordinate title retention with PPSA registration.
Price, payment and set-off
Set out pricing, invoicing mechanics, payment terms, interest on overdue amounts, and any set-off or suspension rights. Address GST clearly.
ACL-compliant warranties
Draft warranties that do not purport to exclude or modify the non-excludable ACL guarantees. Include a compliant limitation of liability clause and any manufacturer warranty wording.
IP, branding and third-party claims
Address intellectual property in the goods — including branding, trade mark licences, and indemnities for third-party IP claims.
Term, termination and transition
Set the term, renewal mechanism, termination for cause and convenience, and any transition services on termination (including residual stock handling).
Boilerplate and execution
Finalise governing law, dispute resolution, confidentiality, unfair contract terms review, and execution blocks. Register a PPSA financing statement after execution if required.
What you will have at the end
An executed supply agreement that documents the commercial relationship, complies with the ACL, and supports PPSA registration where title retention or consignment stock applies.
Common issues
- Limitation of liability clauses that purport to exclude non-excludable ACL guarantees
- Forgetting to register a PPSA financing statement for title retention
- Unfair contract term risks where the customer is a small business
- Pricing clauses with no clear escalation or review mechanism
- Not coordinating with any parallel distribution or licensing arrangements
Run this workflow on a real matter
Quillio drafts the supply agreement from your matter intake and flags unfair contract term and ACL compliance risks. See /practice-areas/commercial-lawyers or start a free trial.
This workflow is a general guide. Adapt each supply agreement to the commercial arrangement, products, and risk profile.
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