How to Review a Supply Agreement (2026 Checklist)

What a supply agreement review needs to catch A supply agreement governs the ongoing supply of goods from a supplier to a buyer over time, usually through repeated orders rather than a single sale. The risk sits in the mechanics: how orders are placed and priced, when title and risk pass, what counts as acceptable goods, and who carries the loss when something goes wrong. Review in the order the goods actually flow, from order to delivery to acceptance to remedy. This is general guidance, not legal advice. For high-value or safety-critical supply, get qualified advice, especially on liability and product warranties. ## A fast first pass - What is being supplied, and is it a one-off or a framework? A framework supply agreement sets the terms, while individual purchase orders call off the goods. Check which layer carries which terms.

• Whose paper is it? A supplier's template will favour its pricing, delivery and liability positions.
• Buyer or supplier side? Your priorities flip depending on which side you are on.
• How long does it run, and can you get out? Term and termination decide how exposed you are if the relationship sours. ## The clause-by-clause checklist ### 1. Scope and products Exactly which goods are covered, to what specification, and whether the supplier can change the specification or discontinue a line. Red flag: a specification referenced but not attached, or a right for the supplier to change products without the buyer's consent. ### 2. Ordering mechanism How orders are placed and accepted: forecasts, minimum or maximum order quantities, lead times, and whether forecasts are binding. Check which terms govern if a purchase order conflicts with the agreement. Red flag: binding forecasts that expose the buyer, or an order process where the supplier can reject accepted orders. ### 3. Price and price adjustment The price, what it includes (packaging, duties, delivery), and how and when it can change. Watch for cost-pass-through and indexation clauses. Red flag: the supplier can raise prices at will or on short notice, or 'then-current pricing' applies with no cap. ### 4. Payment Payment terms, invoicing, taxes, and any set-off or interest on late payment. Red flag: payment due before delivery or acceptance, or one-sided late-payment interest. ### 5. Delivery, title and risk Where and when delivery happens, which delivery terms apply (for cross-border supply, the agreed Incoterms), and when title and risk in the goods pass to the buyer. These do not always pass at the same moment. Red flag: risk passing to the buyer well before the buyer takes possession or can inspect. ### 6. Acceptance and inspection How the buyer inspects goods, the window to reject, and what counts as acceptance. Red flag: a very short inspection window, or deemed acceptance that bites before the buyer can realistically check the goods. ### 7. Quality, warranties and compliance What the supplier warrants about the goods (conformity to specification, fitness for purpose, freedom from defects), warranty duration, and compliance with safety and regulatory standards. Note that sale-of-goods legislation implies baseline terms about quality and fitness. Red flag: warranties excluded or cut below what the law implies, or no compliance warranty for regulated goods. ### 8. Remedies for defective goods What the buyer can do if goods are defective: reject, require replacement or repair, or claim a refund, and who pays return and re-delivery costs. Red flag: repair-or-replace as the only remedy with no right to reject or refund, or the buyer bearing all return costs. ### 9. Intellectual property Ownership of IP in the goods and any licences needed to use or resell them, plus an indemnity if the goods infringe a third party's IP. Red flag: no IP infringement indemnity from the supplier. ### 10. Liability and indemnities The liability cap, what sits outside it, and indemnities for product liability and recalls. This is usually the highest-risk section. Red flag: an uncapped indemnity from the buyer, a cap far below contract value, or the supplier excluding liability for defective goods causing damage. ### 11. Term, termination and continuity of supply Length, renewal, termination rights, and what happens to open orders and spare-parts supply after termination. Red flag: the supplier can terminate for convenience and leave the buyer without a source, or no run-off supply for in-service products. ### 12. Force majeure and supply chain What excuses non-performance, and how supply shortages are allocated between customers. Red flag: a force majeure clause that lets the supplier suspend supply broadly while the buyer stays fully bound. ### 13. Governing law, disputes and signing Governing law, forum, and correct execution, including stamping where it applies. Red flag: a forum inconvenient to the buyer, or governing law that does not match where supply happens. ## Red flags to escalate - Risk passing before the buyer can inspect.
• Deemed acceptance on an unrealistic timetable.
• Price increases with no cap or notice.
• Warranties cut below the law's implied terms.
• Repair-or-replace as the only remedy for defects.
• No continuity of supply or spare parts after termination. ## A note on jurisdiction Supply of goods carries implied terms by statute in most markets: in India through the Sale of Goods Act, in the UK through the Sale of Goods Act 1979, and elsewhere through local equivalents, and for cross-border sales the UN Convention on Contracts for the International Sale of Goods may apply unless excluded. Whether and how far a supplier can exclude these implied terms differs by country. Adira is India-first today, with the Sale of Goods Act position built in, and other jurisdictions on the roadmap, so confirm the local rule before relying on one position. This is not legal advice. ## Where a contract workspace helps Most supply disputes trace back to a clause that looked routine: who carried the risk, how short the inspection window was, whether price could move. The checklist keeps the review disciplined; the slow part is doing it the same way on every supplier and remembering what you accepted last time. That can live in one AI workspace tuned to your company. A tool like Adira opens the document, marks each position as favourable, neutral or unfavourable to your side, flags missing clauses against your own standards, and lets you edit terms in plain language with a clean diff. The checklist does the thinking; the workspace keeps every supplier review consistent.