Advisory Case on Risk Assessment and Adjustment of a Goods Supply Agreement

1. The Client's Situation

The client requested a review, expressing concern that certain provisions of a goods supply agreement presented by the counterparty could operate to the client's disadvantage. In particular, the structure under which the contract is formed merely by an additional purchase order, the provision allowing the supply schedule to be suspended in the event of delayed payment, and the ambiguity in the scope of installation and technical support were identified as the main problems. Since repeated transactions were anticipated, the client determined that the contract structure needed to be clearly organized in advance.

Your Legal Team reviewed the entire contract and organized the key issues step by step, including the scope of the supplier's liability, the payment structure, the scope of installation and maintenance, and the limits of liability for damages. We then adjusted the wording of the provisions so that liability would not be excessively expanded, and presented a revised draft aimed at establishing clear standards for the parts most likely to give rise to disputes. We also provided guidance so that the matters that repeatedly become problematic in practice—such as the contract formation procedure via additional purchase orders, inspection standards, and the scope of maintenance—could be designed preventively.

Based on the revised draft, the client proceeded with negotiations with the counterparty and resolved a significant part of the ambiguity in the contract structure. The scope of supply, the method of payment, and the scope of maintenance and liability were clearly reorganized, and a stable standard structure that can also be used for future repeated contracts was established. Through this, the client was able to reduce the risk of disputes during the performance of the contract and secure consistency and efficiency in internal contract management.