Are You Legally Protected When Working with Suppliers?

Your business probably relies on a wide range of suppliers — whether they are manufacturers, consultants, designers, freelancers, or service providers. A good supplier can be a huge asset, but when things go wrong, a lack of legal protection can cost you dearly.

From delays and quality issues to non-delivery or disputes over money, supplier relationships can become risky — especially if your agreement is vague or based on trust alone.

In this post, we explore what legal protections every business should have when working with suppliers, and how to prevent common pitfalls.

The Risk of Working Without a Contract

You might think a simple email chain or verbal agreement is enough — and sometimes, it works fine.

But if:

              •            The supplier disappears

              •            They deliver late or not at all

              •            They breach confidentiality

              •            There’s a disagreement over price or quality

…you’ll struggle to resolve things without a written contract.

Worse still, if a dispute reaches court, a judge will look at what can be evidenced — and if your arrangement is unclear or inconsistent, it could go against you.

What a Good Supplier Agreement Should Cover

Whether you’re engaging a supplier, contractor, or freelancer, your agreement should clearly set out:

Scope of Work

Exactly what the supplier will (and won’t) do, including deliverables, deadlines, milestones, and standards.

Payment Terms

How much they’ll be paid, when, and under what conditions, such as stage payments, refunds for failure, and penalties for delay.

Termination Clauses

What happens if either side wants to end the contract. Do you need to give notice? Are there exit fees?

Intellectual Property (IP)

Who owns the rights to any work created — especially important with designers, developers, content creators or consultants.

Confidentiality

Most businesses share sensitive information with suppliers. Make sure there’s a clear obligation to keep it protected.

Liability and Indemnities

If the supplier causes you financial loss, can you recover that loss from them? Are their liabilities capped?

Dispute Resolution

What happens if things go wrong?  It’s a very good idea to have a mediation clause in your agreement; it’s cheaper, and faster than court, and confidential. 

Warranties and Service Levels

A strong supplier contract can also include:

• Service Level Agreements (SLAs); these set out how quickly you can expect a response, or deliveries to take place.

• Warranties – such as, “the goods will conform to specification and be free from defects for 12 months”

• Rectification rights – what happens if something isn’t right: re-do, refund, or compensation?

These give you leverage if things go wrong — and prevent ‘he said / she said’ disputes.

Limiting Your Exposure

It’s also important to check that your supplier:

• Has adequate professional indemnity or public liability insurance

• Isn’t passing risk onto you in hidden ways, for example by making you liable for problems in their supply chain

• Is acting as an independent party; not implying they speak on your behalf

And if your supplier is critical to your operations, consider a business continuity clause — what happens if they go bust or can’t deliver?

What About Purchase Orders or Standard T&Cs?

Purchase orders or standard terms and conditions (T&Cs) can help — but only if:

• The terms are properly incorporated into each order or contract

• They’ve been agreed before the work starts

• There’s no conflict with the supplier’s own terms, which may take precedence

This is where a “battle of the forms” can arise — and a court will look at whose terms were accepted last.

Protecting Your Reputation

Legal protection isn’t just about money. If a supplier fails to deliver, your reputation may be on the line — especially if you’re reselling their services or using them to fulfil client work.

Your supplier agreement can include:

              •            Performance expectations

              •            Non-compete or non-solicitation clauses

              •            Data protection clauses (especially if they handle personal data for you)

We Can Help

At Your Legal Team, we help businesses get their supplier relationships watertight. Whether you need:

              •            A bespoke supplier agreement

              •            Advice on managing an underperforming supplier

              •            Help recovering money or enforcing a contract

              •            Support with due diligence on a new supplier

…we’re here to support you.

Our goal is simple: to keep your operations smooth and your legal risks low, so you can focus on growth.