Clear explanations of 500+ contract clauses, written in plain English for businesses and individuals.
An approved supplier list is a requirement that you can only buy certain goods or services from vendors the other party has pre-approved. This matters legally because it restricts your commercial freedom—you lose the right to choose your own supplier
Read More →A blanket purchase order is an agreement where you commit to buying a minimum quantity of goods or services over a set period, often at fixed prices. This matters legally because once you sign it, you're legally bound to buy those quantities—you can'
Read More →A framework agreement is a master contract that sets the general terms (price, quality, payment terms, etc.), but doesn't commit you to buy any specific quantity. Individual orders are placed under this framework. This is medium-risk because while yo
Read More →A call-off order is a contract where you commit to buying a minimum quantity over a set period (like 1,000 units over 12 months), but you decide *when* to actually order. You're legally obligated to buy the full amount, even if you don't need it. Thi
Read More →Consignment means the vendor keeps ownership of goods sitting in your location until you actually use or sell them. You only pay when the stock leaves your warehouse. This is legally cleaner than vendor-managed inventory because ownership stays with
Read More →Under this arrangement, the vendor controls how much stock you hold—they decide what quantity sits in your warehouse and when to replenish it. You don't order; they push stock to you based on their own system. This is risky legally because you may st
Read More →This clause requires you to provide accurate predictions about how much product you'll need in the future. The vendor uses your forecasts to decide how much stock to make or hold. If your forecasts are wrong, you might face penalties—like paying for
Read More →Safety stock is extra inventory you must keep on hand to cover unexpected demand spikes or supply disruptions—a buffer against running out. This clause requires the vendor to maintain this reserve at their own cost. It's medium-risk because it ties u
Read More →A lead time guarantee promises you'll deliver goods or services within a specific timeframe—for example, "all orders will ship within 5 business days." This is low-risk because it's just a promise about timing, not about quality or quantity. However,
Read More →This clause sets a maximum percentage of defective items the vendor can deliver—for example, "no more than 2% of parts can be faulty." If defects exceed this target, there are usually financial penalties or the buyer can reject the shipment. This is
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