Supply Agreement.

Pricing, price review and cost pass-through

Fixed pricing for the life of a multi-year supply agreement rarely survives real-world cost movements in freight, raw materials or currency exchange. We build in a defined price review mechanism — commonly an annual review linked to a nominated index or agreed cost pass-through formula — so both parties know in advance how and when pricing can change, rather than facing an unplanned renegotiation or a supplier unilaterally increasing prices mid-term.

Retention of title and what it actually protects

A retention of title clause states that ownership of goods doesn't pass to the buyer until they're paid for in full, even though physical possession transfers on delivery. On its own, this clause is largely symbolic once goods are on-sold or mixed into a manufactured product — its real value comes from being backed by a Personal Property Securities Register (PPSR) registration under the Personal Property Securities Act 2009 (Cth), which gives the supplier a registered security interest that can be enforced ahead of unsecured creditors, and critically, ahead of a liquidator, if the buyer becomes insolvent.

PPSR registration as standard practice

We register a PPSR interest against the buyer as a routine part of setting up an ongoing supply relationship of any material value, particularly where goods are supplied on credit terms. Timing matters — registration needs to occur before or within the timeframes required to obtain purchase money security interest (PMSI) priority, which gives the supplier priority even over an earlier-registered general security interest held by the buyer's financier.

Quality, rejection and liability for defective goods

We set out clear quality specifications, an inspection and rejection window, and a defined remedy — replace, repair or refund — for non-conforming goods. This sits alongside, not instead of, the consumer guarantees implied by the Australian Consumer Law where the buyer is acquiring goods for use rather than resale, since those statutory guarantees generally can't be excluded even by contract.

Force majeure and supply disruption

Recent years have made supply chain disruption a live commercial risk rather than a boilerplate afterthought. We draft a force majeure clause that specifically addresses partial supply shortfalls, not just total prevention of performance, and sets out each party's rights — including whether the buyer can source elsewhere for the shortfall without breaching any exclusivity obligation.

What the fixed fee covers

• Full supply agreement covering pricing, volume, delivery and quality terms
• Price review and cost pass-through mechanism
• Retention of title clause with matching PPSR registration
• Quality, rejection and defective goods remedy clause
• Force majeure clause addressing partial supply disruption
• One round of negotiation support with the counterparty

Mistakes we see

• Retention of title clause included but never backed by a PPSR registration
• PPSR registration made too late to secure purchase money security interest priority
• Fixed pricing with no review mechanism for a multi-year term
• Force majeure clause that only covers total prevention, not partial shortfall
• No defined rejection window, leaving quality disputes to drag on indefinitely

Who this is for

• Manufacturers and wholesalers supplying on ongoing credit terms
• Businesses sourcing raw materials or components under long-term contracts
• Distributors negotiating volume-based supply arrangements
• Retailers with recurring purchase order relationships with key suppliers

Frequently asked questions

Is retention of title enough to protect me if my customer goes into liquidation?

No. Retention of title clauses in supply agreements generally need to be backed by a PPSR registration to be enforceable against a liquidator or other creditors. Without registration, an unregistered retention of title claim is likely to rank behind secured creditors and may be treated as an unsecured claim in the insolvency.

How often can I review pricing under a multi-year supply agreement?

That's a commercial decision built into the drafting — commonly annual reviews tied to a cost index, or trigger-based reviews if a specific input cost moves beyond an agreed threshold. Without a defined mechanism, either party attempting to change price mid-term is in breach unless the other agrees.

Do I need a separate supply agreement for every customer, or can I use standard terms?

Standard terms of supply work well for smaller, lower-volume customers, with a bespoke supply agreement reserved for higher-value or longer-term relationships involving volume commitments, exclusivity or bespoke pricing. We can prepare both tiers so your commercial team applies the right document based on deal size.

What happens if I can't meet an agreed minimum volume due to a supply chain issue?

This is exactly what the force majeure and supply disruption clauses need to address specifically — including whether shortfall triggers penalties, allows the buyer to source elsewhere, or is excused entirely where the cause is genuinely outside your control.

Can consumer guarantees under the Australian Consumer Law be excluded in a supply agreement between two businesses?

Generally not where the buyer is acquiring goods ordinarily used for personal, domestic or household purposes, or where the value is below the relevant threshold, even in a business-to-business context. We draft warranty and liability clauses that operate alongside these statutory guarantees rather than attempting to exclude them entirely.