For cleverly structured customer agreements, follow a modular approach.  Each Customer Agreement should be made up of:

  1. one or more Orders (this is defined to include goods, licences, services or work orders); and
  2. Customer Relationship Terms.

All the commercial terms are in the Order, and all the general terms are in the Customer Relationship Terms (no commercial or variable terms are in the Customer Relationship Terms).

You may then execute one or more Orders with the customer

You can have various different Orders, depending on the goods and services you provide.  Each Order contains the commercial terms that are relevant to the goods or services that are to be provided.  An Order can have one or more schedules or annexures that specify, in detail, the goods and services to be provided.

This has numerous benefits:

  • Businesspeople only need to consider the short Order, so the Order is signed faster without protracted negotiation.
  • The parties can dispense with the general terms needed to conduct business at the beginning of their working relationship.  This means that the parties needn’t worry about concluding the general terms every time a specific service is required by the customer. In other words, the general terms allow for an ongoing relationship between the parties, which facilitates a productive working relationship.
  • It is not necessary to conclude a further agreement after an Order has been accepted.
  • The commercial terms, which are of most interest, are easy to find.
  • Amendments only need to be made to the Order, reducing mistakes and unauthorised amendments.
  • The other party thinks the Customer Relationship Terms are not negotiable, which reduces the time to sign the agreement.
  • The Customer Relationship Terms do not need to be signed or initialled by the parties – they are incorporated into the Order by reference. This makes it faster and easier to conclude a Customer Agreement.
  • Flexibility is achieved.  As and when new goods or services are to be provided, the parties need only conclude a new Order.  The parties can agree on specific terms that apply to specific goods or services in the Order.
  • The Vendor can increase its offerings (and the Customer can procure any goods or services) and still use the same contractual structure.  For example, if a Vendor only provides services and then decides to start offering goods, this is covered in the Customer Relationship Terms.