Delivery contract and contract: general characteristics, differences

In this article, we consider a supply contract and a contract.

A work contract is an obligation of one party, that is, a contractor, to carry out an assignment, certain work and hand it over to the other party (customer), which must accept and pay it accordingly. Such an agreement is mutual, bilateral, onerous, consensual. Contracting relationships are differentiated into types and subspecies depending on the work performed and its result. So, on the basis of the latter, there are obligations to manufacture new things and obligations to change, restore, improve the properties of existing objects. What is a mixed supply and contract agreement? About it further.

Types of Contracts

Contracts have the following varieties:

• domestic;
• building;
• to perform survey and design work;
• for the needs of the state.

Features

The contract has the following distinguishing features:

• the contractor does his work strictly according to the instructions of the customer, while it must satisfy his individual requirements;
• the contractor is obliged to perform certain work, the result of which will either be a new thing, or improvements, changes, additions to an existing object will be made;
• the item created under the contract belongs to the property right contractor before the customer accepts the finished work;
• independent decision by the contractor of all issues relating to the choice of methods and means of achieving the final result of work provided for by the contract of work;
• the contractor is fully responsible for the implementation of the work;
• for work, the contractor should receive the appropriate remuneration to which he is entitled after the work is handed over and accepted by the customer.

We will understand how the supply contract and the contract differ.

Delivery contract

A supply contract is a type of business contract that is very widely applied in practice. It is part of a series of sales contracts. With its help, a substantial part of the commodity circulation is now being produced both in the Russian Federation and abroad. Such an agreement is an agreement under which the supplier (seller) engaged in entrepreneurial activity assumes the obligation to transfer the goods produced or purchased to the buyer within the agreed time for future use in the business sector or for other purposes that are not related to family, personal, home use. What is the difference between a contract for the supply and supply of equipment?

Features

Regulation of the supply of goods has important features caused by peculiar features that delimit the supply in the general series of contracts of sale. Such an agreement is onerous and consensual, has the following characteristics:

• A specific subjective composition, which consists in the fact that only an individual organization of a commercial nature can be in the role of a supplier or an entrepreneur. Non-profit enterprises can supply goods only when such activities are not prohibited by their founders, carried out in the field of their legal capacity. Goods are purchased or manufactured by the supplier.
• The buyer is given the right to use the goods in entrepreneurial activity or for other purposes that are not related to family, personal, home use.The role of the buyer is usually a commercial organization.
• The purchase of any goods that support entrepreneurial activity also does not apply to personal use (for example, office furniture). So, what are the similarities between the supply contract and the contract?

The following criteria are highlighted.

Subject

• In the contract, the subject is the manufacture, processing or processing of a thing, as well as other work that has a tangible result (a generic thing or a certain one).
• In the supply agreement, the subject matter is goods produced or bought by the supplier, which the buyer acquires for the purpose of using in his entrepreneurial activity or for other purposes not related to family, personal, domestic use (individually defined thing). There may be a mixed supply and contract.

Thus, the nature of the subject matter of the agreements is different, but its presence is an essential condition in both cases.

By object

In the supply contract, such is a product in the broad sense, that is, a product of labor, a material object that has consumer value and is manufactured for market sale.

By subject

• The parties to the supply agreement are the buyer and supplier, which can be both individual entrepreneurs and legal entities; non-profit organizations can also be suppliers, but only if such activity is provided for by constituent documents as capable.
• There are two parties to the contract: the contractor and the customer; there are no restrictions on the subjects of civil law on each side, the focus is only on the general rules for the participation of legal entities and citizens in trade. In addition, the possibility of multiplicity of the subject is provided if two or more persons act as a contractor. There is a contract for the supply and installation of equipment.

Thus, the contract provides greater potential, allows you to join it to an almost unlimited circle of participants. They are united only by the possible involvement of other persons, but if they are not parties to the contract in the supply, then in the contract they are so and are called subcontractors.

By responsibility

• On the basis of a work contract, liability is only incurred if the obligations stipulated by the contract are improperly fulfilled; in this case, the customer usually has to pay the contractor full remuneration, in turn, the contractor is obliged to compensate for the losses or perform the specified work at his own expense, eliminate the shortcomings as soon as possible, reimburse the costs of the customer if he himself eliminated the errors or terminated the contract ahead of schedule.
• In a supply contract, liability is usually built on a risk basis. Its main forms are the payment of a penalty and compensation for losses, as well as the responsibility of storing goods during their re-delivery. A sample mixed delivery and contract will be presented below.

By timing

• In the contract, the deadline is very important, as the customer seeks to fulfill his order at a specific time. Start and end dates must be determined, and in some cases also intermediate (for example, trying on sewing clothes for an individual). The length of such a period is established on the basis of an agreement; there is no special law on its minimum or maximum duration. In addition, it is important to remember the limitation period if goods of inappropriate quality, which is one year, were manufactured.
• The terms of fulfillment of obligations under the supply contract are set by the parties independently. They can be determined by indicating a specific date, delivery periods. Most often, in a contract of this type the concept of “reasonable time” is used.If it is impossible to determine a specific period and if it is impossible to deliver the goods in batches, the period is determined on the basis of applicable law. The limitation period is three years. A sample supply and contract agreement can be found in the article.

Thus, the term is still an important condition for both types of contracts. In addition, they can be completed ahead of schedule.

By agreement

• The contract is in writing. It is noteworthy that the differences are consistent. In case of non-compliance, the contractor may refuse to fulfill the obligations of the agreement.
• The right to unilateral refusal may be realized in the supply contract if the contract is seriously violated by any party.

Thus, for contracts of both types, an agreement is considered concluded if both parties have agreed on the subject, and in the case of a contract, also the deadlines. Most often it has a written form, additional documents may also be attached. Often there is a contract of supply and delivery in one.

By price

• In the contract, the price is set for the work to be performed, or the methods for its implementation. It includes reimbursement of the contractor’s expenses and reward due to him. The estimate in this case can be both approximate and fixed. Unless otherwise indicated in the contract, it is considered solid.
• In the supply contract, the goods are paid according to the calculations provided for in it. If they are not defined, then they are carried out by means of payment orders. This is the main difference between a supply contract and a contract.

In addition, both agreements provide for prepayment.

By risk

• The contract stipulates that the work is carried out by the contractor at his own risk.
• In the supply contract, the risk of a property defect occurs from the moment when, according to the agreement or the law, the seller fulfilled his obligations to transfer the goods. If he is on the way, he goes to the buyer.

Summing up the main features of the contracts of contract and delivery, it should be said that their common features are determined by the fact that at the time of conclusion of the agreement things are not yet available, it only needs to be done. The main difference is that the obligations of the supply agreement satisfy the mass needs of the company, and the contractual relationship - individual requirements and requests. In addition, the contract agreement provides for the manufacture of goods both from the customer’s material and from the supplier’s material, and under the supply agreement exclusively from the manufacturer’s material. Also, the last form of the contract imposes an obligation on the debtor to transfer the goods by a certain date, and when contracting, the priority is to produce work, and then transfer it.

Consequences of the erroneous distinction between a supply contract and a contract

It may seem that the impossibility of accurately assigning a contract to one or another type will not lead to negative consequences, since it is possible to conclude mixed contracts. But under certain circumstances, the confusion of contract elements leads to serious risks. The most common errors are the following:

• incorrect classification of the relations of the parties;
• false representation of the norms and rules governing the relations of the parties;
• lack of attention to the features of the composition of the subjects of the contract;
• incorrect establishment of the moment of conclusion of the agreement and non-compliance with formal rules;
• erroneous determination of the main conditions or their absence;
• absence or incorrect setting of price, quality, procedure for accepting work done, risk sharing between the two parties;
• the absence of conditions that ensure the fulfillment of obligations under the contract and determine the responsibility for their failure;
• misconception that the exact name of the contract is considered the main factor.

The essential terms of the supply and contract agreement are presented below.

When there is a controversy over the erroneous classification of a contract, a situation may arise when one side believes that it has concluded a contract, and the other considers a supply contract. In such a situation, the court will establish the legal nature of the contract, having studied its content, but if the latter is uncertain, consequences may arise that are unexpected for both parties.

The regulation of work and supply contracts using legal norms has significant differences. For agreements of both types, various conditions and possibilities for changing the price of work are provided, the grounds for canceling the contract unilaterally. So, the customer has the opportunity to withdraw from the contract in the event that the contractor does not start to fulfill its conditions in a timely manner, does the work so slowly that it is not possible to finish it on time. Also, the customer can cancel the agreement at any time before the final result of the work if he pays a part of the price proportional to the work done by the contractor before notifying him of the refusal of the other party. Such provisions do not exist in the supply agreement.

An unpleasant factor may also be the fact that one of the consequences will be material liability not taken into account by the parties when concluding the contract. For example, upon delivery, the buyer has the right to eliminate errors on his own or with the involvement of third parties, requiring the supplier to adequately cover their costs. In the relationship of the contract, the customer has such an opportunity only with a direct reference to it in the contract. If this condition is not stipulated, then the customer has no right to demand compensation of his expenses from the other side.

This is the difference between a contract and a supply contract.