In our country, such a concept as a framework agreement is at the stage of implementation and planned development. There is still no clear definition of this term in modern law. However, various firms and companies are increasingly resorting to drafting and concluding precisely this type of agreement.
In connection with the above circumstances, legal knowledge in this area is simply necessary. As a rule, a full-time lawyer of the enterprise acts as an assistant or a third party is involved. A framework agreement should be drawn up competently, and each item should be carefully considered. Most often, it is between the parties planning a long-term cooperation. As the main goal, we can highlight the improvement of relations with contractors. In addition, efficiency is significantly increased, indicators reflecting the results of joint work are improving.
If we talk about terminology, the framework agreement is a bilateral agreement of counterparties that gives the parties mutual rights and obligations. Its feature is the ability to adjust certain conditions in the future. As you know, market conditions are constantly changing, which can lead to a significant change in the financial condition of the company. And since long-term relationships are expected, the right to make adjustments and amendments in the future for many entrepreneurs is considered an excellent way to reduce risks.
Experts note the similarity of the framework and preliminary agreements. With all this, there are significant differences. A framework agreement may serve as a basic agreement, but does not imply the existence of material conditions. In the course of their activities, economic entities may adjust items approved earlier. When one of the partners has a desire to change some conditions, he must notify the other side of this. And only if there is mutual agreement, an additional contract is drawn up, which is a kind of annex to the framework.
Any agreement must have a basis, therefore the subject is considered a prerequisite for its existence. Many companies have been practicing such an agreement for many years, for example, there is a contract for the regular supply of certain products, which is not limited to specific volumes or a list of quality requirements for the product. And upon delivery of the goods, an additional agreement is being developed, specifying the previously defined union.
Thus, the framework supply agreement allows business entities to change the volume of production, its price or quality indicators each time, while maintaining strong relationships with each other. Moreover, in each additional contract there should be a link to the basic or basic agreement. What is the benefit for the entrepreneur of such an agreement? Significantly reduced time spent on the development and signing of contracts, since in the future the question is reduced only to clarifying some points. And also the entrepreneur has confidence in the "tomorrow", because he knows for sure that he can provide his company with uninterrupted supplies.
Often, companies enter into a framework agreement, which, in turn, acts as a guarantee for the provision of certain services in the future. That is, this agreement expresses the intention to cooperate fruitfully in the future period, taking into account the fact that at the moment it is not possible to establish specific volumes and prices. In practice, cases of non-fulfillment of obligations under the contract have become more frequent due to the lack of specific data. It is worthwhile to understand that such an agreement has legal force, therefore, the injured party can safely apply to the appropriate court for compensation for the damage caused.