March 3, 2022

A framework is an agreement with suppliers to establish terms governing contracts that may be awarded during the life of the agreement. In other words, it is a general term for agreements that set out terms and conditions for making specific purchases (call-offs). Frameworks are freestanding documents which set out agreements to provide goods and/or services on specified terms. They are used in situations where the parties anticipate doing business with each other in the future, but they want to agree the terms now and on which the A framework agreement is an ‗umbrella agreement‘ that sets out the terms (particularly relating to price, quality and quantity) under which individual contracts (call-offs) can be made throughout the period of the agreement. In framework arrangements, there is no contractual commitment for a particular quantity, nor is there even any commitment to purchase at all. Usually, the framework arrangement includes any agreed specifications, prices, delivery arrangements and terms and conditions of contract that would apply to any contract entered into in the future. In a framework agreement, however, you would have a contractual commitment to purchase a particular quantity or value of goods and/or services although this could be set out as a specified range that is no less than the minimum specified and no more than the maximum specified. Framework arrangements or agreements can be fixed term, fixed quantity or ―insurance‖. Fixed term arrangements usually give an estimate of the goods and/or services to be supplied. Fixed quantity arrangements give greater reassurance that the estimated quantities of goods and frequency of services will be required. Insurance arrangements deal with services with a fixed annual cost regardless of the frequency of the service required. Call-offs or call-of contracts are the names commonly given to the purchase orders submitted against framework arrangement or agreement. The purchase orders (call-offs) are offers made by the purchaser. The supplier then has the choice of accepting the offers and supplying the goods/services ordered according to the terms and conditions already agreed in the framework agreement. If the supplier is no longer willing to abide by the terms agreed in the framework agreement, he can reject the offer no contract will be formed. What are the benefits of a framework over a simple contract? A framework agreement will generally allow a purchaser more flexibility around the goods or services contracted for under the framework, both in terms of volume and also the detail of the relevant goods and services. A multi-supplier framework allows a contracting authority to select from a number of suppliers for its requirements, helping to ensure that each purchase represents best value. What is commonly procured using framework agreements? Framework agreements are typically used where the authority knows they are likely to have a need for particular products or services, but are unsure of the extent or schedule. So framework agreements are commonly set up to cover things like office supplies, IT equipment, consultancy services, repair and maintenance services etc. How are call-offs awarded under a framework agreement? If the framework agreement is awarded to one provider, then the purchasing authority can simply call-off the requirement from the successful supplier as and when it is needed. Where the framework is awarded to several suppliers, there are two ways in which call-offs might be made: Where the terms laid out in the framework agreement are detailed enough for the purchasing authority to be able to identify the best supplier for that particular requirement, then the authority can award the contract without re-opening competition. If the terms laid out in the framework agreement are not specific enough for the purchasing authority to be able to identify which supplier could offer them best value for money for that particular requirement, a further mini-competition would be held between all the suppliers on the framework agreement who are capable of meeting the need. What are the advantages of framework agreements? 1. The main advantage to a purchasing authority of using a framework agreement is that they do not have to go through the full tendering process every time the requirements arise. Having to go through the tender procedure once rather than several times, will obviously reduce tendering costs. It also means there is less downtime between identifying the need and fulfilling it, which considering how lengthy the tendering process can be, could be a considerable benefit. There are also further potential savings to the purchasing body because of economies of scale, which may prompt suppliers to offer more competitive prices. 2. Secondly, the reduction to tendering costs will also apply to suppliers, as going through the tender procedure is costly and time-consuming for suppliers too. 3. Obviously, the main advantage to suppliers of being on a framework agreement is the chance of being awarded valuable business opportunities. Benefits of using framework agreements There are several reasons why the use of multi-user Framework Agreements in procurement is a good idea: Frameworks are a pre-competed route to market providing a vehicle to centralize procurement spend. Shared procurement expertise and resource; Shared risk and contract management; Reduced administrative burden in terms of: The time and cost compared to running a full procurement procedure each time (and helps to ensure legal compliance). The requirement has been advertised and capable suppliers have been identified through competitive procurement, so at mini-competition there may be fewer tenders to evaluate for each requirement – particularly if the framework is divided into distinct lots. At mini-competition it should be easier to compare tenders, particularly where the framework is divided into distinct lots, because the products and services making up those lots will normally have been defined and categorized when the framework was established. Flexibility: use of framework agreements is not mandated and authorities are free to use framework agreements where they provide value for money or to go elsewhere if they do not (but when taking into consideration the potential savings of going elsewhere you would of course need to factor in the potentially considerable cost of running

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A Call‐off Order is an order created to cover multiple supplies or deliveries from a single company. A Call‐off order may be applied in the following circumstances: 1. For a medium / long / regular term supply of the same services from the same supplier 2. For regular, multiple deliveries to a range of dispersed sites 3. An unknown future delivery schedule 4. Where precise volumes or values are not known until after delivery 4. Where delivery and packing charges or supplier discounts, regularly affect final prices 5. A different legal contract exists with the supplier and the order is raised internally for control purposes only 6. Where there is a proven need to reduce document processing (reduce quantity of invoices through consolidated billing etc) An order of this type can only be placed after the appropriate procurement requirements have been satisfied. Typical applications Typically a Call‐off order could relate to the following categories of supply : Construction, building or repair work Servicing or maintenance contracts ( e.g. plant or equipment) Call out services (e.g. envisaged emergency work) Service / License agreements paid in installments (e.g. monthly / quarterly) Supply of low value, high volume consumables (materials, food, scientific gases) Critical supplies (order /approval system may not enable a quick re‐supply) For supplies that need to be recharged to a range of cost centers

A blanket order is a purchase order the customer makes with its supplier which contains multiple delivery dates over a period of time, often negotiated to take advantage of predetermined pricing. It is normally used when there is a recurring need for expendable goods. Blanket orders are often used when a customer buys large quantities and has obtained special discounts. Based on the blanket order sales orders (release orders) and invoice items can be created as needed until the contract is fulfilled. Having a blanket order prevents the customer from having to hold greater than necessary amounts of stock and avoids the administrative expense of processing frequent purchase orders, while favoring discount pricing through volume commitments or price breaks. A blanket order is set at a fixed priced contract for a period of time. The buyer looks for the best pricing among competing supplier bids. After the best one is chosen, the prices of goods are fixed, and also quantities of each products are given to the supplier to prepare stock for on requested delivery. Forecasted quantity is provided by the buyer as full usage quantity recorded historically few years or as needed for quantitative analysis. The supplier may give a condition of quantity to supply for this [contract]. For example, 80% of the forecast quantity must be bought at the end of the contract, which may be one or two years. The blanket order will charge the delay delivery if the supplier could not supply the products in the contract on time. Anyway, since the supplier has already kept the stock for ready delivery for the first year or agreed period, if the buyer could not fulfill the contract’s conditions, such as “must buy 80% of forecast quantity within a year,” the contract may be extended, or the delay charge could be no more, or no other charges requested by the buyer. Realistically, at the end of the blanket order contract, the buyer would not buy at forecasted quantity as agreed in the contract say, 80% of the demand sent to the supplier. The buyer will also allow the supplier to sell the products in the contract to reduce the quantity. The supplier also has to talk and inform the buyer the quantities of goods kept in order that the buyer could know the status of the stock. Before the buyer issuing the purchase order to supplier, the buyer must ask the supplier first about stock availability to avoid the problem from no stock availability. The blanket order is very useful for the buyer. The most difficult part of having a contract is determining the forecast quantity arranged by the user of the product. As the forecast quantity can be difficult to get, the supplier must be aware of the quantity to keep in stock. An easy way to do this is to discuss with the buyer what quantity to keep in stock. For example, they might keep only 20% in stock in the first 6 months, so that the supplier and the buyer are able to review the quantity and adjust it appropriately. This reduces the stock burden of the supplier during the contract period and might help the buyer at the end of the contract if the stock doesn’t move as quickly as anticipated. The contract might be extended year after year, but it can be adjusted each time as more relevant forecasting history will predicate the need to decrease or increase stock requirements. Such purchasing Agreements: A blanket order system offers seven important benefits: 1. It requires many fewer purchase orders and reduces clerical work in purchasing, accounting, and receiving 2. It releases procurement professionals from routine work, giving them more time to concentrate on value-added activities 3. It permits volume pricing by consolidating and grouping requirements 4. It can improve the flow of feedback information because of the grouping of materials and suppliers 5. Because some suppliers stock materials for prompt delivery, this system may reduce the buyer‘s lead times and inventory levels 6. It allows the supplier to plan and buy more effectively, reducing the buyer‘s price 7. It develops longer-term and improved buyer-supplier relationships Summary on BPO A Blanket Purchase Order (BPO) is a long term agreement that includes a description of the items needed, unite price, and contractual provisions. Although a single blanket purchase order number is only set up one time, it can allow multiple releases against it at different times throughout a set time period. A ―release‖ occurs each time a blanket purchase order quantity is fulfilled and invoiced against. A BPO is conducted in a Blanket Order System (BOS). A BOS is a system where a store comes into an agreement with a supplier to supply small quantity items repetitively. This type of system solves the problem for the thousands of items a store can‘t carry in inventory due to space, time and cash flow. The BOS increases efficiency by eliminating repetitive data entry and multiple one-time purchase orders.

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1) Quiet Possession There is an implied warranty that the buyer shall have and enjoy quiet possession of the goods. 2) Free from Charge or encumbrance There is an implied warranty that the goods shall be free from any charge or encumbrance not made known to the buyer when the contract was made. Terms Implied By Courts of Law Courts of law reluctantly imply terms in contracts as it is the duty of the parties to agree as to what the contractual terms shall be. However in certain circumstances, courts are called upon to imply terms in contracts and do so for 2 reasons: To give effect to the intentions of the parties. To facilitate commercial transactions or give business efficiency. Courts of law imply terms in contracts on the basis of: 1. The reasonable by stander test. 2. Trade usages and customs. 1. REASONABLE BY-STANDER TEST Under this test a court will imply into a contract any term which a reasonable person overhearing the contract being made would have implied. 2. TRADE USAGES & CUSTOMS A court of law may imply a trade usage or custom into a contract if it is proved that the transaction was subject to it. The party relying on the trade custom must prove that: 1. The custom exists. 2. Is certain. 3. Is reasonable. 4. Is known to the parties. 5. The parties had not exempted the custom from their transaction. It was so held in Halilal Shah and Champion Shah v. Standard Bank Co. Ltd. In Fluery and King v. Mohamed Wali & Another, the plaintiff bought 1000 hand kerchiefs from the defendants and the same were delivered in batches of 30. The plaintiff took delivery but sued the defendant for a reduction in the purchase price. It was proved that in Zanzibar there was a trade usage that handkerchiefs bought in bulk were supplied in dozens. The court implied the custom into the contract and held that the plaintiff was entitled to the reduction in the price as he had to unpack and repack the pieces in dozens.

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These are terms which though not agreed to by the parties, are an integral part of the contract. Theses terms may be implied by statutes or by a court of law. Terms implied By Statutes Certain statutes imply terms in contracts entered into pursuant to their provisions. These terms become part of the contract. Terms implied in Sale of Goods contracts by the Sale of Goods Act The Sale of Goods Act implies both conditions and warranties in contracts of Sale of goods unless a different intention appears. CONDITIONS Right to sell Under Section 4 (a) of the Act there is an implied condition that the seller of goods shall have the right to sell when property in the goods is to pass. Correspond to description In a sale by description there is an implied condition that the goods shall correspond to the description. Fitness for purpose where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to rely on the sellers skill and judgement, there is an implied condition that the goods shall be reasonably fit for that purpose. Merchantable Quality Where goods are bought by description from a person who deals in such goods in the ordinary course of business whether a seller or manufacturer, there is an implied condition that the goods will be of merchantable quality. Sale by Sample In a sale by sample, the following conditions are implied: 1. The bulk shall correspond with the sample in quality. 2. The buyer shall be afforded a reasonable opportunity to compare the bulk with the sample. 3. That the goods shall be free from any defects rendering them unmerchantable.

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These are the oral and written terms agreed upon by the parties. Written terms prevail over oral terms. If contractual terms are written, oral evidence is generally not admissible to vary or explain the written terms. However, such evidence is admissible to prove that: 1. The contract was subject to a particular trade usage or custom. 2. The parties had not incorporated all the terms into the document. 3. The parties had agreed to suspend the agreement until some event occurred If handwritten, printed and typed terms contradict, the handwritten terms prevail as they are a better manifestation of the parties‘ intentions. It was so held in Glynn v. Margetson

Definition: E-contract is a contract modeled, specified, executed and deployed by a software system. E-contracts are conceptually very similar to traditional (paper based) commercial contracts. Vendors present their products, prices and terms to prospective buyers. Buyers consider their options, negotiate prices and terms (where possible), place orders and make payments. Then, the vendors deliver the purchased products. Nevertheless, because of the ways in which it differs from traditional commerce, electronic commerce raises some new and interesting technical and legal challenges. E-contract is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract. The Uniform Computer Information Transactions Act provides rules regarding the formation, governance, and basic terms of an e-contract. Traditional contract principles and remedies also apply to econtracts. This is also known as electronic contract. Electronic signature An electronic signature, or e-signature, is any electronic means that indicates either that a person adopts the contents of an electronic message, or more broadly that the person who claims to have written a message is the one who wrote it (and that the message received is the one that was sent by this person). By comparison, a signature is a stylized script associated with a person. In commerce and the law, a signature on a document is an indication that the person adopts the intentions recorded in the document. Both are comparable to a seal. In many instances, common with engineering companies for example, digital seals are also required for another layer of validation and security. Digital seals and signatures are equivalent to handwritten signatures and stamped seals. Increasingly, digital signatures are used in e-commerce and in regulatory filings as digital signatures are more secure than a simple generic electronic signature. The concept itself is not new, with common law jurisdictions having recognized telegraph signatures as far back as the mid-19th century and faxed signatures since the 1980s. What Are the Advantages & Disadvantages of an Electronic Signature? Equipment Cost Electronic signatures are created and read by sophisticated technologies that use networks to verify personal data like business location or social security numbers, or which are advanced enough to compare points within handwriting or a fingerprint with points in images in databases. This equipment isn’t always cheap, as pointed out by Beginners Guide. Even once initial costs are met, advances in electronic signature technology will mean that a business must continually update its electronic signature systems and provide technical support. Deterred Clients Electronic signature systems assume that people will be comfortable or familiar with the electronic signature methods and equipment. However, previous generations of individuals may not have been exposed to the newer technology and thus may have trouble initially using it. Even tech-savvy individuals still will have to stay abreast of technological changes if they want to conduct business electronically in the future. The lack of exposure to methods and equipment, along with a need for continuing technology education, may deter some clients from using an electronic signature. Recognition Work led by Fritz Grupe published in the 2003 issue of The CPA Journal indicates that there is inconsistency in the recognition of electronic signatures as of 2010. People are not necessarily required to recognize an electronic signature as valid, depending on their jurisdiction. Authentication and Verification In terms of authentication and verification of identity, an electronic signature can be better than an ink-on-paper signature, depending on the system used. For example, if someone loses an unsigned credit card, someone else can sign it and the signature on the back of the card will match receipt signatures, even though the person signing isn’t the card owner. By contrast, an electronic signature system that relies on fingerprints is much more secure because one cannot replicate or forge the fingerprint matrix. Long-Distance Business With an electronic signature, an individual does not have to be in the same geographical location to complete a transaction or validate a contract. People thus can use electronic signatures to conduct business from thousands of miles away if needed, increasing global business opportunities and potential profit margins. Material and Storage Reduction The U.S. Immigration and Customs Enforcement and Grupe both argue that electronic signatures reduce the amount of materials used on a regular basis and take less space to store. Furthermore, electronic signatures facilitate tasks such as e-filing and electronic file and database searches. This reduces time needed to find and verify data. Overall, these factors can reduce business costs. ELECTRONIC DOCUMENTS What are the disadvantages of electronic documents? Electronic documents can be subjected to failure of an electronic system, virus, corruption and computer breakdown. Disadvantage of electronic documents One disadvantage to electronic communication is the fact that you can misinterpret what someone is saying. This will affect the direction of the conversation.

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