Supply Contract

(postavka, dogovor postavki), in the USSR, a contract concluded between socialist organizations to formalize their economic relations with respect to the sale of goods and commodities.

The supply contract obliges the supplier to deliver specific goods to the customer within set times. Upon delivery, the goods become the property of the customer; if the latter is a state organization, the goods pass into the operational management of that organization. The goods supplied are to be delivered according to a planning document for their distribution. Supply orders and schedules of allocations are examples of such documents, which are binding for both parties. The customer is obligated to accept the goods and pay the prices set for them. A contract to deliver goods that are not covered by a planning act and are to be supplied at a time after the conclusion of the contract is also considered a supply contract.

The general statutes on supply contracts are set forth in the Basic Principles of Civil Legislation of 1961. These relations are regulated in detail by the Statute on Supply of Industrial and Technical Goods and the Statute on Supply of Consumer Goods, which were ratified by the Council of Ministers of the USSR on Apr. 9, 1969. Further regulations are contained in legislation on special conditions of delivery for certain types of output and in other enactments.

The supply contract must specify the designation, quantity, and quality of the goods to be delivered; the overall life of the contract and the deadlines for delivery; the price for the goods purchased and the total price named in the contract; the procedures for settlement of accounts; and the type of containers and packaging to be used. Where necessary, the supply contract also specifies the product mix, grades, and completeness of the assortment of required goods. The parties bear financial liability for violation of the conditions of a supply contract. For example, in cases of late or incomplete delivery of industrial and technical goods, the supplier pays the customer a penalty of 3 percent of the cost of undelivered goods. If the period of default is more than ten days, an additional 5 percent penalty is charged. Payment of the penalty does not release the supplier from the obligation to deliver the goods. The law also provides rules and time limits for submitting claims related to shortcomings in delivered goods and liability for violation of other contract conditions. Disputes associated with supply contracts, including contract-negotiation disputes, are resolved by arbitration agencies.