Minimum Purchase Commitment Clauses
(Supply Agreement)

Summary

These clauses can be used to establish minimum purchase commitments between a buyer and seller under a supply agreement. This template includes practical guidance and drafting notes. A minimum purchase commitment, also referred to as a minimum quantities requirement, requires a buyer to a sales agreement to purchase a designated quantity of goods over a specified period of time (such as one year). A buyer will be in breach of the sales agreement should it fail to satisfy the minimum purchase requirement. Such a provision, among other things, helps ensure that the seller will receive a base level of demand and sales of the subject goods, while the buyer is able to secure a reliable source for the goods. The provision can be included in, among other agreements, a basic sales agreement; a distribution, reseller, or dealer agreement; and a requirements contract (whereby a buyer is required to purchase all of its requirements for a particular product from a seller). When negotiating an ...