Drafting a framework agreement

A framework agreement is an agreement in which parties set out the basic arrangements for a long-term or recurring collaboration. The framework agreement regulates the general legal and commercial ground rules. Specific assignments, deliveries, or work are subsequently often recorded in separate sub-assignments, orders, quotations, statements of work, or call-off confirmations.

A framework agreement prevents parties from having to renegotiate all legal arrangements for every assignment. At the same time, it must be clear what is already included in the framework agreement and what is still being agreed upon for each sub-assignment.

MKB Juristen drafts framework agreements that align with your collaboration, assignment structure, and risks. We ensure that the relationship between the framework agreement, sub-assignments, general terms and conditions, and appendices is clearly regulated.

A framework agreement is suitable when parties collaborate frequently or when not all concrete assignments are known in advance. This is common in service provision, consultancy, IT, SaaS, support, supplier relationships, call-off contracts, marketing services, outsourcing, and preferred supplier agreements.

The framework agreement then provides a fixed legal basis. For each assignment, the parties can subsequently define the specific activities, volumes, prices, schedule, or deliverables without having to draw up a completely new contract each time.

The content depends on the collaboration. In many cases, we assess or arrange, among other things:

• goal, scope and extent of the collaboration;
• procedure for partial assignments, orders, call-offs or statements of work;
• hierarchy between framework agreement, annexes, sub-assignments and general terms and conditions;
• rates, price changes, indexation, payment and invoicing;
• minimum purchase volume, exclusivity or preferred supplier status;
• planning, delivery, execution and cooperation of parties;
• additional work, amendment procedure and additional costs;
• quality, acceptance, complaints and service levels;
• intellectual property, usage rights and licenses;
• confidentiality, privacy and processor agreements;
• liability, mitigation of damage and insurance;
• duration, cancellation, termination and consequences for ongoing assignments;
• exit, transfer, data, documents and return of materials.

The framework agreement contains the general basic agreements that apply to the entire collaboration. A partial assignment contains the concrete agreements for a single assignment, delivery, project, or call-off. Examples include activities, quantity, price, schedule, deliverables, and specific conditions.

This distinction is important. If a sub-assignment deviates from the framework agreement, it must be clear which document takes precedence. Therefore, a good framework agreement contains a ranking clause.

Framework agreements often involve multiple documents: the framework agreement, appendices, general terms and conditions, quotations, orders, statements of work, SLAs, data processing agreements, and sometimes the customer's purchasing terms and conditions. Without a precedence clause, disputes arise if the documents contradict each other.

A framework agreement must therefore clearly state which document takes precedence. The framework agreement often takes precedence over sub-assignments and general terms and conditions, but this depends on the desired structure. It must also be determined whether or not the general terms and conditions of one party apply.

In long-term collaborations, rates and volumes are often an important component. Parties may work with fixed rates, hourly rates, tiered rates, indexation, price revision, call-off prices, or rates per partial assignment.

If minimum purchase, exclusivity, or preferred supplier agreements apply, these must be formulated concretely. Consider the period, volume, product group, region, exceptions, and consequences if the agreements are not met.

Liability under framework agreements requires special attention because multiple assignments may fall under the same basic agreements. The question then is whether a liability limit applies per sub-assignment, per year, per event, or for the entire collaboration.

We tailor the liability arrangement to the assignment value, insurance coverage, type of collaboration, and potential damage. We also assess whether certain damages, such as consequential damage, loss of revenue, data loss, or third-party costs, should be limited or excluded.

Upon termination of a framework agreement, it must be clear what happens to ongoing sub-assignments. Will they be completed, terminated immediately, or cancelled separately? It must also be stipulated which amounts are still due and what happens to data, documents, materials, access, licenses, or transfer.

In IT, outsourcing, management, and recurring services, an exit arrangement is often important. It prevents parties from remaining dependent without clear agreements regarding transfer or continuity.

Have you already received a framework agreement, or are you using a template yourself? We can then check whether the agreement suits your collaboration and risks. We examine, among other things, sub-assignments, ranking, rates, minimum purchase, exclusivity, duration, termination, liability, IP, data, SLA, data processing agreements, and general terms and conditions.

We also assess whether the framework agreement works in practice. Text may appear legally sound but still cause problems if sub-assignments, orders, or appendices do not align.

After a brief intake, we discuss the collaboration, parties, assignment structure, rates, duration, and key risks. Subsequently, we draft a customized framework agreement or review your existing framework agreement.

You will receive a document tailored to your practice, with attention to sub-assignments, ranking, payment, minimum purchase, exclusivity, liability, IP, data, term, termination, and correct use, alongside quotations, orders, and general terms and conditions.