A sea of currantsThe current sea represents currency (groan) and pricing…

When setting out pricing, make sure it’s clear! Many contracts contain ambiguous pricing tables, particularly when it comes to the way in which discounts are applied. Worked examples are useful to illustrate how pricing mechanisms are intended to operate in practice, and give you an opportunity to check that you both have the same understanding of the maths.

It’s also a good idea to agree a policy for price increases. Is the supplier allowed to increase prices whenever they like, or just once a year? Is there a maximum percentage increase permitted, or are increases linked to the price of certain key indices? For example, a product made of plastic might have its increases linked to the price of oil, while one made primarily of aluminium could have its increases linked to the price of aluminium on the global commodity markets. If you are offering services, you might want to link your price increases to the annual earnings index.

If the customer and supplier are in different countries with different currencies, specify exactly which currency the prices are given in. If dollars are the currency of the deal, remember to state which ones! Aussie dollars, Canadian dollars, Singapore dollars and US dollars are very different beasts, so be sure to state which one you’re referring to. It is also wise to state how the bank charges associated with currency transactions will be paid – often, each party pays the charges levied by its own bank.

Want to know more? Contact Devant for contract assistance!