Supply Agreement (Pakistan)
SUPPLY AGREEMENT
Under the Sale of Goods Act 1930 | Contract Act 1872 | Sales Tax Act 1990
This Supply Agreement ("Agreement") is entered into with effect from [Agreement Start Date] between:
SUPPLIER: [Supplier Name], NTN/CNIC: [Supplier NTN], having its address at [Supplier Address] (hereinafter "the Supplier"); AND
BUYER: [Buyer Name], NTN/CNIC: [Buyer NTN], having its address at [Buyer Address] (hereinafter "the Buyer").
The Supplier and the Buyer are each referred to herein as a "Party" and collectively as the "Parties".
1. GOODS
1.1 The Supplier agrees to supply and the Buyer agrees to purchase the following goods ("Goods"): [Goods Description], measured in [Unit Of Measure].
1.2 Minimum order quantity per delivery: [Minimum Order Quantity].
2. DELIVERY
2.1 Delivery terms: [Delivery Terms].
2.2 Delivery schedule: [Delivery Schedule].
2.3 The Buyer shall have an inspection period of seven (7) business days from delivery to inspect the Goods and notify the Supplier of any non-conformity. Failure to notify within this period shall constitute acceptance. Rejected Goods shall be replaced or credited within fourteen (14) days of the rejection notice under Section 43 of the Sale of Goods Act 1930.
3. PRICE AND PAYMENT
3.1 The contract price is [Unit Price] per [Unit Of Measure], which is [Price Incl Tax].
3.2 Price adjustment: [Price Adjustment].
3.3 Payment terms: [Payment Terms] by [Payment Method].
3.4 Overdue payments shall bear interest at [Late Payment Rate] on the outstanding amount from the due date until the date of actual payment.
4. TERM AND TERMINATION
4.1 This Agreement shall commence on [Agreement Start Date] and shall expire on [Agreement End Date], unless earlier terminated in accordance with this clause.
4.2 Either Party may terminate this Agreement for convenience by giving [Termination Notice] to the other Party.
4.3 Either Party may terminate this Agreement immediately upon written notice if the other Party commits a material breach and fails to remedy the breach within thirty (30) days of receiving written notice specifying the breach.
4.4 Either Party may terminate immediately if the other Party becomes insolvent, makes an assignment for the benefit of creditors, or is wound up under the Companies Act 2017 or the Insolvency Act 1909.
5. GENERAL PROVISIONS
5.1 This Agreement is governed by [Governing Law]. Disputes shall be referred to the applicable dispute resolution forum stated above.
5.2 Force majeure: Neither Party shall be liable for delay or failure to perform due to causes beyond its reasonable control including floods, earthquakes, strikes, government actions, or other events of force majeure under Section 56 of the Contract Act 1872, provided the affected Party notifies the other within five (5) days of the force majeure event occurring.
5.3 This Agreement constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all prior representations, negotiations, and agreements. Amendments must be in writing signed by both Parties.
IN WITNESS WHEREOF the Parties have executed this Supply Agreement on [Agreement Start Date].
SUPPLIER: [Supplier Name]
NTN: [Supplier NTN]
Authorised Signatory: _________________________
Designation: _________________________
Date: _________________________
BUYER: [Buyer Name]
NTN: [Buyer NTN]
Authorised Signatory: _________________________
Designation: _________________________
Date: _________________________
Witness 1: _________________________ CNIC: _________________________
Witness 2: _________________________ CNIC: _________________________
Supplier (Authorised Signatory)
________________
Signature
Buyer (Authorised Signatory)
________________
Signature
What Is a Supply Agreement (Pakistan)?
A Supply Agreement (Pakistan) in Pakistan a Supply Agreement in Pakistan is a commercial contract between a supplier (seller) and a buyer establishing the terms and conditions under which goods will be supplied on an ongoing or recurring basis. The Supply Agreement (Pakistan) is governed by the Sale of Goods Act 1930 (Act III of 1930) and the Contract Act 1872 (Act IX of 1872), which together form the foundational legal framework for commercial transactions in Pakistan.
The Contract Act 1872 governs the formation and enforceability of contracts generally — including the requirements of offer, acceptance, consideration, and free consent under Sections 7, 10, and 13 respectively. A Supply Agreement without free consent — for example, entered into under coercion under Section 15 of the Contract Act 1872, undue influence under Section 16, or misrepresentation under Section 18 — is voidable at the option of the aggrieved party. The Contract Act 1872 also governs damages for breach of contract under Sections 73 and 74, which provide for compensation for actual loss and for agreed liquidated damages where a genuine pre-estimate of loss is stated in the contract.
The Sale of Goods Act 1930 applies specifically to contracts for the sale of movable goods and supplements the Contract Act 1872 with detailed rules on transfer of property and risk, delivery, acceptance, rejection, and the seller's and buyer's remedies. Section 18 of the Sale of Goods Act 1930 governs the passing of property in ascertained goods, and Sections 20 to 24 govern property in specific, unascertained, and future goods. Section 26 provides the general rule that risk passes with property unless the parties agree otherwise — a critical term for supply agreements involving transit of goods.
Section 12 of the Sale of Goods Act 1930 distinguishes conditions (terms going to the root of the contract, breach of which entitles the innocent party to treat the contract as repudiated) from warranties (collateral terms, breach of which sounds only in damages). The quality and fitness for purpose of supplied goods are governed by Sections 14, 15, and 16 of the Sale of Goods Act 1930, which imply conditions of merchantable quality and fitness for the buyer's disclosed purpose into commercial supply contracts.
In practice, Supply Agreements in Pakistan are used across all sectors: manufacturing (raw material and component supply to factories), retail and wholesale (stock replenishment agreements with distributors), government procurement (supply contracts under the Public Procurement Rules 2004 administered by the Public Procurement Regulatory Authority (PPRA)), and agriculture (supply of inputs and produce). Large Supply Agreements involving government buyers must comply with the PPRA Rules 2004 and the provincial public procurement rules, including competitive bidding requirements.
The Securities and Exchange Commission of Pakistan (SECP) requires listed companies to disclose material Supply Agreements under the Listed Companies (Code of Corporate Governance) Regulations 2019. Supply Agreements between related parties must be disclosed and approved under the Related Party Transactions Policy under Section 208 of the Companies Act 2017. The Federal Board of Revenue (FBR) requires that Sales Tax under the Sales Tax Act 1990 be charged on supplies of taxable goods and that tax invoices comply with Rule 29 of the Sales Tax Rules 2006.
When Do You Need a Supply Agreement (Pakistan)?
A Supply Agreement in Pakistan is required whenever a buyer and supplier wish to formalise an ongoing trading relationship that goes beyond a single purchase order, establishing consistent terms for recurring deliveries of goods.
The agreement is needed when a manufacturer or wholesaler appoints a supplier for regular delivery of raw materials, components, or finished goods over a defined period — for example, a textile mill in Faisalabad agreeing to purchase a fixed quantity of raw cotton from a ginning factory each month during the cotton season, with defined quality specifications and delivery schedules.
The agreement is required when a retailer — a supermarket chain, a pharmacy group, or a consumer goods distributor — enters into a framework supply arrangement with a vendor that will govern multiple purchase orders placed over a year or more. The framework agreement sets the commercial terms (pricing methodology, minimum order quantities, payment terms) so that individual purchase orders can be placed without renegotiating the core terms each time.
The agreement is needed when a company is supplying goods to a government department, statutory body, or public sector enterprise under a public procurement contract governed by the Public Procurement Rules 2004 (PPRA Rules). PPRA contracts require a formal Supply Agreement that meets the format and terms prescribed by the Public Procurement Regulatory Authority, including performance security requirements, inspection procedures, and liquidated damages for late delivery.
The agreement is required when a foreign supplier is exporting goods to a Pakistani importer, where the international supply terms (Incoterms 2020) must be incorporated into the agreement alongside Pakistani law requirements — customs documentation under the Customs Act 1969, letters of credit through banks regulated by the State Bank of Pakistan (SBP), and compliance with the Import Policy Order issued annually by the Ministry of Commerce.
The agreement is needed when an investor or financier requires a supply contract as security for a financing facility — for example, a bank providing invoice financing or supply chain finance to a supplier needs evidence of the underlying supply obligations to assess the credit risk and structure the drawdown mechanism under the State Bank of Pakistan's Prudential Regulations.
The agreement is required when a dispute arises between a supplier and buyer regarding delivery shortfalls, quality defects, or non-payment, and the parties need to reference a written contract to determine their rights and obligations under the Sale of Goods Act 1930 and the Contract Act 1872.
What to Include in Your Supply Agreement (Pakistan)
A valid Supply Agreement in Pakistan under the Sale of Goods Act 1930 and the Contract Act 1872 must contain the following essential elements.
Parties and Authority: Full legal names, addresses, National Tax Numbers (NTN), and CNIC or SECP registration numbers of both the supplier and the buyer. Where either party is a company incorporated under the Companies Act 2017, the agreement must be executed by an authorised signatory under a board resolution or power of attorney — an agreement signed by an unauthorised person is not binding on the company under Section 180 of the Contract Act 1872.
Goods Description and Specifications: A precise description of the goods to be supplied — including brand, model, grade, specifications, and applicable quality standards such as Pakistan Standards and Quality Control Authority (PSQCA) standards or international standards incorporated by reference. Vague descriptions of goods create disputes under Sections 14 to 16 of the Sale of Goods Act 1930 regarding merchantable quality and fitness for purpose.
Pricing and Price Adjustment: The contract price per unit or per batch, whether prices are fixed for the term or subject to review based on an index (for example, the State Bank of Pakistan's wholesale price index or the international commodity benchmark), and the currency of payment. Where Sales Tax under the Sales Tax Act 1990 applies, the agreement should state whether prices are exclusive or inclusive of Sales Tax and identify who issues the tax invoice.
Delivery Terms: The delivery schedule — whether fixed calendar dates, on-demand delivery against purchase orders, or minimum monthly quantities — the delivery point (ex-works, FCA, CIF, or DAP under Incoterms 2020), and the party responsible for freight and insurance. The passing of risk from seller to buyer must be expressly stated to supplement the default rule under Section 26 of the Sale of Goods Act 1930.
Inspection and Acceptance: The buyer's right to inspect goods before acceptance, the inspection period (typically five to fourteen days from delivery), the procedure for rejecting non-conforming goods under Section 43 of the Sale of Goods Act 1930, and the supplier's obligation to replace or credit rejected goods. Where goods are supplied against samples under Section 15 of the Sale of Goods Act 1930, the sample description must be annexed.
Payment Terms: Credit period (for example, net thirty days from invoice date), payment method (crossed cheque, IBFT, RTGS through the SBP payment system, or Letter of Credit), and interest rate on overdue invoices under the Interest Act 1839 or a contractually agreed rate. Where advance payment is made, the advance payment guarantee terms should be stated.
Term and Termination: The duration of the agreement, renewal provisions, and grounds for termination — including termination for material breach with a cure period (typically thirty days' written notice), termination for insolvency under the Insolvency Act 1909 or the winding up provisions of the Companies Act 2017, and termination for force majeure under Sections 32 and 56 of the Contract Act 1872.
Dispute Resolution: The forum for dispute resolution — civil courts under the Code of Civil Procedure 1908, arbitration under the Arbitration Act 1940 or the international arbitration provisions of the Arbitration Act 1940, or mediation through the Centre for Effective Dispute Resolution (CEDR) or the Pakistan Institute of Corporate Governance (PICG) mediation panel. The governing law must be stated as the law of Pakistan.
Forms-legal.com provides this Supply Agreement (Pakistan) template as a practical starting point for commercial supply arrangements. Both parties should review the agreement with an Advocate enrolled at the relevant provincial Bar Council — particularly for high-value or long-term supply contracts — to confirm compliance with the Sale of Goods Act 1930, the Sales Tax Act 1990, and any sector-specific regulations.
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Forms Legal. (2026). Supply Agreement (Pakistan) (Pakistan) [Legal document template]. Forms Legal. https://forms-legal.com/pakistan/business/contracts/supply-agreement-pakistan
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Frequently Asked Questions
The Sale of Goods Act 1930 implies two key conditions of quality into supply agreements where goods are sold in the course of the seller's business. First, under Section 16(1) of the Sale of Goods Act 1930, where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required, there is an implied condition that the goods shall be reasonably fit for that purpose — unless the buyer relied on their own skill or judgement rather than the seller's. Second, under Section 16(2), where goods are bought by description from a seller who deals in goods of that description, there is an implied condition that the goods shall be of merchantable quality — meaning goods that a reasonable person would regard as satisfactory having regard to the description, price, and all other relevant circumstances. These conditions operate as terms of the supply agreement by operation of law and cannot be excluded by the supplier against a consumer buyer under the applicable consumer protection laws. For commercial supply agreements between businesses, the parties may contractually modify or exclude these implied conditions, but clear and express language is required — a standard exclusion of warranties clause may be insufficient under Pakistani courts' interpretation of Section 16.
Where a supplier fails to deliver goods as agreed under a Supply Agreement in Pakistan, the buyer has several remedies under the Sale of Goods Act 1930 and the Contract Act 1872. First, under Section 57 of the Sale of Goods Act 1930, where the seller wrongfully neglects or refuses to deliver goods, the buyer may maintain a suit against the seller for damages for non-delivery. The measure of damages is the difference between the contract price and the market price of the goods at the time when delivery should have been made, under the principle established in Section 73 of the Contract Act 1872. Second, where property in specific or ascertained goods has already passed to the buyer, the buyer may apply to court for a decree of specific performance under Section 58 of the Sale of Goods Act 1930 requiring the seller to deliver the goods. Third, the buyer may treat the non-delivery as a repudiation of the contract and rescind the entire agreement, recovering any advance payments made. Fourth, if liquidated damages are specified in the Supply Agreement — provided they represent a genuine pre-estimate of loss — the buyer can recover the agreed amount under Section 74 of the Contract Act 1872 without proving actual loss. Courts in Lahore, Karachi, and Islamabad have consistently upheld liquidated damages clauses in commercial supply contracts where the quantum is reasonable.
Under the Stamp Act 1899 as administered provincially in Pakistan, certain commercial agreements are subject to stamp duty if they fall within the categories listed in the First Schedule to the Stamp Act 1899. A general Supply Agreement for the sale of goods is typically not subject to ad valorem stamp duty in the same way as a mortgage, lease, or share transfer document — however, a Supply Agreement that contains an arbitration clause may require stamp duty applicable to arbitration agreements, and any Supply Agreement that is also a bond or guarantee may require separate stamp duty. The practical position varies by province: Punjab, Sindh, KPK, and Balochistan each administer their own stamp duty schedules. An unstamped agreement is inadmissible in evidence in court under Section 35 of the Stamp Act 1899, though the court may allow the deficiency to be cured by payment of the duty plus penalty. For high-value Supply Agreements, parties should obtain confirmation from a local Advocate on the applicable stamp duty before execution to avoid inadmissibility issues if the agreement becomes the subject of litigation.
Sales Tax under the Sales Tax Act 1990 applies to the supply of taxable goods in Pakistan at the standard rate of seventeen percent, unless the supply is zero-rated or exempt under the relevant schedule to the Sales Tax Act 1990. A registered person (supplier) is required to issue a tax invoice complying with Rule 29 of the Sales Tax Rules 2006 for each taxable supply, showing the supplier's Sales Tax Registration Number (STRN), the buyer's STRN (if registered), the description and quantity of goods, the value of supply, the amount of Sales Tax charged, and the invoice date. The Supply Agreement should specify whether the agreed price is inclusive or exclusive of Sales Tax, and which party bears the Sales Tax. Where the buyer is also a registered person, the buyer can claim input tax credit on the Sales Tax paid, making a price-exclusive-of-tax arrangement commercially preferable. The Federal Board of Revenue (FBR) IRIS portal is the system through which Sales Tax returns are filed monthly under Section 26 of the Sales Tax Act 1990. Non-compliance with Sales Tax obligations can attract penalties under Section 33 of the Sales Tax Act 1990 and can trigger FBR audit of the supplier's business.
The limitation period for filing a civil suit for breach of a Supply Agreement in Pakistan is three years from the date of the breach, under Article 115 of the First Schedule to the Limitation Act 1908. For a claim for the price of goods sold and delivered under a supply contract, Article 48 of the Limitation Act 1908 provides a three-year period running from the date the price became payable. The Limitation Act 1908 provisions are strict — a suit filed after the limitation period has expired will be dismissed even if the claim is meritorious, unless the court is satisfied under Section 5 of the Limitation Act 1908 that the delay was caused by sufficient cause. For supply disputes arising from ongoing commercial relationships, determining the precise date of breach — which starts the limitation period running — is a critical legal question, particularly in cases of instalment deliveries where some deliveries were short and others were not. Parties to Supply Agreements should maintain contemporaneous records of deliveries, weighment slips, invoices, and correspondence, as these records are essential evidence in any limitation period dispute before the civil courts in Lahore, Karachi, Islamabad, or other provincial courts.
Whether a Supply Agreement in Pakistan can be terminated without cause depends entirely on the termination clause in the agreement. If the agreement contains a termination for convenience clause — stating that either party may terminate on a specified notice period (for example, thirty or sixty days' written notice) without needing to establish a breach — then termination without cause is contractually permitted under Section 62 of the Contract Act 1872. Without such a clause, a party terminating a fixed-term Supply Agreement without cause commits a repudiatory breach entitling the other party to claim damages for the unexpired term of the agreement. Damages in such cases are calculated on the expectation interest — the profit the non-terminating party would have made on the remaining deliveries under the Sale of Goods Act 1930 and Section 73 of the Contract Act 1872. Pakistani courts have held that where a party exercises a termination for convenience clause in bad faith — for example, to avoid paying for goods already manufactured to order — the courts may imply a duty of good faith or apply estoppel under Section 115 of the Qanun-e-Shahadat Order 1984 to restrict reliance on the termination clause. Parties should obtain legal advice before terminating long-term supply agreements.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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