A framework agreement is, in simple words

What law governs the framework agreement?

The framework agreement appeared in 2015 and is regulated by Article 429.1 of the Civil Code.
Before this, a similar agreement was applied, but was called an organizational agreement, which determined the general features of the future full-fledged agreement. The framework is subject to the principles of civil law on freedom of contract, the validity of the contract, and the requirements for the form of concluding the contract. The parties enter into it free of charge, and property obligations will appear in subsequent agreements.

Framework agreement

The concept of a framework agreement has appeared in civil legislation since June 2015. Most often, it is understood as an agreement that specifies only the general aspects of interaction, without specifying all the specific details. How to draw up a document, a ready-made example of a contract and its legal significance are described in detail in the article.

Sample

The name corresponds to the wording adopted in practice and in civil legislation, for example: “supply”, “contract”, “rent”, “paid services”, etc. However, the title should directly indicate that the agreement is a framework agreement. You can take this ready-made example as a sample.

Legislative Definition: 6 Important Features

The main federal law that defines this concept is the Civil Code:

From the wording of the article, as well as from the actual practice of business relations, it is obvious that:

Represents only a general agreement of a long-term nature.
It is expected that specific conditions will be clarified by the parties by concluding new contracts and/or additional agreements.
At the same time, partners can, but are not required to, draw up such agreements. They can also be guided by the general text of the framework agreement.
Moreover, in some situations, it is this document that partners can refer to when defending their rights in court. This refers to cases where controversial issues are not reflected in other agreements, i.e. you have to refer to a single source - an agreement with open terms.
Such a document is signed free of charge. Those. After signing, the parties do not undertake any financial obligations - they are prescribed in other documents and implemented subsequently.
The document is valid for the entire period of actual cooperation and can be used repeatedly to clarify the terms of interaction and resolve possible disputes.

EXAMPLE. The bank and a commercial company enter into a framework agreement to open one or more credit lines. Thus, the partners express their intentions to cooperate, but at this stage they do not talk about its specific conditions: credit limit, interest rate, repayment period and other important nuances.

Thus, a framework agreement is in many ways similar to a preliminary agreement. Although in fact these documents have significant differences, which are discussed in detail below.

Framework and preliminary agreements: 3 key differences

The preliminary agreement is also mentioned in the Civil Code.

Based on the above wording of the article, significant differences in the preliminary agreement are obvious:

It necessarily contains an obligation that the parties will sign the main agreement in the future. Moreover, this obligation lasts for a predetermined period, after which (in case of non-fulfillment) it terminates for both partners.
The text of the preliminary agreement, in fact, already describes all the essential and important terms of the future agreement, which largely copies it in form and content.
If a partner refuses to sign the basic agreement, he may be forced to do so by court action.

Thus, a framework agreement is a more complex legal phenomenon. He declares the fact of cooperation, the intention to organize a partnership, as well as the general directions of joint activities. But it does not contain clear obligations to sign the main document within any time frame.

Why is it needed?

Since there are no specific obligations in the text of the document, a natural question arises about its purpose. The main goal is that the parties declare their intention for future long-term cooperation. The agreement has more of a psychological and business effect than a legal one .

Therefore, it is possible to reach a framework agreement in situations where:

the general terms of cooperation are clear, but specific details are still unknown;
the parties have already verbally agreed on many details, so they are ready to commit them to paper for further negotiations;
the companies have quite serious intentions and are considering the possibility of long-term partnership.

Most often, such papers are signed in the banking sector, as well as in the field of government orders (in tender documentation) or in the field of cargo transportation, procurement of goods, etc.

The presence of a framework agreement does not guarantee the conclusion of the main one. Moreover, the general agreement cannot and should not replace the basic document. It is important for the parties to specify all the conditions in the relevant papers, which is done at different stages of cooperation subsequently.

What are the requirements for a framework agreement?

The Civil Code of the Russian Federation contains only general requirements for a framework agreement. The parties have the right to determine all the rules and conditions in the document themselves. An agreement falls under the concept of a framework agreement if it specifies the general outlines of the agreement: it may not contain the names of goods or services or the amount of the agreement. In the future, the general conditions are subject to clarification and reinforcement using annexes to the contract (specifications); the parties sign them when the need for supply arises. The amount of such an agreement is the sum of all applications.

But do not confuse a framework agreement with a preliminary agreement. Under a preliminary agreement, the parties are obligated to sign an agreement in the future on the terms and conditions specified in the preliminary agreement. And if a framework agreement is concluded, in the future the parties only clarify the specific conditions using appendices to the agreement.

The most important thing about the framework agreement

Partners do not always immediately understand what form their cooperation will take. This is especially true for the supply of goods upon request. The buyer and supplier cannot know in advance which items will be in demand. But we intend to work together and are ready to discuss the terms of interaction. In such cases, a framework agreement is concluded.

In simple terms , it is an agreement reflecting:

general outlines of collaboration;
its preconditions.

It does not indicate such points as:

transaction amount;
goods;
supply volumes.

Therefore, a framework agreement implies the mandatory conclusion of such types of documents as:

additional agreement;
application.

They will perform a clarifying role . They include specific terms and amounts, but the conditions are not re-specified. Since they are already discussed in the framework agreement and are of an unchangeable nature .

The number of applications is unlimited. But the regulatory function in this matter is performed by the terms of the contract - within their boundaries there can be any number of applications. In fact, each new supply requires the signing of an additional agreement .

A framework agreement is also concluded with the bank . In this system, in 90% of cases it is represented by a credit agreement. What does it mean? The bank undertakes to open a line of credit to the client, but due to the variety of financial products, it is not ready to indicate all options in advance. In the future, each loan is formalized in a new agreement in accordance with the terms of the framework agreement.

It is noteworthy that such a definition also exists in international law . In this legal field, states act as interested parties. The framework agreement defines interaction on issues, the specification of which is achieved by concluding additional protocols .

It is advisable to sign a framework agreement if the parties:

plan long-term cooperation;
have not decided on product items or list of services.

It is relevant in both of the above cases.

Summarizing the above, it is worth noting that a framework agreement is, in simple words, a structure for fixing the general conditions of cooperation, which requires clarifying specifications.

Why do you need a framework agreement?

With the help of a framework agreement, the parties agree on long-term cooperation, certain transactions or services. The contract is concluded for a long period or for an indefinite set of supplies, services, etc.

It is often concluded if the parties cannot determine the cost of the work and its volume before the start of cooperation. Or if the parties intend to cooperate, but do not yet know the exact timing of deliveries and the start of work. Such an agreement is also concluded in order to formalize long-term business relationships in a variety of areas: regular deliveries, work or services.

The advantage of a contract is that it allows you to discuss and agree on the terms of the contract in advance. In addition, they can be flexibly changed depending on the current situation: product availability, market conditions, etc.

The framework is concluded in the following business areas:

placing orders for municipal and state needs;
transportation;
trade and procurement;
banks and lending.

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What is a framework agreement

Civil legislation defines a special type of agreements - contracts concluded with open terms (Article 429.1 of the Civil Code of the Russian Federation).
In essence, this is an agreement between the parties on the general (possibly preliminary) terms of the transaction, the initial points of cooperation - this is what a framework agreement is in simple words. There is no price in such an agreement; some parties do not specify the delivery items. The key task of the document is to define the rights and obligations of the parties. As soon as the customer needs to purchase goods, works or services, a specification - one or several - is prepared for the framework agreement. The sum of all specifications is the price of such a contract.

The Civil Code sets out what a framework agreement means:

A contract with general conditions and basic obligations of each party. The main requirements of the parties to each other remain open. The customer and supplier have the right to detail the object of delivery or clarify specific conditions in new or additional agreements. If any obligations are not regulated by the initial documents, then they are considered in accordance with generally accepted legislative standards.

There are framework contracts for the supply of goods, performance of work and provision of services. The scope of such agreements is extensive. This includes the organization of cooperation, the acquisition of energy resources, and periodic maintenance (of buildings, structures, etc.) of the customer.

Despite its general appearance, such an agreement must reflect certain requirements of the parties. Include the following items in the contract:

subject - the main activity in relation to which the transaction is concluded;
rules, features and procedure for further operations within the framework of mutual cooperation (how the order, shipment, delivery and acceptance occur);
unchanged conditions for each financial and business transaction (payment for each delivery, liability of the parties for late obligations).

The parties have the right to determine the remaining requirements for each other and the specifics of cooperation independently. In fact, here is the complete answer to the question of what is a framework agreement for the supply of industrial and industrial components: this is an agreement that establishes the capabilities and responsibilities of the parties, the basic rules for conducting repeated procedures (shipment, payment) and there is the possibility of specifying other provisions on cooperation between the customer and the supplier . This also applies to the term: civil legislation does not limit the frequency of validity of such a contract (clause 4 of Article 421 of the Civil Code of the Russian Federation). If the contract term is required to be clarified, the parties have the right to use local contractual provisions (example - Procurement Regulations of the State Corporation Rosatom No. 37 dated 02/07/2012).

How to draw up a framework agreement

Include as many important things as possible in the frame. To avoid problems, formulate in the framework agreement the important conditions that were agreed upon: sanctions for failure to deliver and failure to meet deadlines, acceptance rules, methods of determining the price, the right to unilaterally withdraw from the contract, the procedure for filing claims. Then, in the annex to the contract, it remains to specify the specifics: assortment items, number of deliveries and their terms, payment terms, prices.

Ensure cooperation. The framework does not guarantee the conclusion of applications. And if the counterparty refuses to cooperate, he cannot be forced to do so, as is the case with a preliminary agreement.

To avoid such situations, negotiate the framework agreement carefully. For example, include a clause that the supplier must accept all bids from the buyer within certain amounts. Or, conversely, the buyer undertakes to accept all goods of proper quality from the supplier.

Don't forget about apps. Carefully draw up annexes to the contract. Often the parties carefully agree on the terms of the framework agreement, but during the next delivery they forget to draw up a specification, which in essence becomes the main agreement. And then, in case of violations by one of the parties, there will simply be no basis to hold it accountable.

Flaws in the design of the framework and applications can also lead to difficulties.

Establish a connection between the framework and the applications. Write in the frame the name of the documents in which you and the other party will establish the missing terms of the contract: application, specification, application, supply agreement. Please note: some documents require signatures of two parties (supply agreement), while some remain one-sided (application, offer). When drawing up specific documents, make sure that the name strictly corresponds to that specified in the framework agreement, and also state in each application that it forms part of the framework agreement.

When is a framework agreement needed?

It is recommended to draw up a framework agreement for the supply of products or provision of services, in particular in the following cases:

The parties to the transaction plan to cooperate for a long period of time, but the specific conditions for carrying out mutually beneficial activities have not yet been determined and may change.
There is a need to record the agreements reached in the case when one of the parties has not yet decided on the basic requirements of the contract.
It is necessary to provide conditions for all transactions concluded in the future.
The exact volumes of product supply have not yet been established.

A framework agreement can be concluded for the supply of products, performance of work or provision of services. The document is suitable for use in a variety of areas: trade, cargo transportation, construction, etc. Also, this agreement is drawn up when placing state and municipal orders, when payment is made by bank transfer from the budget.

What happens when the framework is terminated

The contract ceases to be valid if there is a refusal to renew it or upon termination - and then rely on the rules for termination of the Civil Code of the Russian Federation.

Termination of the framework does not relieve the parties of existing obligations under transactions that are enshrined in the annexes to the framework. The main framework agreement and the specifications for it are independent contracts, so termination of the framework does not entail termination of the specifications, but only releases the parties from the obligation to enter into future transactions on the terms of the framework and with reference to it.

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