Supply contracts will typically contain provisions relating to the following:
- Price and price escalation
- Take-or-pay provisions. I.e. how much the project must pay to the supplier irrespective of whether it is able to receive the supplied goods
- Quality specifications for the supplied goods (e.g. calorific value of coal, sulphur content, ash content, etc for a coal power plant)
- Details on any performance tests including what tests must be undertaken, when, what constitutes a pass, and whether they may be repeated
- Pass through provisions for events outside of the project’s control, such as force majeure and change in law. In particular, these will be based on the offtake contracts
- Consequences of failing to meet obligations for each counterparty, and the rights which will arise therefrom. In particular, termination rights and consequences of termination
- Guarantees (delivery date and performance levels), including limitations of liability for the supplier, rates of accrual of liquidated damages and performance security (liquid bank bond, vs parent company guarantees)