28 | SUPPLY CONTR ACTS | LEGAL ADVICE
Supply contracts for schools: what you should know
Oliver Pool looks at the issues schools should bear in mind when negotiating and running contracts with suppliers
concentrate on what they are good at, and to get specialists in to run specifi c services that the school needs. An example is a school's cleaning
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function. Schools may not want to employ and manage cleaners directly, in which case they can turn to specialist cleaning companies. Another function which is most commonly ‘outsourced’ in this way is the school shop. Many schools decide not to take on the workload of running and managing a shop, monitoring stock levels and dealing with suppliers. The alternative is to appoint someone else to do so, and to take a fee or a slice of the profi t made. This is far easier – at least, it is when it works. When entering into these sorts of
agreement, though, it is important for both sides to be clear about the arrangements that are to be put in place. Often third-party suppliers will set out the terms on which they will act, and the path of least resistance for the school is simply to sign on the dot ed line and to accept those terms as off ered. This approach is fi ne as long as relations between school and supplier remain intact, and nothing ever goes wrong. When things do start to go wrong, or
when the relationship needs to come to an end, it often turns out that the agreement contained prejudicial terms which ought to have been considered at the start of the relationship. After all, a supplier's terms are typically designed solely to put the supplier in the best possible position in its dealings with schools. Sometimes suppliers will state that
their standard terms are fi xed and ‘cannot be negotiated’. This is not really
ou can't do everything yourself. Often those running schools decide that it makes sense to
true. All a statement like this means is that the supplier would prefer not to negotiate its terms – but in reality, every contract can be negotiated. In fact, when terms are presented as ‘not for negotiation’ it is all the more important for schools to check what they are signing up to. Just because a document is short, it does not mean that it doesn't contain problematic provisions. Of course, it will be important for
the contract to ensure that the supplier does the required job properly. The more detail there is about what must be done, how it must be done, and to what timetable, the bet er position the school will be in if there is a dispute, and the less chance there is for misunderstanding. A simple specifi cation of the services is not enough on its own – the contract may contain traps for the unwary which should be checked by a solicitor.
Common 'hidden nasties' Although a key role for a school shop supplier is to manage their stock, their contracts will often provide that the ‘stock risk’ is taken by the school, i.e. the school must buy all unsold stock at the end of the agreement. If a contract contains such a provision, it is extremely important that it also allows the school some control over the level of stock that is accumulated. Otherwise, a school
can be left in a position where the supplier runs up very high levels of stock, or accumulates old or out-of-date stock, which the school is bound to take on termination of the contract. If this sort of clause features
RIGHT: Oliver Pool
in an agreement, the school should be careful to monitor stock levels to ensure they do not creep up unnecessarily. It would be preferable for the contract to allocate this risk to the supplier, who is in a bet er position to manage this risk. Many schools have a dedicated room
which is used as the school shop, and which is fi t ed out accordingly. Some or all of the stock may be kept in that room. If so, the supplier arguably has ‘exclusive possession’ of that space. This is the case even if the shop isn't always open. This can give the supplier the right to argue that it has the benefi t of a lease over that room, and that it has a right to renew that lease. It is important to avoid this arising, because it may hamper the school's ability to bring the contract to an end and eject the supplier if it needs to. What the contract with the supplier says about the nature of its occupation is therefore very important, and should be checked. Unless the supplier is online only, the school shop will need to be staff ed.
Main image: © Edhar Yralaits |
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