Framework agreements set the basic parameters for a business relationship, serving as a prelude to a signed contract or a shared approach to a specified objective. It’s a formal agreement and provides the necessary context to establish a relationship, but can be modified with terms being added or deleted at a later date.
Documenting the Basics
Framework agreements can define the basics of how business will be done, with specific details added later. For example, a framework agreement between a vendor and supplier may set the price and delivery terms, but leave the specific amounts to be ordered and the delivery schedule to be determined later. Such agreements can also occur to document when companies will cooperate or merge. Framework agreements can be set subject to stakeholder approval or an examination of the books, with a final document prepared once any conditions are satisfied.