Too many small businesses are signing contracts that are time bombs. The other side gives you a slick document and a smile, tells you it’s just “standard” or “a formality,” and before you know it, you’ve handed over your margin, your tooling, your flexibility — and sometimes even your future.

Here’s the truth:
If you’re being asked to sign a supply or service contract, you are not being hired — you are being bound.

Let’s walk through what we’ve seen recently — without naming names, of course — but yes, this happened to one of our clients. They’re good at what they do. Trusted. Experienced. But they didn’t see the knife in the handshake.

You want to get paid? Here’s the fine print.

• Payment terms? 62 days from end of month. But if they feel generous and pay you in 45 days, they get a discount.
• Forecasts? They’ll send you some, but they don’t have to buy anything. You stock up, you wait. Too bad.
• Minimum orders? None.
• Volume commitment? Zilch.

They can change the price — and walk away. You can’t.

• Prices are reviewed yearly — and they’ve written themselves a formula so complicated NASA couldn’t audit it. If your costs go down? They lower your price. If your costs go up? They might cancel the contract.
• They’ve capped your ability to raise prices — but not their power to terminate if you try.
• Oh — and if you’re late on a delivery? That’s 1% of the product price, per day, in liquidated damages.
• Fail to meet KPIs for 3 months? 5% of the order value — gone.

They own your tooling. Your designs. Your improvements.

• You’ll build the tools, but they own them.
• You make improvements to the process or equipment? They own that too.
• Want to use the same design for another customer? Absolutely not. You can’t. They’ve locked that up tighter than a patent vault.

They can walk. You get nothing.

• They can terminate the agreement for any reason with 20 business days’ notice.
• You don’t get compensated for future revenue, goodwill, or the sleepless nights wondering if you can meet their next KPI target.
• You’re left with stock, costs, and tooling you can’t legally use.

This isn’t partnership — it’s control.

If a contract lets them:

• own your tooling,
• dictate your pricing,
• walk away any time,
• and audit your books…

…then you’re not a supplier — you’re a subcontracted employee with none of the rights.

Serviced by related company Fresh Number Pty Ltd