Framework agreements: 8 FAQs answered by experts with examples to guide you through the process

1. What is a framework agreement?

A framework agreement (also known as a framework services agreement or master services agreement) outlines the basic terms and conditions between a supplier and customer for the supply of services or goods where the parties will be engaging in multiple transactions.

2. Do I need a framework agreement?

If you will be collaborating on several projects with another company, a framework agreement can save you time and money whilst streamlining your contractual negotiations. A framework agreement can be used to cover many different services, from project-based services to support services. For more information about framework agreements, check out this guide.

3. How does a framework agreement work?

A framework agreement is an umbrella contract that sets out the general legal terms of a business relationship. Once the supplier and customer have agreed to the terms of the framework agreement, when they need to work on specific projects or transactions, they only need to enter into smaller contracts called a statement of work (SOW) or purchase order (PO) which set out the specific details relating to each project. The SOW or PO will refer to the terms of the framework agreement which ensures that each SOW or PO is governed by the terms of the framework agreement.

4. What are the benefits of using a framework agreement?

A well-drafted framework agreement can speed up negotiations and become your go-to document for all your business relationships involving multiple transactions or projects. Once you have a solid framework agreement in place, you can easily agree on project-specific terms without the need to renegotiate the legal aspects of the business relationship each time. It's like having a reliable roadmap for your long-term business relationships, giving you the flexibility to commence new projects efficiently. Ultimately, framework agreements streamline your contracting process, reduce costs and enhance efficiency when starting future projects or transactions.

For more information about the benefits of framework agreements, check out this comprehensive guide.

5. What is the difference between a framework agreement and a services agreement?

A framework agreement is used for ongoing business relationships involving multiple transactions or projects. It outlines the general legal terms between the parties. When a new transaction arises, a smaller contract (e.g. a statement of work or purchase order) is created, referring to the terms of the framework agreement. In contrast, a services agreement is for one-off transactions or projects. It is a standalone contract governing specific services, including details like scope, payment terms and timelines. Framework agreements have broader, general legal terms for the overall relationship, while services agreements are more specific and focused on individual transactions.

6. Can a framework agreement be used for multiple projects?

Yes, a framework agreement is designed to be used for multiple transactions or projects throughout the relationship between two parties. It outlines a standardised set of terms and conditions that can be applied to various transactions over a specified period of time. It provides a consistent framework that can be applied to a range of transactions, projects or collaborations.

7. Does a framework agreement have to have a fixed term?

Framework agreements can have a fixed term or be set up to renew automatically, according to each party's preferences. It is common for framework agreements to have an initial fixed term which either ends the contract upon its expiry, or automatically renews for subsequent periods. Alternatively, some framework agreements may have indefinite terms with no specified end date. However, this is uncommon and will usually allow for either party to terminate for convenience if so. So no, a framework agreement does not have to have a term that is fixed.

For more information about the initial terms and renewal terms in a framework agreement, take a look at this guide.

8. What happens if there’s a conflict between the terms of the framework agreement and a statement of work/purchase order?

If a conflict arises between the terms of a framework agreement and those of a statement of work or purchase order, it's essential to include a provision within the framework agreement that specifies which document will take precedence. Typically, the framework agreement acts as the overarching contract, while the statement of work (SOW) containing project-specific details takes precedence if there is a conflict. However, there may be instances where it is preferred for the framework agreement to take precedence. Since framework agreements are often carefully negotiated by lawyers, ensuring the terms of the framework agreement will be referred to the over SOW can help mitigate potential legal risks that might arise if SOWs are not as rigorously reviewed. Including clear precedence provisions in the framework agreement helps to maintain consistency and reduce uncertainties when conflicts arise.

Why use Docue to create your own framework agreement?

Designed by lawyers: Our framework agreement template is drafted by UK-qualified lawyers and contains lawyer-crafted guidelines to help steer you through every section of the template. This means your business is equipped with the details needed to meet legal requirements.

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