No quantity guarantees: Overview, definition, and example
What are no quantity guarantees?
No quantity guarantees refer to clauses in contracts that specifically exclude any commitment to a certain volume or amount of goods, services, or transactions. In other words, these clauses make it clear that the seller or service provider is not required to supply a fixed quantity or meet a minimum order amount. Instead, these agreements allow flexibility for both parties, with the buyer or client free to make purchases or request services on an as-needed basis, without being obligated to meet specific quantities or volumes. These clauses are often used in supplier agreements, service contracts, or sales arrangements where the demand is uncertain or fluctuates.
For example, a retailer may enter into a supplier agreement with no quantity guarantees, meaning the retailer is not obligated to purchase a set number of items, but can buy as many or as few as needed over time.
Why are no quantity guarantees important?
No quantity guarantees are important because they provide flexibility and risk reduction for buyers or clients who cannot predict future demand or requirements. Without the obligation to commit to a specific quantity, businesses can adjust their purchases based on real-time needs, budget constraints, or market conditions. This flexibility can be particularly beneficial for small businesses or startups that need to manage cash flow carefully or for businesses that experience seasonal or unpredictable demand.
For suppliers or service providers, agreeing to no quantity guarantees can help foster relationships with customers by offering them the ability to scale orders or services up or down without the pressure of minimum purchase obligations. This flexibility can attract more customers who may be hesitant to commit to larger, long-term orders or contracts.
Understanding no quantity guarantees through an example
Imagine a small business that needs to purchase office supplies but is uncertain about how much it will need over the next year. It enters into a supplier agreement with no quantity guarantees, which allows it to place orders on an as-needed basis. The supplier is not obligated to provide a minimum number of supplies, and the business is not required to buy a set amount. This arrangement gives the business flexibility and ensures it can manage its expenses without overcommitting.
In another example, a company contracts with a third-party logistics provider for shipping services, but with no quantity guarantees. The company can request shipping services as required, whether that’s a large shipment or just a few packages at a time, depending on the company’s varying needs throughout the year.
An example of a no quantity guarantees clause
Here’s how a no quantity guarantees clause might appear in a contract:
“The Buyer is under no obligation to purchase any minimum quantity of products from the Seller. The Buyer may order goods from the Seller at its sole discretion, with no guarantees regarding the quantity or volume of purchases. The Seller agrees to supply goods as requested by the Buyer, subject to availability, but is not required to meet a fixed quantity.”
Conclusion
No quantity guarantees provide flexibility for both buyers and sellers by allowing transactions to be made on an as-needed basis, without the pressure of minimum purchase commitments. This approach benefits businesses that need to adjust their purchases or service requirements based on changing needs or market conditions, offering greater control and reducing the risk of overcommitment. For suppliers, such arrangements can open the door to more customers by offering flexible, non-binding terms that better align with the buyer’s uncertain or fluctuating demands.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.