Task ymtecb81

Can you take a look at the two Master Supply Agreement templates (Master Supply Agreement Template.pdf ("Template1"), Master Supply Agreement 2.pdf ("Template2"))?  We’re considering them for Acme (the steel supplier) and we want a comparison.

I need to know how each template deals with tariff‑related cost exposure, since Acme is importing steel from outside USMCA and the new tariffs are creating real financial pressure. Also, TAC is thinking about giving Acme a cash infusion secured by a lien ...

Template1 provides TAC with the strongest insulation against tariff‑related cost exposure. Section 5.2 (“Price Protection”) and Section 5.6 (“No Price Increases”) expressly prohibit any price increases or surcharges, ensuring Acme cannot pass tariff costs through to TAC. By contrast, Template2 (Section 5.4 “Raw Material Adjustments”) permits negotiated price adjustments for raw material cost changes, leaving TAC exposed to tariff‑driven increases.  

The lien‑secured financing would expose TAC to lender liability risk. Courts may view TAC as a de facto lender if it exercises extensive operational control over Acme, which could subject TAC to claims from Acme’s creditors in bankruptcy. With lien-secured financing, Template2 is safer from a lender liability standpoint because it limits TAC’s operational control and financial oversight.

Under Template1 , TAC has absolute change rights to the Products provided by Acme (Section 9.1 “Buyer’s Absolute Change Rights”), including unilateral authority over design, specifications, materials, processes, and suppliers. Template1 also grants TAC unlimited rights to conduct financial audits of Acme (Section 4.6 “Inspections and Audits” and Section 5.9 “Price Audits”), extending beyond quality records to full financial documentation. In contrast, Template2 allows for good faith cost and timing negotiation for TAC‑initiated changes (Section 9.4 “Buyer‑Initiated Changes”) and does not contain any clause granting TAC audit rights over Acme’s financial records (Section 4.6 limits audits to quality records and documentation).