Supply Chain Management Introduction

Supply Chain and Contract Management

• Supply Chain involves all stages directly or indirectly fulfilling a customer request, including manufacturers, suppliers, transporters, warehouses, retailers, wholesalers, and customers.
• It is a dynamic process involving the constant flow of information, product, and funds between different stages.
• All parties involved in Supply Chain Management should know the basics of the Indian Contract Act, 1872.

Important Definitions

• A contract is an agreement enforceable by law, which can be shown as Contract = Agreement + Enforceability.
• An agreement not enforceable by law is said to be a void agreement.
• An agreement is formed by a proposal (offer) and acceptance, which can be shown as Agreement = Proposal (Offer) + Acceptance.
• A proposal is an offer made by one party to another, and when accepted, it becomes a promise.

Proposal and Acceptance

• A proposal is made when one person signifies to another his willingness to do or to abstain from doing something with a view to obtaining the assent of that other.
• When the person to whom the proposal is made signifies his assent, the proposal is said to be accepted.
• The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee".

Consideration and Reciprocal Promises

• A consideration is an act or abstinence or promise made by the promisee at the desire of the promisor.
• Promises which form the consideration or part of the consideration for each other are called reciprocal promises.
• In an agreement, both parties are promisors as well as promises.

Vowable Contracts

• An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a vowable contract.

Role of Communication in Contracts

• Communication is essential in contracts, as the offer and acceptance have to be communicated between the parties.
• The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances are deemed to be made by any act or omission of the party proposing, accepting or revoking.