securing a supplier question

[paulw1283]

If you are selling a product and a supplier supplies a critical component, such that, without it your product cannot be made and they are the only supplier with this component, and you want to protect yourself in case they decided to rip you off once they find out that you are completely dependent on them, can you ask to sign a contract guranteeing no unreasonable price increases for a period of time?

But they cannot agree to a fixed price because cost can rise etc... So what would be a reasonable contract that can protect both parties? One that ensure that they still make a profit even if their cost rises and also protect me from price gauging?

Thanks

[jasaunders]

First of all, are you sure they are the only company in the world that cna supply this component. I find that very hard to believe. I think you just have to look harder.

Secondly, you very well can have a contract which fixes the price for a set period of time. This is very common when working with suppliers. A contract that can protect both parties will guarantee that you buy a certain amount of components over a set period of time and the supplier will sell it to you at a set price during that time period.