Supply Agreements in Bangladesh 2026: Supply, Distribution, Agency and Sale Contracts, Drafting and Disputes

Supply agreement Bangladesh law: the 2026 framework for goods contracts

A supply agreement Bangladesh businesses can rely on is built from two colonial-era statutes that still do most of the work: the Contract Act 1872, which decides when a promise binds and what happens when it is broken, and the Sale of Goods Act 1930, which fills every gap the parties leave on quality, delivery, risk, title and price. Around them sit the Competition Act 2012 for exclusivity and pricing restraints, the Stamp Act 1899 and the ICT Act 2006 for execution, and, since January 2026, a dedicated Commercial Court system for the disputes that follow.

This guide brings the family of goods contracts into one place: supply and supply chain agreements, distribution and dealer agreements, agency, sale and purchase agreements and international sales contracts. It then covers drafting and execution, and what a buyer or supplier can do when goods or money fail to arrive, including across borders. Where TRW has already published a detailed analysis, such as on Incoterms or legal notices, we link to it rather than repeat it.

Summary: Supply, distribution, agency and sale contracts in Bangladesh are governed by the Contract Act 1872 and the Sale of Goods Act 1930, with the Competition Act 2012 policing exclusivity and resale prices. Bangladesh is not a party to the CISG, so cross-border contracts need an express governing law, Incoterms and a workable dispute clause. Breaches are remedied through damages, specific performance in limited cases, the unpaid seller's statutory rights, the Commercial Courts or arbitration.

Key point: The Sale of Goods Act implies conditions of title, description, quality and fitness into every sale unless the contract excludes or varies them, and Bangladeshi law gives a terminated agent or distributor no statutory goodwill indemnity. Both rules reward a carefully drafted contract and punish reliance on a purchase order or a foreign template.

At a glance

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Table of Contents

How a supply agreement Bangladesh law recognises is built

There is no supply contracts statute in Bangladesh. A supply agreement is a contract under the Contract Act 1872, valid when made by the free consent of competent parties for a lawful consideration and object.[1] Where it transfers property in goods for a price, the Sale of Goods Act 1930 applies on top, distinguishing a sale, where property passes at once, from an agreement to sell, where it passes later or on a condition. Section 3 of the 1930 Act keeps the Contract Act in force on every point the sale statute does not displace.[2]

The consequence is that a supply agreement in Bangladesh is never silent. If the parties do not address quality, delivery, risk or payment, the Sale of Goods Act supplies an answer, and it may not be the one either side wanted. Our hub on contract law in Bangladesh covers formation and validity, and our guide to commercial agreements in Bangladesh covers deal architecture across contract types. This guide concentrates on goods contracts.

Conditions, warranties and the default terms

The Sale of Goods Act divides terms into conditions, whose breach allows the buyer to reject the goods, and warranties, whose breach gives only damages. Section 13 treats a breached condition as a warranty in some situations, notably once the buyer has accepted the goods. Sections 14 to 17 imply terms on title, description, quality or fitness and sale by sample, and section 62 allows the parties to exclude or vary them by express agreement, course of dealing or usage.[2] Every supply agreement should say which implied conditions survive and what replaces those that do not.

Core clauses in a supply agreement Bangladesh businesses should negotiate

Most supply disputes trace back to five clauses: quantity, quality, delivery, price and force majeure. Each interacts with a statutory default that should be adopted, adjusted or excluded deliberately.

Quantity, forecasts and take-or-pay

Long-term arrangements usually combine non-binding forecasts with binding purchase orders. The agreement should say when a forecast becomes firm, whether the buyer must take a minimum volume and whether a shortfall is paid for anyway, a take-or-pay obligation common in energy and commodities. Otherwise, section 37 governs delivery of the wrong quantity, and section 38 provides that a buyer is not bound to accept delivery by instalments unless agreed.[2]

Quality, specifications and inspection

Specifications belong in a schedule that is measurable and tied to a test method, an inspection point and a time limit for complaints. Section 41 gives the buyer a reasonable opportunity to examine goods, and section 42 treats goods as accepted when the buyer intimates acceptance, acts inconsistently with the seller's ownership or keeps them beyond a reasonable time without rejecting them.[2] A clause fixing the place, method and notification window prevents arguments about acceptance by silence.

Delivery, time and risk

Under section 11, stipulations as to time of payment are not of the essence unless the contract shows otherwise; whether other time stipulations are depends on the terms.[2] If late delivery should allow termination, say that time is of the essence for delivery. Section 26 provides that risk passes with property unless otherwise agreed, and section 39 treats delivery to a carrier as delivery to the buyer in the ordinary case.[2] For cross-border shipments an Incoterms rule will usually override these defaults.

Price, price adjustment and tax changes

Section 9 allows the price to be fixed by the contract, in an agreed manner or by the course of dealing, failing which the buyer pays a reasonable price.[2] In multi-year supply a fixed price is rarely realistic. Index-linked formulas, pass-throughs and currency bands all work if the mechanism is certain enough to survive section 29 of the Contract Act, which voids agreements whose meaning is not certain or capable of being made certain.[1] Section 64A of the Sale of Goods Act also adjusts the price for increases or decreases in duty or tax imposed after the contract is made, unless otherwise agreed.[2]

Force majeure and frustration

The Contract Act has no force majeure provision, so relief for supervening events must be created by contract, typically as a contingent arrangement within section 32. Absent a clause, the fallback is section 56: a contract to do an act that becomes impossible or unlawful after it is made becomes void.[1] Frustration is applied narrowly, and higher costs or a supplier's own supply-chain failure will rarely qualify. A good clause lists the qualifying events, requires prompt notice and mitigation, suspends obligations for a defined period and then allows termination.

Liability caps and liquidated damages

Section 74 of the Contract Act limits recovery under a clause naming a sum payable on breach to reasonable compensation not exceeding that sum, whether or not actual loss is proved.[1] Delay liquidated damages are still worth including, because they fix a ceiling and ease proof, but the rate should be a genuine pre-estimate. Pair them with an overall cap, an exclusion of indirect loss and a statement of whether they are the buyer's sole remedy for delay.

Supply chain, SCM and procurement-type supply contracts

Supply chain management relies on layered contracts rather than one bilateral agreement, and each supply agreement Bangladesh manufacturers sign sits between upstream vendors and downstream customers on different terms.

Framework agreements and back-to-back terms

The most common SCM agreement framework is a master supply agreement with call-off purchase orders. The master agreement sets the legal terms; each order fixes quantity, date and price within the agreed mechanism. State an order of precedence so that pre-printed terms on an order or acknowledgement cannot override the master agreement, and say when an order becomes binding, because the Contract Act requires acceptance to be communicated.[1] Then align caps, force majeure and dispute clauses up and down the chain so liability passes back to the vendor that caused it.

Supplying the government

Procurement-type supply contracts with public bodies sit under a separate regime. The Bangladesh Public Procurement Authority issued the Public Procurement Rules 2025 on 28 September 2025, replacing the 2008 rules. They make electronic government procurement compulsory for all public agencies, require disclosure of the beneficial owner of contract awardees, expand framework agreements and negotiation, and provide for a debarment board.[12] Public contracts use standard documents, so the focus shifts to the tender and performance security.

Distribution agreements and dealer agreements

Distribution is where a supply agreement Bangladesh suppliers sign most often turns into a long-term relationship. A distribution agreement appoints a business to buy goods and resell them within a territory or channel; a dealer agreement is the same model at a smaller scale, often with stricter brand and pricing controls. The Commercial Courts Act 2026 lists distribution and licensing agreements as commercial disputes.[9]

Key clauses in a distribution agreement

• Appointment and territory: exclusive, sole or non-exclusive, with territory and channels defined precisely.
• Minimum purchase targets: linked to exclusivity, with a cure period before conversion or termination.
• Supply terms: ordering, pricing, delivery, payment security and price-list changes.
• Brand and registrations: trade mark use, marketing, after-sales service and who holds product registrations.
• Exit: notice periods, termination for cause, and the fate of stock, registrations and receivables.

Exclusivity and the Competition Act 2012

Section 15(1) of the Competition Act 2012 prohibits agreements relating to the production, supply, distribution, storage or acquisition of goods or services that cause or are likely to cause an adverse effect on competition. Section 15(3) deems five arrangements anti-competitive if they have that effect: tie-ins, exclusive supply agreements, exclusive distribution agreements that limit supply or allocate areas or markets, refusals to deal, and resale price maintenance unless lower resale prices are clearly permitted.[4]

For a distribution agreement, section 15(4) matters: it saves reasonable conditions protecting intellectual property rights and agreements relating exclusively to exports from Bangladesh.[4] Exclusivity in a distribution agreement is therefore not automatically unlawful; the test is effect, and a supplier with modest share appointing an exclusive distributor for one area is in a different position from a dominant brand locking up every outlet. Section 16 separately prohibits abuse of dominance, including unfair or discriminatory conditions of sale.[4] Our guide to competition law in Bangladesh covers enforcement.

Non-compete clauses, termination and compensation

Section 27 of the Contract Act voids agreements restraining anyone from a lawful trade or business, with a narrow saving for the seller of goodwill.[1] A covenant not to handle competing products during an exclusive appointment is generally part of the bargain; a post-termination non-compete is exposed. There is no distributor-protection statute. A distributor terminated without the contractual notice can claim damages under section 73, generally measured by the profit lost during the notice it should have received rather than the value of the business it built.[1] Deal expressly with stock buy-back and transfer of registrations. For brand-led systems, see our guide to franchising in Bangladesh.

Supply and distribution across SAARC and MENA

Bangladeshi exporters often appoint distributors in South Asia and the Gulf. Several Gulf jurisdictions run commercial agency registration regimes that can protect a registered local agent or distributor on termination, so take local advice before signing. Regional trade preferences depend on rules-of-origin certificates, which should be the supplier's obligation, and payments must fit Bangladesh Bank's foreign exchange rules, covered in our guides to letters of credit and telegraphic transfers and international trade law.

Agency agreements under the Contract Act 1872

Sections 182 to 238 of the Contract Act are a complete code of agency. Section 182 defines an agent as a person employed to do any act for another or to represent another in dealings with third persons.[1] Commercial agents, sales representatives and indenting agents all fall within it, whatever the contract calls them.

Authority, duties and liability to third parties

Section 186 provides that authority may be express or implied, so define whether the agent may sign contracts, accept payments or appoint sub-agents. Sections 211 and 212 require the agent to follow the principal's directions or the custom of the business, with the usual skill and diligence, and section 221 gives the agent a lien for commission and expenses unless excluded.[1] Under section 226, contracts made through an agent bind the principal as if made personally; under section 230, absent contrary agreement, the agent can neither enforce nor be bound by them; and section 237 binds a principal that induces third parties to believe unauthorised acts were authorised.[1]

Termination and compensation

Section 201 ends an agency by revocation, renunciation, completion of the business, the death or unsoundness of mind of either party or the principal's insolvency. Section 202 prevents termination to the agent's prejudice where it has an interest in the subject matter. Section 205 requires compensation where an agency agreed for a period is revoked or renounced early without sufficient cause, and section 206 requires reasonable notice, failing which resulting damage must be made good.[1] There is no goodwill indemnity of the kind some foreign laws give, so fix the notice period, define sufficient cause and state how commission on pre-termination orders is paid.

The table below compares the three structures. On a phone, scroll it sideways.

Sale and purchase agreements for goods and commodities

A sale and purchase agreement turns on when property and risk pass.

Property, title and risk

Under section 18 no property passes in unascertained goods until they are ascertained, and under section 19 property in specific or ascertained goods passes when the parties intend. Section 23 governs appropriation of unascertained goods, and section 25 lets the seller reserve a right of disposal, the statutory basis for retention of title.[2] Section 14 implies a condition that the seller has the right to sell, and section 27 provides, subject to exceptions, that a buyer from a non-owner takes no better title than the seller had.[2]

Commodity and LNG sale and purchase agreements

Commodity agreements add load-port inspection, benchmark pricing, laytime and demurrage. LNG is the clearest Bangladeshi example. Petrobangla holds long-term LNG contracts with Qatar and Oman's OQ Trading, and in June 2023 signed a further agreement with OQ Trading for 0.25 to 1.5 million tonnes a year from January 2026 until 2035, alongside spot purchases since 2020.[14] Such agreements are typically governed by English law with arbitration abroad.

International sales contracts: governing law, CISG and Incoterms

An international sales contract must answer a question domestic contracts never face: which country's law governs it.

Why the CISG does not apply automatically

The UN Convention on Contracts for the International Sale of Goods has 97 parties, including China, the United States, Viet Nam and Singapore. Bangladesh is not among them, and nor is India.[11] A Bangladeshi party will rarely be bound by it by default, though it can still apply by choice, or where the forum's conflict rules point to the law of a contracting state that has not excluded that route. Our analysis of the WTO impact on Bangladesh trade covers the Convention and the wider trade context.

Governing law, forum and Incoterms

Choose the governing law expressly. Bangladeshi law suits contracts performed mainly in Bangladesh; English law dominates commodity, energy and shipping contracts. A foreign law must be proved as a fact in a Bangladeshi court, as our guide to enforcing foreign law in Bangladesh courts explains. Incoterms allocate delivery, risk and cost but not title, payment or remedies, and in Bangladesh the choice is shaped by foreign exchange and insurance rules covered in our guide to Incoterms in Bangladesh.

How to draft a contract in Bangladesh: structure and formalities

A supply agreement Bangladesh courts will enforce without argument is one that is clearly structured, properly stamped, properly executed and capable of being proved.

Structure that works

1. Parties and authority: full legal names and registration numbers, with board or power-of-attorney authority.
2. Definitions: including an order of precedence between terms, schedules and purchase orders.
3. Commercial core: scope, quantity, specifications, delivery, acceptance, price and payment.
4. Risk allocation: warranties, implied-term exclusions, caps, liquidated damages, indemnities, insurance and force majeure.
5. Relationship and exit: exclusivity, intellectual property, confidentiality, term and termination.
6. Boilerplate that matters: notices, assignment, variation in writing, governing law and dispute resolution.

Stamp duty and execution

Instruments chargeable under Schedule I of the Stamp Act 1899 and executed in Bangladesh must be stamped before or at execution under section 17; those executed only abroad may be stamped within three months of first receipt in Bangladesh under section 18.[5] Under section 35, an unstamped instrument cannot be admitted in evidence or acted upon until the duty is paid with a penalty of up to ten times the deficit, and section 33 requires it to be impounded.[5] Rates change through the annual Finance Act, so confirm the schedule entry before signing, and have authorised signatories sign and initial each page.

Electronic signatures

Sections 6 and 7 of the ICT Act 2006 give legal recognition to electronic records and signatures.[6] The Evidence (Amendment) Act 2022 added section 65B on computer output and section 85A, under which a court presumes that a digital record purporting to be an agreement bearing the parties' digital signatures was concluded by affixing them.[7] That presumption attaches to certificate-based digital signatures, not a scanned signature or typed name, and stamping obligations still apply. See our guide to digital signature law in Bangladesh.

A commercial contract review checklist

• Implied conditions kept, varied or excluded, and replaced with what?
• A price mechanism certain enough for section 29, with tax and currency risk allocated?
• Exclusivity and resale price terms tested under section 15 of the Competition Act, and no post-term restraint caught by section 27?
• A dispute clause enforceable where the counterparty's assets are, and a stamped, provable instrument?

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Remedies for failure to supply goods

When a supplier fails to deliver, delivers late or delivers non-conforming goods, the buyer's remedies come from both statutes, and some are lost by delay or by conduct amounting to acceptance.

Rejection and damages

Where the seller wrongfully neglects or refuses to deliver, section 57 gives the buyer damages for non-delivery.[2] They are assessed under section 73 of the Contract Act: loss arising naturally in the usual course of things, or that the parties knew would be likely to result, excluding remote and indirect loss, and taking account of the means available to remedy the inconvenience, the root of the duty to mitigate by buying replacement goods.[1] For breach of a condition the buyer may reject; for breach of warranty, section 59 limits the buyer to a price reduction or damages.[2]

Specific performance and injunctions

Section 58 of the Sale of Goods Act allows the court to order delivery of specific or ascertained goods without giving the seller the option to pay damages.[2] The Specific Relief Act 1877 sets out when specific performance is available in section 12 and when it is not in section 21, including where money compensation is adequate, and section 57 allows an injunction to enforce a negative covenant such as an exclusive supply commitment.[3] Specific performance is realistic for unique goods or goods with no available market, and article 113 of the Limitation Act allows only one year to sue.[8]

Consumer remedies and the seller's exposure

Where the buyer is a consumer, section 45 of the Consumer Rights Protection Act 2009 makes failure to sell or deliver a promised product or service after payment an offence punishable with up to one year's imprisonment, a fine of up to Tk 50,000, or both, and a complainant whose complaint is proved receives 25 per cent of the fine realised.[13] Online sellers carry further obligations covered in our guide to e-commerce law in Bangladesh. Criminal complaints against a supplier that keeps an advance are rarely the fastest route to money. For the substantive law, see breach of contract in Bangladesh.

Supplier payment disputes and proforma invoice claims

Non-payment is the mirror image of non-delivery, and the most common supply agreement Bangladesh dispute. The Sale of Goods Act gives an unpaid supplier tools that do not depend on going to court.

The unpaid seller's rights, the price and limitation

Section 46 gives an unpaid seller a lien on goods in its possession, a right of stoppage in transit if the buyer becomes insolvent and a limited right of resale, and section 54 confirms that exercising them does not by itself rescind the contract.[2] Section 55 allows a suit for the price where property has passed or the price is payable on a fixed day and section 61 preserves claims to interest.[2] The limitation period is three years from delivery, or from the end of an agreed credit period, under articles 52 and 53 of the Limitation Act.[8] Our guide to contract enforcement in Bangladesh explains how acknowledgements and part payments restart the clock.

Proforma invoice disputes

In import and export trade a signed proforma invoice is often the only contract. It fixes goods, price, Incoterms rule and payment method but says nothing about quality, delay or disputes, so the court fills the gaps from the Sale of Goods Act and the correspondence. Attach short standard terms with a governing law and forum, and keep the emails that fixed specifications and dates. Our Incoterms guide treats proforma invoice disputes in more depth, and our note on letter of credit disputes covers documentary payment failures.

Legal notice, money suit and the Commercial Court

The usual sequence is a legal notice, a short negotiation window and then a money suit or arbitration. Sale of goods, distribution, agency and import and export disputes are listed categories under the Commercial Courts Act 2026, which has no monetary threshold, allows summary judgment, requires the final hearing to finish within ninety days of the date fixed and, unless the judgment says otherwise, gives post-judgment interest at 2 per cent a year above the Bangladesh Bank rate.[9] See our guide to the Commercial Courts Act, and our note on cheque dishonour notices where a payment cheque has bounced.

International commercial disputes: jurisdiction and enforcement

Cross-border disputes turn on one question best answered at signature: will the result be enforceable where the losing party's assets are?

Arbitration as the default

Bangladesh acceded to the New York Convention on 6 May 1992, and under section 45 of the Arbitration Act 2001 a foreign award is enforced by execution through the District Court, Dhaka, with appeals to the High Court Division.[10] Where a party sues in Bangladesh despite a foreign-seated arbitration clause, the High Court Division has held that the referral provision in section 10 does not apply to foreign arbitration but that the court should stay local proceedings under section 151 of the Code of Civil Procedure.[10] See our guides to the arbitration clause and foreign arbitral award enforcement.

Foreign judgments and forum choice

Foreign court judgments are harder to use than awards: decrees from a small group of notified reciprocating territories can be executed directly, while others generally need a fresh suit on the judgment. In most cross-border supply contracts, arbitration with a stated seat, rules, language and governing law is the realistic choice.

Mistakes that undermine a supply agreement Bangladesh claim

• Trading on purchase orders alone: every gap is filled by Sale of Goods Act defaults.
• Penalty-style liquidated damages: an inflated rate is cut back to reasonable compensation under section 74.[1]
• Unchecked exclusivity: territory and resale price clauses that ignore section 15 of the Competition Act invite challenge.[4]
• Unstamped agreements: an instrument inadmissible without a penalty weakens a claim at the worst moment.[5]
• Waiting too long: limitation runs while the parties negotiate.[8]

What to watch in 2026 and beyond

Three developments matter. The Commercial Courts are moving to full operation, and pre-suit mediation rules will decide how quickly a claim reaches a hearing.[9] The Public Procurement Rules 2025 are bedding in, with compulsory e-GP and beneficial ownership disclosure changing how suppliers bid for public contracts.[12] And LDC graduation will push exporters to revisit pricing, origin and dispute clauses in their international contracts.

Every supply agreement Bangladesh businesses sign today should anticipate those changes with a flexible price mechanism, a clear force majeure clause and a dispute route that produces an enforceable result. TRW's corporate and commercial advisory practice drafts and negotiates supply, distribution, agency and sale agreements, our customs and trade compliance practice advises on cross-border sales, and our international arbitration practice acts when disputes arise. To discuss a contract or dispute, contact TRW.

Frequently asked questions

Which law governs a supply agreement in Bangladesh?

The Contract Act 1872 governs formation, performance, damages and agency, and the Sale of Goods Act 1930 supplies default terms on quality, delivery, risk, title and price unless the contract excludes them.[1] [2]

What is the difference between a distribution agreement and an agency agreement?

A distributor buys and resells on its own account, taking title and credit risk. An agent makes contracts on the principal's behalf without owning the goods, and the principal is bound under section 226 of the Contract Act.[1]

Is exclusive distribution legal in Bangladesh?

It can be. Section 15 of the Competition Act 2012 deems exclusive distribution and exclusive supply anti-competitive only where they adversely affect competition, so market power and scope decide the answer.[4]

Does a terminated agent or distributor get compensation?

There is no statutory goodwill indemnity. A fixed-term agent revoked early without sufficient cause may claim under section 205 of the Contract Act, and reasonable notice is required under section 206. A distributor's rights depend on its contract.[1]

Does the CISG apply to sales contracts with Bangladeshi companies?

Not automatically. Bangladesh is not one of the CISG's 97 parties, so choose the governing law expressly.[11]

Does a commercial contract need stamp duty in Bangladesh?

Chargeable agreements must be stamped at or before execution in Bangladesh, or within three months of first receipt if executed abroad. An unstamped instrument is inadmissible until duty and a penalty are paid.[5]

Can a supply agreement be signed electronically?

Yes. The ICT Act 2006 recognises electronic records and signatures, and the Evidence Act presumes a digitally signed agreement was concluded by its signatories. Stamping still applies.[6] [7]

What can I do if a supplier fails to deliver goods?

Claim damages for non-delivery under section 57 of the Sale of Goods Act, measured under section 73 of the Contract Act, and for specific or ascertained goods consider specific performance under section 58.[1] [2]

How long does a supplier have to sue for an unpaid invoice?

Three years from delivery, or from the end of an agreed credit period, under articles 52 and 53 of the Limitation Act 1908.[8]

Can a foreign arbitral award against a Bangladeshi buyer be enforced?

Yes. Bangladesh acceded to the New York Convention in 1992, and foreign awards are enforced through the District Court, Dhaka, under section 45 of the Arbitration Act 2001.[10]