The nature of a supply contract under the just in time modality
Judgement of the Civil Chamber of the Supreme Court, 5 October 2016
Case: Whether the withdrawal and payment of warehouse stock represents a fundamental or natural obligation of the mentioned contract, tied to a contractual compliance action; or, on the contrary, should this obligation be specifically agreed upon by the parties, so that, in the absence of the mentioned agreement, this can only be agreed on in court as an obligation to pay compensation for any damages and harm caused.
The Chamber concluded that the just in time supply contract is defined as being a supply contract modality, functionally linked to the manufacturing system and marketing of the product, in such a way that the supplier assumes the obligation to deliver goods and, on occasions, perform related services, in accordance with the request of the party supplied within a short period of time as established by the contract or by the sector business usage.
Undoubtedly, in order to comply with this obligation, the supplier must maintain a stock of finished goods and sufficient raw materials in order to deal with a reasonable request for goods from the party to be supplied. Therefore, from this functional perspective, it must be noted that an agreement just in time necessarily implies that the supplier has ensured the availability of the mentioned stock and bears the costs resulting from this, which constitutes a natural obligation of this atypical contract.