This Precedent drop ship agreement is for a transaction involving a supplier (in this case the manufacturer of the goods) and its customer (in this case, a retail merchant) . It assumes that the merchant will separately be trading directly with consumers, or the end-users of the goods. This Precedent has been drafted with a bias in favour of the customer. Drop shipping can arise at different points in the supply chain eg manufacturer to distributor, distributor to merchant or manufacturer to merchant. A drop ship agreement is an agreement for the supply of goods on terms which allow a merchant to operate free from stock holding constraints by leaving the physical stock holding and supply arrangements to be managed by a third party, in this case the supplier or manufacturer of the goods.