Procurement Contract Assessment Example
Each of the client's supply Contract Provision are rated on a four point scale:
1 - World Class
2 - Changes Recommended
3 - No Provision
4 - Immediate Surgery Recommended
(Suggested language, where available is hyper linked)
Percentage Business Guarantees – Terms and pricing should be predicated on supplier being granted a minimum percentage of available business, not absolute dollar or unit volumes.
Best Pricing – Achieve Most Favored Customer status guaranteeing best price offered at any volume.
Formula Price Reductions – Agreement should provide for price reductions (or rebates) for business levels materially higher than initial expectations.
Existing Orders – Terms of contract should be applicable to any future deliveries, whether on existing orders or new orders.
Demand-Pull Scheduling (AKA Just-in-Time) – Should provide for weekly releases with 1-week lead-time.
Schedule Sharing – Supplier should be provided with 12 month, non-binding forecast and inventory information on a weekly basis.
Upside Guarantees – Agreement should include explicit obligations for supplier to support short-term schedule increases.
On-Time Delivery – Supplier should be required to deliver on time (within a reasonable tolerance) to schedule dates.
Material Liability – Liability upon termination, cancellation, or engineering change should be limited to no longer than the supplier’s factory cycle time plus shipping. Exceptions can be taken for unique materials, limited to the above parameters at that level.
Cycle/Lead Time Reductions – If lead times are longer than one week initially, there should be an explicit roadmap to achieving such over the term of the agreement.
Consignment Agreement – Requires supplier to consign material to BUYER factory until consumed in production.
Best Terms – Should be Most Favored Customer, guaranteeing best terms offered.
Discount Terms – Preferred terms are 2% net 10 days.
Packaging – Packaging should be in conformance with a BUYER specification that facilitates subsequent storage and handling.
Lot Sizing – Supplier should be required to deliver in lots that are consistent with production usage and can be easily changed.
Freight – Supplier should be required to pay freight to BUYER’s dock.
Freight Account – If BUYER is to pay shipping, it is preferable to have the charges made to BUYER’s account, thus increasing BUYER’s volume-based discounts.
Actual Freight Costs – In those cases where BUYER is to pay shipping costs on the supplier’s account, they should be actual costs after any discounts provided by the carrier to the supplier
Documents (Bills of Lading, etc.) – Provision of all necessary documents should be delineated in the contract.
Responsibility for Tooling Maintenance – Supplier should be required to maintain any BUYER tooling, keeping appropriate records and reporting status on a regular basis.
EDI Support – Supplier should support EDI provision of requirements. Additionally, in the cases where supplier’s e-commerce capabilities are superior to BUYER’s, supplier should assist the conversion/upgrade of BUYER’s capability.
Partner/Affiliate Reciprocity – All provisions of the agreement should be made available to BUYER affiliates and manufacturing partners.
No-Questions RMA – BUYER should have the right to return defect product without waiting for an RMA.
Warranty – Supplier should warranty materials and workmanship for a minimum of 3 years.
Termination Clause – Either party should have the right to terminate if the other party becomes insolvent.
Default Cancellation – Either party should have the right to terminate in the event of uncured breach of contract.
Continuity of Supply – Supplier should be required to supply after termination for the life of the product.
Performance Penalties – Supplier should be required to pay penalties for late delivery and defects (per delivery)
Force Majeure – Circumstances beyond the reasonable control of either party should constitute grounds for suspension of obligations.
Time-of-the-Essence – Timely performance of the duties of either party is an ultimate requirement of the contract.
Intellectual Property – BUYER should have rights to any IP created as a result of the performance of the agreement. Also the performance of the agreement should not grant any rights to the supplier to any IP of BUYER’s. Mutual indemnification.
Confidentiality – Both parties should be required to hold the confidential information of the other in confidence.
Explicit right to sub-license - Supplier's technology should be provided with explicit grant to sub-license to BUYER customers.
Choice of Governing Law - Customer's state law should govern all disputes.
Workers' Compensation – Each party should be required to retain adequate insurance for Worker’s compensation
Compliance with Existing Law – Each party should be required to comply with all laws in the performance of the agreement.
Assignability – BUYER should have the right to approve any assignment of the responsibilities of the supplier
Change of Control – BUYER should have the right to terminate in the event of a material change of control of the supplier.
Configuration Control – The supplier should be required to seek written approval from BUYER for any material change of process or manufacturing site.
First Article Compliance – Supplier should be required to submit first articles of any new or modified product.
Set-offs – Any financial obligations of the supplier should be offset from existing invoices.
No Bill-Backs – The supplier should not have the right to increase prices or bill BUYER for reductions from expected volumes.
Import Offsets – BUYER should have the right to offset trade balances for the purposes of import duty reduction.
Acceptance of Title – Title should not pass to BUYER until product is delivered to BUYER’s dock.
Severability – Any clause of the agreement should be severable in the event of invalidity.
Note that DeHart Consulting, Inc. does not provide legal services and that the information provided herein is opinion based upon our experience in dealing with similar matters. This is not intended to be a legal review and BUYER’s legal counsel should review the suggested language contained herein prior to its use. Finally, the suggested language, in many cases, embodies one of several methods to achieve the desired result.
BUYER warrants that during the term of this Agreement, and subject to SUPPLIER’s compliance with the terms of this Agreement, BUYER will purchase Products from SUPPLIER in an amount that is equal to or greater than _______ percent (___%) of BUYER’s total purchases of the Products from all suppliers.
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Inspection and Warranty:
All items (including raw materials, components, sub-assemblies and end SUPPLIER Products) may be inspected and tested by BUYER at all reasonable times and places before, during and after manufacture, delivery and installation. If such items are defective in materials or workmanship, or do not conform to the requirements of the Order, BUYER will have the right to reject it or require that it be corrected or replaced promptly with satisfactory materials or workmanship. BUYER retains the right to return any rejected Product to SUPPLIER at SUPPLIER’s expense. BUYER will not be liable for any reduction in value of samples used in connection with any inspection or test performed by BUYER. SUPPLIER will provide without charge facilities and assistance for the safety and convenience of inspectors making inspections or tests on SUPPLIER's premises. SUPPLIER further agrees to maintain adequate authenticated inspection and test documents that relate to Products and Services delivered under the Order. Such records will be retained for at least 3 years after completion of the transaction contemplated by the Order, and made available to BUYER upon request. SUPPLIER agrees to supply BUYER with inspection and test reports, affidavits, certifications or any other documents as may reasonably be requested.
SUPPLIER warrants the Products to be free from defects in workmanship and materials; to be new and of the most suitable grade of their respective kinds; to conform to applicable specifications, drawings, samples or other descriptions given, including those set forth or referenced in the Order or SUPPLIER's sales literature; to be of merchantable quality, and if of SUPPLIER's design, to be suitable for the purpose intended, to meet all of the performance requirements and to be free from defects in design. SUPPLIER further warrants that the Service and Products provided to BUYER will, at no additional cost to BUYER, experience no reduction or change in performance, capability, characteristics, functionality, and delivery, regardless of whether same occurs on, during, or after January 1, 2000, such provision specifically to include exact date data century recognition, values, and compatibility. These warranties will run to BUYER, its successors, assigns and the users of the Products and Services provided under the Order. These express warranties will be in addition to any standard warranty or guaranty of SUPPLIER, will be construed as conditions as well as warranties and will not be exclusive. SUPPLIER agrees to replace or correct any Product not conforming to this warranty when notified by BUYER within the warranty period stated on the face of the Order, and if no warranty period is stated for three years, after final acceptance. If SUPPLIER’s Products are found to be defective, SUPPLIER will reimburse BUYER for the costs associated with handling the rejected material and administering the return. If SUPPLIER, upon notice of defect, fails to correct or replace the Products when required by BUYER, BUYER may do so without further notice and SUPPLIER will promptly reimburse BUYER for all related costs. No inspection, test or approval of any kind, including approval of designs, will affect SUPPLIER's obligation under this paragraph. Products that have been rejected will not later be tendered for acceptance unless the former rejection and correction are identified in connection with such tender. Replaced or repaired Products will be subject to the provisions of this warranty to the same extent as the original Products, and the warranty will run from the last delivery and installation date for the relevant repaired or replaced Product.
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For the term of the Agreement, the price for each of the SUPPLIER Products supplied under this Agreement shall be as specified in Exhibit A attached to this Agreement, FOB BUYER’s receiving dock.
SUPPLIER warrants that the prices specified in the Order do not and will not at any time exceed the prices charged for the same or substantially similar Products sold or in any way made available to any other purchaser;
SUPPLIER warrants that prices offered to BUYER during the term of this Agreement are based on the lowest costs offered to any of SUPPLIER’s customers for the same or substantially similar materials sold or in any way made available to any other purchaser.
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Formula Price Reductions:
This agreement includes volume-based rebates. The following rebates will be provided on a quarterly basis for the quantity of SUPPLIER Products delivered during such calendar quarter, based on the following schedule:
Quarterly Quantity Threshold Rebate Percentage
Exhibit A Estimated Quantity/4 x 1.2 x%/Unit
Exhibit A Estimated Quantity/4 x 1.3 y%/Unit
Exhibit A Estimated Quantity/4 x 1.4 z%/Unit
Exhibit A Estimated Quantity/4 x 1.5 a%/Unit
The above rebates will be calculated in the first month of each calendar quarter, for the preceding quarter and paid by the end of that month directly to BUYER.
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Orders existing with SUPPLIER as of the effective date of this Agreement, from BUYER or any Manufacturing Partner, will be converted to the terms and conditions, including pricing, set forth in this Agreement for all future deliveries.
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Demand-Pull Scheduling (AKA Just-in-time):
As used herein, “Notification Period” will mean that period of time from when BUYER initiates a change and when it must be implemented by SUPPLIER and will be specified on Blanket Orders by BUYER on the face of the Order.
As used herein, “Inventory Holding Period” will mean that period of time from when BUYER becomes liable for Product as specified in Section (d) below and when the Product must be released for delivery by BUYER.
Forecast and Release for Blanket Order Agreements. This clause is applicable only to Blanket Orders, as specified on the face of the Order.
(a) BUYER, or BUYER’s Manufacturing Partner, will, using reasonable efforts, provide SUPPLIER on a weekly basis, (but in no event less than monthly), a written Forecast and Release (the “SURF Report”), which will contain a rolling forecast of anticipated Product needs. The SURF Report will include a weekly forecast for the first thirteen (13) weeks of such forecast, and five (5) week forecasts thereafter. BUYER will report any significant changes to the forecast to SUPPLIER without delay. No such forecast will be binding on BUYER except as defined in Section (b), (c), and (d).
(b) The SURF Report will also contain a firm and binding commitment as to quantity of Product (the “Release”), provided SUPPLIER confirms within forty-eight (48) hours its ability to deliver such Release on the date specified on the SURF Report. In no event will BUYER be committed to volumes in excess of those confirmed by SUPPLIER.
(c) SUPPLIER will accept, in accordance with these Terms and Conditions, any Release issued hereunder. These Terms and Conditions will continue to apply to all Releases issued under this Order until all obligations herein are performed. SUPPLIER agrees that BUYER may increase the quantity contained in a Release by up to 100% on notice to SUPPLIER, such notice not to be less than the Notification Period and SUPPLIER agrees to deliver the revised quantity in accordance with the requested delivery schedule.
(d) BUYER will be liable for the cost of all Products built by SUPPLIER in support of the SURF Report, limited to BUYER’s requirements within the Notification Period. In the event that Product is forecasted within the Notification Period and BUYER does not release delivery of Products within the Inventory Holding Period from the date that the Product is initially forecasted, SUPPLIER may ship and invoice and BUYER will pay on normal terms for the Products.
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On Time Delivery:
SUPPLIER shall fabricate,inspect, test, and deliver Products to BUYER in such quantities and times as to achieve 100% on time delivery (+0 and -3 days) to the dates specified in the Releases.
(a) BUYER may terminate the Order, in whole or in part, at any time upon notice of 10 days for its own convenience. Upon receipt by SUPPLIER of said notice, SUPPLIER will stop work to the extent specified by BUYER, and will submit its written termination claim, if any, within 15 days. BUYER's entire liability, and SUPPLIER's sole remedy, in the event of such termination will be limited to the following:
(i) The price of the delivered and accepted Products for which SUPPLIER has not been paid, and finished goods in inventory to the extent such inventory is specifically required under the Order; and
(ii) The actual cost to SUPPLIER of raw materials (excluding materials that can be used by SUPPLIER for other customers) that SUPPLIER has accepted or committed to accept from its suppliers for use in manufacturing items released under then existing Orders for delivery within the Notification Period after the date of termination.
(b) SUPPLIER will use its best efforts to minimize all such termination liability of BUYER. Upon payments of such prices and costs by BUYER, title to all SUPPLIER Products, materials, supplies and other items in respect of which BUYER has made such payments will pass to BUYER and will be delivered F.O.B. as specified on the Order.
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Cycle/Lead Time Reductions:
Notification Period to be specified in an exhibit to the agreement and declining as a function of time toward the target
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SUPPLIER agrees to provide upon request but not sooner than three months after the execution of this agreement a SUPPLIER-owned safety stock at BUYER of any or all items covered by this Agreement, having a safety stock quantity for each item equal to the sum of the first four weeks of the Forecast and Release schedule for said item. For such safety stock, ownership will transfer from SUPPLIER to BUYER as items are withdrawn from said safety stock for production use. For such safety stock, BUYER will report withdrawals to SUPPLIER in a mutually acceptable manner (for example by bar code scanning and EDI data transfer) and upon receipt of such information SUPPLIER will submit invoices to BUYER for payment in accordance with the terms of this Agreement. Neither BUYER nor its insurer(s) shall accept any responsibility for loss of or damage to said safety stock due to circumstances beyond BUYER’s control.
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SUPPLIER and BUYER agree to a payment discount of 2% for net payment within 10 days from the date of invoice and payment terms of Net 45 days from the date of invoice, which shall be no sooner than the date of delivery of the Products.
Currency will be in US. Dollars.
SUPPLIER warrants that the payment terms specified in the Order are not and will not at any time be less favorable than those allowed for the same or substantially similar Products sold or in any way made available to any other purchaser.
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Packaging and Shipment:
a) All Products must be packed in accordance with sound commercial practices and to obtain the lowest transportation rates. Such packing must comply with the requirements of the Order and requirements of common carriers.
b) SUPPLIER will mark each container with necessary lifting, loading, shipping and storage information, including the BUYER Order number, date of shipment, and name and address of consignor and consignee.
c) Packages should be constructed for stocking. Packages weighing over 50 pounds must be packaged for handling with a mechanical device.
d) Shipments will be made in quantities and units specified by BUYER, and otherwise in such quantities and units that will result in the lowest transportation rate. Transportation insurance for loss and damage will not be purchased unless specifically directed by BUYER. SUPPLIER will use BUYER’s United Parcel or Federal Express account number for transportation by these carriers. Transportation costs resulting from failure to comply with the provisions of this paragraph will be debited to SUPPLIER's account.
(e) A complete packing list with applicable dates and numbers must be included with all shipments. SUPPLIER will pay all premium transportation charges.
(f) All transportation charges prepaid by SUPPLIER, and for which BUYER is by agreement responsible, must appear on SUPPLIER's invoice and be supported by a paid freight bill or equivalent.
(g) BUYER’s Order number and the Order date and the relevant part number, if any, must appear on all invoices, packing lists, bills of lading, package, container or envelope used in connection with each shipment made pursuant to the Order.
(h) Bills of lading, if applicable, will be mailed to the destination address shown on the face of the Order, or to consignee, on the day shipment is made.
Changes: BUYER may at any time upon notice of ten (10) days, or in the case of a Blanket Order not to be less than the Notification Period, make changes within the general scope of the Order or SURF Report, including but not limited to increase in the quantity of an Order or Release by up to 100%. Any such changes may involve any one or more of the following: drawings, designs or specifications; method of shipment or packaging, inspection standards, place of inspection, delivery or acceptance; the amount of BUYER consigned material; or any other requirements of the Order or otherwise. If any such change causes an increase or decrease in the cost of or the time required for performance of any part of the Products and Services under the Order, or affects any other provision of the Order, an equitable adjustment will be made in the Order price, delivery schedule, or both, and in such other provisions of the Order as may be affected. Any claim by SUPPLIER for adjustment under this paragraph must be made in writing within 15 days of SUPPLIER's receipt of the relevant change order. Where the cost of Products made obsolete or excess as a result of a change is included in SUPPLIER's claim for adjustment, BUYER will have the right to prescribe the manner of disposition of any such Product. Nothing herein will excuse SUPPLIER from proceeding with the Order as changed. The Order will not be deemed or construed to be modified, amended, rescinded, canceled or waived in whole or in part, except by a written change order signed by an authorized BUYER representative.
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Unless otherwise specified in the Order, all tooling and all other items required for the efficient performance of the Order and the transactions contemplated by the Order will be furnished by SUPPLIER, and will be maintained in good condition and replaced when necessary at SUPPLIER's expense. Title to all tooling materials, Products and other property furnished to SUPPLIER by BUYER or paid for by BUYER will be and remain with BUYER.
The title to all tools and computer programs purchased or manufactured specifically for this Agreement that are used in the production or the testing of Product(s) passes to MFG Co. prior to the time the tools and computer programs are used by Manufacturing Subcontractor. Additionally, MFG Co. is responsible for any taxes associated with said tooling and computer programs.
a) Any MFG Co. tooling/equipment furnished to Manufacturing Subcontractor or paid for by MFG Co. in connection with this Agreement shall:
i) Be clearly marked and remain the personal property of MFG Co.
ii) Be kept free of liens and encumbrances.
iii) Unless otherwise agreed, Manufacturing Subcontractor is responsible for the general maintenance of MFG Co. tooling/equipment.
b) Manufacturing Subcontractor shall hold MFG Co. property at its own risk and shall not modify the property without the written permission of MFG Co. Upon MFG Co.'s request, Manufacturing Subcontractor shall redeliver the property to MFG Co. in the same condition as originally received by Manufacturing Subcontractor with the exception of reasonable wear and tear, In the event the property is lost, damaged or destroyed, Manufacturing Subcontractor's liability for the property is limited to the book value of the property.
In the case of die cast tooling the following terms shall apply:
a) A log is to be kept on the performance of tool including: all repairs and maintenance with dates; all run dates and the completion dates of each run; and the total number of shots the tool has to date. This log shall be faxed to BUYER every thirty days regardless of tool status.
b) The tool is to be cleaned and polished when necessary. The tool shall be lubricated and inspected for lube build up, proper shut off, damage or wear after every run. All slides must be checked for galling and free movement.
c) Any bent or broken ejector pins shall be replaced when damage occurs.
d) All soldering conditions are to be handled immediately and monitored for this frequently in the prone areas.
e) One untrimmed shot, tagged with the date from every run shall be delivered to BUYER.
f) BUYER must approve any modifications to the tool.
g) The tool is to be cleaned and lubricated before storing and shall be stored indoors with a moisture protected barrier.
h) All spare parts are to be tagged and stored in a moisture-protected environment.
i) Allow the tool to reach a minimum of 400 degrees F before operation.
j) After every *30,000 shots on the tool, the tool is to be cleaned, full lubrication of the ejector system, cavities re-polished as needed and inspected for wear and damage.
(*Depending on run quantities, 30,000 shots is to be used as a guideline to maintain the tool and can be fit in with production runs.)
k) At approximately every 60,000 shots the tool shall be stress relieved along with the general maintenance routine. All costs associated with the stress relieve operation shall be quoted to BUYER for issuance of PO prior to stress relieve operation.
l) At 100,000 shots the tool is to be evaluated for rebuilding or replacing of inserts and other components of the tool. At this point BUYER has the option to apply the metallife process. This will depend on the condition of the tool and the expected quantities yet to run.
m) All new tooling is to have the MetalLife process applied after the initial run of approximately 30k shots. This will be quoted to BUYER for issuance of PO prior to applying the process
n) SUPPLIER is responsible for all repairs associated with normal routine maintenance such as broken ejector pins and core pins. BUYER will build spare parts and do total rebuilds.
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BUYER shall have the option to contract the services of one or more turnkey manufacturing subcontractors (the “Manufacturing Partner(s)”) for materials procurement to support production of BUYER products, including the procurement of SUPPLIER Products on behalf of BUYER under this Agreement. As such, SUPPLIER may receive purchase orders and release authorizations from BUYER’s Manufacturing Partner(s). All purchase orders and release authorizations issued by BUYER’s Manufacturing Partner(s), in addition to those issued directly by BUYER, shall be governed by the terms and conditions of this Agreement. BUYER will notify SUPPLIER in writing of its designation of Manufacturing Partner(s). BUYER initially designates Contract Co. as a Manufacturing Partner under this Agreement.
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Termination or Default Cancellation:
a) If either party fails to meet any one or more of the terms and conditions as stated in either this Agreement or the addenda, Manufacturing Subcontractor and MFG Co. agree to negotiate in good faith to resolve such default. If the defaulting party fails to cure such default or submit an acceptable written plan to resolve such default within thirty (30) days following notice of default, the nondefaulting party shall have the right to terminate this Agreement by furnishing the defaulting party with thirty (30) days written notice of termination.
b) This Agreement shall terminate upon written notice should either party; (i) enter into or file a petition, arraignment or proceeding seeking an order for relief under the federal bankruptcy laws of its respective jurisdiction and such petition, arraignment or proceeding is not dismissed within 60 days; (ii) enter into a receivership of any of its assets; or (iii) enter into a dissolution or liquidation of its assets or an assignment for the benefit of its creditors and the same remains undischarged for a period sixty (60) days.
c) The termination or expiration of this Agreement, except in accordance with Section 24, shall not affect or impair the rights and obligations of either party under any Purchase Order regarding the Products in existence prior to such termination or expiration.
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Continuity of Supply:
For a period of ten (10) years following the acceptance of this Order, SUPPLIER shall make available for sale to BUYER at its then current prices, Product, which shall include, without limitation, replacement product, spare parts for regular maintenance and repair which are fully backward compatible with the Product sold hereunder. SUPPLIER may, in order to discharge its obligations pursuant to this Section, substitute devices or material that are acceptable to BUYER's technical personnel, such acceptance shall not be unreasonably withheld provided that said substitution meets all the requirements of the Specifications. This obligation shall survive any termination of this Order. SUPPLIER may at any time cease to manufacture Product, provided, however, that SUPPLIER shall maintain a sufficient inventory of such discontinued Product to meet SUPPLIER's obligations hereunder. SUPPLIER shall notify BUYER of SUPPLIER's intent to discontinue manufacture, specifying the approximate number of parts SUPPLIER then has in inventory, or plans to inventory. BUYER shall provide SUPPLIER with a non-binding forecast of projected requirements for said Product, within ninety (90) days of receipt of the notification set out above. SUPPLIER shall provide BUYER with five hundred forty (540) days advance notice of such discontinuation. All new replacement parts or substitutes must be backward compatible to the discontinued Product.
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BUYER may delay any delivery or acceptance because of events beyond its control that delay BUYER's need for Products. SUPPLIER will hold the affected Products at BUYER's direction and will deliver them when the event causing the delay has been removed. BUYER will be responsible only for SUPPLIER's direct additional costs in holding same. Events beyond BUYER's control will include government action or inaction, labor trouble, fire or other casualty, severe weather or the like.
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Each party acknowledges that time is of the essence in performing all obligations under this Agreement.
Explicit right to Sub-license:
(a) Licenses. Subject to the terms and conditions of this Agreement, SUPPLIER hereby grants to BUYER a royalty-free, non-exclusive, fully-paid, worldwide and perpetual license under the Intellectual Property embodied in the SUPPLIER Products and the SUPPLIER Technology to the extent necessary to use, sell and resell, directly or indirectly, the SUPPLIER Products for any and all applications.
(b) BUYER’s Right to Sub-license. BUYER shall have the right to license or sub-license, as the case may be, the SUPPLIER Technology and the Intellectual Property embodied in SUPPLIER Products to its Affiliates, and to allow distributors, VARs, OEMs and similar reseller parties to use and sell the SUPPLIER Products and to allow end-users to use (on a perpetual basis) the SUPPLIER Products as part of BUYER’s products and subsystems.
(c) Technical Assistance. SUPPLIER shall provide to BUYER on an ongoing basis competent and knowledgeable personnel who will provide technical assistance as reasonably necessary (at its expense) to effectively transfer the SUPPLIER Technology to BUYER and to enable BUYER to practice and fully implement such technology in the use of the SUPPLIER Products (the “Technical Assistance”). Such Technical Assistance will be accompanied by all necessary and proper transfers of the tangible aspects (programming, diagrams, notes, technique summaries, process and work flow charts, assembly instructions, quality control and testing criteria, vendor lists, parts requirements, tolerance specifications, etc.) of the SUPPLIER Products. In addition, SUPPLIER shall provide knowledgeable and competent personnel to assist BUYER in installing the SUPPLIER Products on or otherwise incorporating the SUPPLIER Products into BUYER's products or subsystems, and to ensure that the SUPPLIER Products operate properly as so installed or incorporated.
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Choice of Governing Law:
The Order will be interpreted in accordance with the laws of the State of ____________, excluding its choice of law provisions as those laws are applied to contracts entered into by California residents and performed by such residents within _______________. The __________________ courts will have jurisdiction over both parties in any suit arising out of the Order.
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SUPPLIER agrees it will maintain insurance to protect itself from claims (i) by the party's employees, agents and subcontractors under Worker's Compensation and Disability Acts, (ii) for damages because of injury to or destruction of tangible property resulting out of any negligent act, omission or willful misconduct of the party or the party's employees or subcontractors, (iii) for damages because of bodily injury, sickness, disease or death of its employees or any other person arising out of any negligent act, omission, or willful misconduct of the party or the party's employees, agents or subcontractors.
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Compliance with Existing Laws:
SUPPLIER will, in the performance under the Order, fully comply with all applicable federal, state or local laws, rules, regulations or ordinances, including without limitation any export control or corrupt practices law. SUPPLIER will hold BUYER harmless from any liability resulting from failure of such compliance.
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SUPPLIER will not assign any proceeds under or subcontract the Order, or assign any right or delegate any obligation under the Order, without the written consent of BUYER. Purchases of parts and materials normally purchased by SUPPLIER and required by the Order will not be construed as assignments or subcontracts. Any payment to any assignee of any claim under the Order, in consequence of such consent, will be subject to set-off, recoupment or other reduction for any claim that BUYER may have against SUPPLIER. Any such attempted assignment or delegation without such consent will be null and void and of no effect.
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Change of Control:
SUPPLIER agrees that in the event of any sale of a substantial portion or change of control of its business, it will obtain a contractual commitment from the buying party or parties assuming control to honor the terms of the Order and to complete SUPPLIER's duties under it.
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1) Except for Products for which SUPPLIER has previously been approved by BUYER as an acceptable supplier, the Order is contingent upon first article approval according to BUYER's standard approval procedures. After such first article approval, SUPPLIER must notify BUYER in advance of any changes in tooling, materials, process or location of manufacture. If any such change is made, SUPPLIER will, at BUYER's option, again obtain qualification approval from BUYER for the Products affected by such change.
2) BUYER reserves the right at any time to request that SUPPLIER incorporate engineering changes (an “ECO”) in the specifications, drawings or other descriptions to which the Products are to conform, subject to an equitable and agreeable adjustment in price and/or time of performance and acceptance by SUPPLIER of such changes. This notification will include documentation of the change to effectively support SUPPLIER’s investigation of the impact of the engineering change. SUPPLIER will use best efforts to review the changes and report any issues to BUYER within one (1) week after receipt of the proposed ECO from BUYER. If any such change affects the price, delivery, or quality performance of said Product, BUYER and SUPPLIER will mutually review all issues raised by the ECO and agree in writing to specific resolutions prior to ECO implementation.
3) SUPPLIER shall notify BUYER of any engineering changes proposed to be made by SUPPLIER to the Products and shall furnish a written description of the expected effect of the Change of the Products, including effect on price, performance, reliability and serviceability.
4) SUPPLIER shall make no engineering change, or process change, or discontinue any process step that would affect the form, fit, or functions of the Product, without BUYER's prior written approval.
5) BUYER agrees to provide written approval or disapproval of any change in pricing or specifications within fourteen (14) days of receipt from SUPPLIER unless regulatory agency approval is a requirement on BUYER. A formal change order to existing purchase orders will be furnished to SUPPLIER within fourteen (14) days of initial approval. If BUYER fails to respond, such failure shall not constitute approval to proceed with the change.
6) Any claim by SUPPLIER for a price adjustment resulting from a Change requested by BUYER shall be deemed waived unless notice of a claim is made in writing within thirty (30) days following SUPPLIER 's receipt of such changes.
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All invoices and other claims of SUPPLIER for money due from BUYER will be subject to deduction or set-off by reason of any invoice or claim of BUYER arising out of the Order or any other transaction with SUPPLIER.
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SUPPLIER will not raise prices, or make any claim for remuneration if the actual quantity released during the term of this Agreement is less than the original estimate.
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Title to Product(s) and Risk of loss pass to BUYER upon delivery to BUYER’s dock.
The title to all tools and computer programs purchased or manufactured specifically for this Agreement that are used in the production or the testing of Product(s) passes to BUYER prior to the time the tools and computer programs are used by SUPPLIER. Additionally, BUYER is responsible for any taxes associated with said tooling and computer programs.
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The invalidity in whole or in part of any provision hereof will not affect the validity of any other provision.