╨╧рб▒с>■   ■    z√~Ўy                                                                                                                                                                                                                                                                                                                                                                                                            ье┴ °┐`bjbj,0,0 ghNZшgNZшg╕\      ╖ЎnЎnИ|И|И|И|И|$    м|м|м|P№|ЇЁ м|D)<№А М&М&М&МНед ео╘Я(б(б(б(б(б(б($А,╢6/b┼(9И|y│ННy│y│┼(И|И|&М&М█■(С╔С╔С╔y│И|&МИ|&М∙%жС╔y│Я(С╔С╔Ю!╠б!&М    аiGt%'╪    ┤▐ э Hх%)0D)5!lШ/]┐6Ш/Рб!б!Ш/И|▒"4y│y│С╔y│y│y│y│y│┼(┼(У├■y│y│y│D)y│y│y│y│                                                                    Ш/y│y│y│y│y│y│y│y│y│ЎnX N{:  DATE ------------ Supply of goods agreement [SUPPLIER] and AMEY RAIL LIMITED CONTENTS ____________________________________________________________ CLAUSE TOC \t "Title Clause, 1" \h HYPERLINK \l "_Toc89416081" 1. Interpretation  PAGEREF _Toc89416081 \h 1  HYPERLINK \l "_Toc89416082" 2. Supply of the products  PAGEREF _Toc89416082 \h 4  HYPERLINK \l "_Toc89416083" 3. Liaison  PAGEREF _Toc89416083 \h 4  HYPERLINK \l "_Toc89416084" 4. Orders  PAGEREF _Toc89416084 \h 4  HYPERLINK \l "_Toc89416085" 5. Manufacture, quality and packing  PAGEREF _Toc89416085 \h 5  HYPERLINK \l "_Toc89416086" 6. Delivery  PAGEREF _Toc89416086 \h 6  HYPERLINK \l "_Toc89416087" 7. Acceptance and defective products  PAGEREF _Toc89416087 \h 7  HYPERLINK \l "_Toc89416088" 8. Title and risk  PAGEREF _Toc89416088 \h 8  HYPERLINK \l "_Toc89416089" 9. Product prices  PAGEREF _Toc89416089 \h 8  HYPERLINK \l "_Toc89416090" 10. Supplier records and disputes  PAGEREF _Toc89416090 \h 9  HYPERLINK \l "_Toc89416091" 11. Terms of payment  PAGEREF _Toc89416091 \h 9  HYPERLINK \l "_Toc89416092" 12. Insurance  PAGEREF _Toc89416092 \h 10  HYPERLINK \l "_Toc89416093" 13. Compliance with laws and policies  PAGEREF _Toc89416093 \h 10  HYPERLINK \l "_Toc89416094" 14. Indemnity  PAGEREF _Toc89416094 \h 10  HYPERLINK \l "_Toc89416095" 15. Limitation of liability  PAGEREF _Toc89416095 \h 11  HYPERLINK \l "_Toc89416096" 16. Assignment and other dealings  PAGEREF _Toc89416096 \h 12  HYPERLINK \l "_Toc89416097" 17. Confidentiality  PAGEREF _Toc89416097 \h 12  HYPERLINK \l "_Toc89416098" 18. Termination  PAGEREF _Toc89416098 \h 13  HYPERLINK \l "_Toc89416099" 19. Obligations on termination  PAGEREF _Toc89416099 \h 14  HYPERLINK \l "_Toc89416100" 20. Consequences of termination  PAGEREF _Toc89416100 \h 15  HYPERLINK \l "_Toc89416101" 21. Force majeure  PAGEREF _Toc89416101 \h 15  HYPERLINK \l "_Toc89416102" 22. Costs  PAGEREF _Toc89416102 \h 16  HYPERLINK \l "_Toc89416103" 23. Severance  PAGEREF _Toc89416103 \h 16  HYPERLINK \l "_Toc89416104" 24. Multi-tiered dispute resolution procedure  PAGEREF _Toc89416104 \h 17  HYPERLINK \l "_Toc89416105" 25. Further assurance  PAGEREF _Toc89416105 \h 17  HYPERLINK \l "_Toc89416106" 26. Variation  PAGEREF _Toc89416106 \h 18  HYPERLINK \l "_Toc89416107" 27. Waiver  PAGEREF _Toc89416107 \h 18  HYPERLINK \l "_Toc89416108" 28. Notices  PAGEREF _Toc89416108 \h 18  HYPERLINK \l "_Toc89416109" 29. Entire agreement  PAGEREF _Toc89416109 \h 18  HYPERLINK \l "_Toc89416110" 30. Third party rights  PAGEREF _Toc89416110 \h 19  HYPERLINK \l "_Toc89416111" 31. Counterparts  PAGEREF _Toc89416111 \h 19  HYPERLINK \l "_Toc89416112" 32. Governing law  PAGEREF _Toc89416112 \h 19  HYPERLINK \l "_Toc89416113" 33. Jurisdiction  PAGEREF _Toc89416113 \h 19  HYPERLINK \l "_Toc89416114" 34. Special Terms  PAGEREF _Toc89416114 \h 19  SCHEDULE TOC \t "Schedule Title Clause, 1, Schedule, 1, Part, 1, Part Title, 1" \h HYPERLINK \l "_Toc89417993" Schedule 1 Special Terms  PAGEREF _Toc89417993 \h 20  HYPERLINK \l "_Toc89417994" Schedule 2 The Products and Product Prices  PAGEREF _Toc89417994 \h 35  HYPERLINK \l "_Toc89417995" Schedule 3 Reporting & Specification  PAGEREF _Toc89417995 \h 39  HYPERLINK \l "_Toc89417996" Schedule 4 Customer's Mandatory Policies  PAGEREF _Toc89417996 \h 40  This agreement is dated 01/10/2019 Parties [SUPPLIER] incorporated and registered in England and Wales with company number 02347327 whose registered office is XXX (Supplier) AMEY RAIL LIMITED, a company incorporated and registered in England and Wales with company number 11389544 whose registered office is Chancery Exchange, 10 Furnival Street, London, United Kingdom, EC4A 1AB (Customer) BACKGROUND The Supplier carries on the business of supplying Products. The Customer wishes to buy, and the Supplier wishes to supply, the Products on the terms and conditions set out in this agreement. Agreed terms TC "1. Interpretation" \l 1Interpretation The following definitions and rules of interpretation in this clause apply in this agreement. Actual Purchase Amount: the combined Product Price of Products purchased by the Customer during a year (or part year). ADR notice: has the meaning given in clause REF a458229 \h \w 27.1(c). Affected Party: has the meaning given in clause REF a330062 \h \w 23.2. Business Day: a day, other than a Saturday, Sunday or public holiday in England, when banks in London are open for business. Claim: has the meaning given in clause REF a877973 \h \w 15.2. Commencement Date: the date of this agreement. Confidential Information: has the meaning given in clause REF a618690 \h \w 18.1. Delivery: completion of delivery of Products specified in an Order in accordance with clause REF a406073 \h \w 6.2 or clause REF a916593 \h \w 6.5(a). Delivery Date: the date specified for delivery of Products specified in an Order in accordance with clause REF a709030 \h \w 4.3(c). Delivery Location: the location specified for delivery of Products specified in an Order in accordance with clause REF a709030 \h \w 4.3(c). Dispute: has the meaning given in clause REF a502891 \h \w 27.1. Dispute Notice: has the meaning given in clause REF a53858 \h \w 27.1(a). Expert: has the meaning given in clause REF a342526 \h \w 12.1. Force Majeure Event: has the meaning given in clause REF a677539 \h \w 23.1. Group: in relation to a company, that company, any subsidiary or holding company from time to time of that company, and any subsidiary from time to time of a holding company of that company. Holding company: has the meaning given in clause REF a831637 \h \w 1.6. Intellectual Property Rights: patents, utility models, rights to inventions, copyright and neighbouring and related rights, trade marks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world. Mandatory Policies: the Customer's business policies listed in HYPERLINK \l "a122581"Schedule 3 as amended by notification to the Supplier from time to time. Month: a calendar month. Order: an order for Products submitted by the Customer in accordance with clause REF a387298 \h \w 4. Order Number: the reference number to be applied to an Order by the Customer in accordance with clause REF a1004922 \h \w 4.4. Products: the products set out in HYPERLINK \l "a644097"Schedule 1 and, where the context requires, the Products ordered by and supplied to the Customer. Product Price Review: has the meaning given in clause REF a1004779 \h \w 10. Product Prices: the prices of the Products as determined in accordance with clause REF a601372 \h \w 9.1 and Product Price: means the price of an individual Product as determined in accordance with that clause. Purchasing Card: a purchasing card issued by the CustomerТs bank to itТs employees for the purposes of purchasing Products only. Representatives: has the meaning given in clause REF a537148 \h \w 18.2. Specification: the specification of the Products set out in HYPERLINK \l "a825680"Schedule 2. Subsidiary: has the meaning given in clause REF a831637 \h \w 1.6. VAT: value added tax chargeable in the UK. Year: 1 January to the following 31 December. Clause, Schedule and paragraph headings shall not affect the interpretation of this agreement. A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality). The Schedules form part of this agreement and shall have effect as if set out in full in the body of this agreement and any reference to this agreement includes the Schedules. A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established. A reference to a holding company or a subsidiary means a holding company or a subsidiary (as the case may be) as defined in section 1159 of the Companies Act 2006. Unless the context otherwise requires, words in the singular shall include the plural and vice versa. Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders. This agreement shall be binding on, and enure to the benefit of, the parties to this agreement and their respective personal representatives, successors and permitted assigns, and references to any party shall include that party's personal representatives, successors and permitted assigns. A reference to a statute or statutory provision is a reference to it as amended, extended or re-enacted from time to time. A reference to a statute or statutory provision shall include all subordinate legislation made from time to time. A reference to writing or written includes fax and email other than in the case of forma notices. Any obligation in this agreement on a person not to do something includes an obligation not to agree or allow that thing to be done. Any reference to an English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include a reference to that which most nearly approximates to the English legal term in that jurisdiction. References to clauses and Schedules are to the clauses and Schedules of this agreement; references to paragraphs are to paragraphs of the relevant Schedule. Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms. TC "2. Supply of the products" \l 1Supply of the products During the Term, the Supplier shall supply, and the Customer shall purchase, such quantities of Products as the Customer may order under clause REF a387298 \h \w 4 in accordance with the terms and conditions of this agreement. For the avoidance of doubt there are no minimum volumes and this shall not be an exclusive arrangement. Liaison Each party shall appoint a representative with authority to act in all regards on that partyТs behalf. Such representatives shall meet monthly to discuss matters relating to this agreement. TC "3. Forecasts" \l 1 TC "4. Orders" \l 1Orders The Supplier shall supply Products in accordance with the Customer's Orders. 4.2 Each Order shall be deemed to be accepted on the earlier of: the Supplier issuing a written acceptance of that Order; and the Supplier doing any act consistent with fulfilling that Order, 4.3 Each Order shall: be given in writing or, if given orally, shall be confirmed in writing within two Business Days; specify the type and quantity of Products ordered; and unless the parties agree that the Customer may specify the date and location after placing the Order, specify the Delivery Date on which the Products ordered are to be delivered, and the Delivery Location. If the Delivery Date and/or Delivery Location are to be specified after the placing of an Order, the Customer shall give the Supplier reasonable advance notice of the relevant information. 4.4 The Customer may order by Purchasing Card to a value of г3,000 per order or alternatively it shall assign an Order Number to each Order and notify such Order Numbers to the Supplier. Each party shall use the relevant Order Number in all subsequent correspondence relating to the Order. 4.5 The Customer may at any time prior to despatch of the Products amend or cancel an Order by written notice to the Supplier. If the Customer amends or cancels an Order, its liability to the Supplier shall be limited to payment to the Supplier of all costs reasonably incurred by the Supplier in fulfilling the Order up until the date of receipt of the notice of amendment or cancellation, except that where the amendment or cancellation results from the Supplier's failure to comply with its obligations under this agreement the Customer shall have no liability to the Supplier in respect of it. TC "5. [Manufacture, ]quality and packing" \l 1Manufacture, quality and packing The Supplier shall use its reasonable endeavours to maintain sufficient stocks of Products to enable it to meet the Customer's requirements. The Supplier shall supply the Products in accordance with all generally accepted industry standards and practices that are applicable. The Products supplied to the Customer by the Supplier under this agreement shall: conform to the Specification to the extent this is supplied to the Supplier by the Customer; be of satisfactory quality (within the meaning of the Sale of Goods Act 1979, as amended) and fit for any purpose for which the Products are commonly used or for any other purpose made known to the Supplier by the Customer; contain appropriate instruction as supplied by the manufacturer in relation to the safe maintenance and use of the Product; be supplied with the benefit of any extended manufacturerТs warranty (such warranties to be managed and maintained by the Supplier on behalf of the Customer); be free from defects in design, material and workmanship; and comply with all applicable statutory and regulatory requirements. The Supplier shall ensure that the Products are properly packed and secured in such manner as to enable them to reach their destination in good condition. The Supplier shall obtain and maintain in force for the Term all licences, permissions, authorisations, consents and permits needed to manufacture and supply the Products in accordance with the terms of this agreement. The Supplier shall comply with all applicable laws, enactments, orders, regulations and other instruments relating to the packing, packaging, marking, storage, handling, and delivery of the Products. The Customer shall have the right to enter the Supplier's premises to: inspect the Products; and inspect stock levels of Products. Inspections carried out pursuant to clause REF a1039292 \h \w 5.7 shall be carried out during business hours on reasonable notice to the Supplier. If following an inspection the Customer reasonably considers that the Products are not or are not likely to be as warranted under clause REF a642829 \h \w 5.3, the Customer shall inform the Supplier and the Supplier shall immediately take such action as is necessary to ensure that the Products are or will be as warranted under clause REF a642829 \h \w 5.3. The Customer shall have the right to re-conduct inspections after the Supplier has carried out its remedial actions. TC "6. Delivery" \l 1Delivery The Supplier shall deliver the Products specified in each Order to the Delivery Location on the Delivery Date. Delivery of an Order shall be complete on its arrival at the Delivery Location. If an Order is not delivered on the specified Delivery Date, then, without limiting any other right or remedy the Customer may have, the Customer may, acting reasonably: refuse to take any subsequent attempted delivery of the Order; terminate the Order with immediate effect; obtain substitute products from another supplier; and subject to clause REF a338384 \h \w 16, claim damages for any other direct, reasonable costs, expenses or losses resulting from the Supplier's failure to deliver the Order on the Delivery Date, provided that the Supplier shall have no liability for any failure or delay in delivering an Order to the extent that such failure or delay is caused by the Customer's failure to comply with its obligations under this agreement. If the Customer fails to accept delivery of an Order on the specified Delivery Date, then, except where such failure or delay is caused by the Supplier's failure to comply with its obligations under this agreement: the Order shall be deemed to have been delivered at 9.00am on the Delivery Date; and if it is able to the Supplier shall store the Order until delivery takes place. In the event of any delay beyond 7 days the parties shall discuss and agree a reasonable rate for such continued storage. Each delivery of Products shall be accompanied by a delivery note from the Supplier showing the Order Number, the date of the Order, the type and quantity of Products included in the Order. If the Supplier requires the Customer to return any packaging materials to the Supplier, that fact must be clearly stated on the delivery note accompanying the relevant Order, and any such returns shall be at the Supplier's expense. TC "7. Acceptance and defective products" \l 1Acceptance and defective products The Customer shall not be deemed to have accepted any Products until it has had a reasonable time to inspect them following Delivery, or, in the case of a latent defect in the Products, until a reasonable time after the latent defect has become apparent. If any Products delivered to the Customer do not comply with clause REF a642829 \h \w 5.3, or are otherwise not in conformity with the terms of this agreement, then, without limiting any other right or remedy that the Customer may have, the Customer may acting reasonably, reject those Products and: require the Supplier replace the rejected Products at the SupplierТs risk and expense within two Business Days of being requested to do so provided they are held as NDC stock; or repair the rejected Products as soon as practically possible; or require the Supplier to repay the price of the rejected Products in full (whether or not the Customer has previously required the Supplier to repair or replace the rejected Products); and claim damages for any other direct, reasonable costs, expenses or losses resulting from the Supplier's delivery of Products that do not conform with the terms of this agreement. The Customer's rights and remedies under this clause REF a571602 \h \w 7 are in addition to the rights and remedies available to it in respect of the statutory conditions relating to description, quality, fitness for purpose and correspondence with sample implied into this agreement by the Sale of Goods Act 1979. The terms of this agreement shall apply to any repaired or replacement Products supplied by the Supplier. If the Supplier fails to promptly repair or replace rejected Products in accordance with clause REF a749340 \h \w 7.2(a), the Customer may, without affecting its rights under clause REF a594433 \h \w 7.2(c), obtain substitute products from a third party supplier, or have the rejected Products repaired by a third party, and the Supplier shall reimburse the Customer for the direct reasonable costs it incurs in doing so. For the avoidance of doubt, the Customer shall seek to mitigate any such costs. If the parties dispute whether any Products comply with clause REF a642829 \h \w 5.3, either party may refer the matter to an Expert for determination in accordance with clause REF a674076 \h \w 12. TC "8. Title and risk" \l 1Title and risk The risk in Products delivered to the Customer shall pass to the Customer on Delivery. Title to Products delivered to the Customer shall pass to the Customer on Delivery. TC "9. Product prices" \l 1Product prices The Product Prices shall be the prices set out in HYPERLINK \l "a644097"Schedule 1. The Product Prices shall be fixed. The Product Prices are exclusive of amounts in respect of VAT. The Customer shall, on receipt of a valid VAT invoice from the Supplier, pay to the Supplier such additional amounts in respect of VAT as are chargeable on a supply of Products. The Product Prices are inclusive of the costs of packaging, insurance and standard carriage of the Products. Any exceptional delivery charges shall be agreed between the parties prior to being incurred. The Supplier agrees that if at any time during the Term it sells any Product to a comparable customer of comparable size and in comparable quantities for less than the Product Price then in force for that Product, it shall reduce the relevant Product Price to match the lower price. TC "10. Price review, supplier records and disputes" \l 1Supplier records and disputes The Supplier shall provide all such evidence as the Customer may reasonably request in order to verify invoices submitted by the Supplier. In addition, the Supplier shall, on request, allow the Customer to inspect and take copies of (or extracts from) all relevant records and materials of the Supplier relating to the supply of the Products as may be reasonably required in order to verify such matters. TC "11. Terms of payment" \l 1Terms of payment The Supplier shall be entitled to invoice the Customer for each Order at the month end of the month of Delivery. Each invoice shall quote the relevant Order Numbers. The Customer shall pay invoices in full within 28 days of date of such invoice. Payment shall be made to the bank account nominated in writing by the Supplier. If a party fails to make any payment due to the other under this agreement by the due date for payment, then, without limiting the other party's remedies under clause REF a746865 \h \w 20.2, the defaulting party shall pay interest on the overdue amount at the rate of 1% per annum above Barclays Bank's base rate from time to time. Such interest shall accrue on a daily basis from the due date until the date of actual payment of the overdue amount, whether before or after judgment. The defaulting party shall pay the interest together with the overdue amount. In relation to payments disputed in good faith, interest under this clause is payable only after the dispute is resolved, on sums found or agreed to be due, from fourteen days after the dispute is resolved until payment. If the Customer disputes any invoice or other statement of monies due, the Customer shall notify the Supplier in writing. The parties shall negotiate in good faith to attempt to resolve the dispute promptly. The Supplier shall provide all such evidence as may be reasonably necessary to verify the disputed invoice or request for payment. If the parties have not resolved the dispute within 30 days of the Customer giving notice to the Supplier, the dispute shall be resolved in accordance with clause REF a992536 \h \w 27. Where only part of an invoice is disputed, the undisputed amount shall be paid on the due date as set out in clause REF a559779 \h \w 11.2. The Supplier's obligations to supply the Products shall not be affected by any payment dispute. Each party may, without limiting any other rights or remedies it may have, set off any amounts owed to it by the other party under this agreement against any amounts payable by it to the other party under this agreement. All payments payable to the Supplier or the Customer under this agreement shall become due immediately on its termination. This clause REF a701413 \h \w 11.6 is without prejudice to any right to claim for interest under the law or under this agreement. TC "13. Insurance" \l 1Insurance During this agreement and for a period of two years afterwards the Supplier shall maintain in force the following insurance policies with reputable insurance companies: public liability insurance for not less than г10,000,000 (ten million) per claim; and product liability insurance for not less than г10,000,000 (ten million) for claims arising from any single event and not less than г10,000,000 (ten million) in aggregate for all claims arising in a year. On the Customer's written request, the Supplier shall provide the Customer with copies of the insurance policy certificates and details of the cover provided. The Supplier shall: do nothing to invalidate any insurance policy or to prejudice the Customer's entitlement under it; and notify the Customer if any policy is (or will be) cancelled or its terms are (or will be) subject to any material change. The Supplier's liabilities under this agreement shall not be deemed to be released or limited by the Supplier taking out the insurance policies referred to in clause REF a597162 \h \w 13.1. If the Supplier fails or is unable to maintain insurance in accordance with clause REF a597162 \h \w 13.1, or fails to provide evidence that it has paid the current year's premiums in accordance with clause REF a209038 \h \w 13.2, the Customer may, so far as it is able, purchase such alternative insurance cover as it deems to be reasonably necessary and shall be entitled to recover all reasonable costs and expenses it incurs in doing so from the Supplier. TC "14. Compliance with laws and policies" \l 1Compliance with laws and policies In performing its obligations under the agreement, the Supplier shall comply with: all applicable laws, statutes, regulations from time to time in force; and the Mandatory Policies. The Customer may terminate the agreement with immediate effect by giving written notice to the Supplier if the Supplier commits a breach of clause REF a823848 \h \w 14.1. TC "15. Indemnity" \l 1Indemnity The Supplier shall indemnify the Customer against all liabilities, costs, expenses, damages and losses (including but not limited to any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest, penalties and legal and other professional costs and expenses) suffered or incurred by the Customer arising out of or in connection with: any claim made against the Customer for actual or alleged infringement of a third party's Intellectual Property Rights arising out of, or in connection with, the supply or use of the Products; any claim made against the Customer by a third party arising out of, or in connection with, the supply of the Products, to the extent that such claim arises out of the breach, negligent performance or failure or delay in performance of this agreement by the Supplier, its employees, agents or subcontractors; and any claim made against the Customer by a third party for death, personal injury or damage to property arising out of, or in connection with, defective Products, to the extent that the defect in the Products is attributable to the acts or omissions of the Supplier, its employees, agents or subcontractors. If a payment due from the Supplier under this clause is subject to tax, the Customer shall be entitled to receive from the Supplier such amounts as shall ensure that the net receipt, after tax, to the Customer in respect of the payment is the same as it would have been were the payment not subject to tax. TC "16. Limitation of liability" \l 1Limitation of liability This clause sets out the entire financial liability of the parties (including any liability for the acts or omissions of their respective employees, agents and subcontractors) to each other in respect of: any breach of this agreement; any use made or resale of the Products by the Customer, or of any product incorporating any of the Products; and any representation, statement or tortious act or omission (including negligence) arising under or in connection with this agreement. Nothing in this agreement shall limit or exclude the liability of either party for: death or personal injury resulting from negligence; or fraud or fraudulent misrepresentation; or breach of the terms implied by section 12 of the Sale of Goods Act 1979; or breach of section 2 of the Consumer Protection Act 1987; or the deliberate default or wilful misconduct of that party, its employees, agents or subcontractors. Without prejudice to clause REF a985764 \h \w 16.2, neither party shall be liable to the other, whether in contract, tort (including negligence) or restitution, or for breach of statutory duty or misrepresentation, or otherwise, for any special, indirect or consequential damage or loss suffered by the other party that arises under or in connection with this agreement. Without prejudice to clause REF a985764 \h \w 16.2 or clause REF a330158 \h \w 16.3, the Supplier's total liability arising under or in connection with this agreement, whether arising in contract, tort (including negligence) or restitution, or for breach of statutory duty or misrepresentation, or otherwise, shall be limited to г500,000 (five hundred thousand pounds). Without prejudice to clause REF a985764 \h \w  \* MERGEFORMAT 16.2 or clause REF a330158 \h \w  \* MERGEFORMAT 16.3, the Customer's total liability arising under or in connection with this agreement, whether arising in contract, tort (including negligence) or restitution, or for breach of statutory duty or misrepresentation, or otherwise, shall be limited as follows: for non-payment of invoices for Products purchased, to the amount unpaid, and any interest due on such amount pursuant to clause REF a615460 \h \w  \* MERGEFORMAT 11.3; or for any other type of liability, to г500,000 (five hundred thousand pounds). TC "17. Assignment and other dealings" \l 1Assignment and other dealings Neither party shall assign, transfer, mortgage, charge, subcontract, declare a trust over or deal in any other manner with any or all of its rights and obligations under this agreement without the prior written consent of the other party (such consent not to be unreasonably withheld or delayed). TC "18. Confidentiality" \l 1Confidentiality Each party undertakes that it shall not at any time during this agreement and for a period of two years after termination disclose to any person any confidential information concerning the business, affairs, customer, clients or suppliers of the other party or of any member of its Group, including information relating to a party's operations, processes, plans, product information, know-how, designs, trade secrets, software, market opportunities and customers (Confidential Information), except as permitted by clause REF a537148 \h \w 18.2. Each party may disclose the other partyТs Confidential Information: to its employees, officers, agents, consultants or subcontractors (Representatives) who need to know such information for the purposes of exercising the party's rights or carrying out its obligations under or in connection with this agreement, provided that the disclosing party takes all reasonable steps to ensure that its Representatives comply with the confidentiality obligations contained in this clause REF a530648 \h \w 18 as though they were a party to this agreement. The disclosing party shall be responsible for its Representatives' compliance with the confidentiality obligations set out in this clause; and as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority. Each party reserves all rights in its Confidential Information. No rights or obligations in respect of a party's Confidential Information other than those expressly stated in this agreement are granted to the other party or to be implied from this agreement. No licence is hereby granted directly or indirectly under any patent, invention, discovery, copyright or other intellectual property right held, made, obtained or licensable by either party now or in the future. TC "20. Termination" \l 1Termination Either party may terminate this agreement on giving not less than three months' written notice to the other party. Without affecting any other right or remedy available to it, either party may terminate this agreement with immediate effect by giving written notice to the other party if: the other party commits a material breach of any other term of this agreement which breach is irremediable or and (if such breach is remediable) fails to remedy that breach within a period of 30 days after being notified in writing to do so; the other party repeatedly breaches any of the terms of this agreement in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention or ability to give effect to the terms of this agreement; the other party suspends, or threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or is deemed unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986 as if the words "it is proved to the satisfaction of the court" did not appear in sections 123(1)(e) or 123(2) of the IA 1986; the other party commences negotiations with all or any class of its creditors with a view to rescheduling any of its debts, or makes a proposal for or enters into any compromise or arrangement with any of its creditors [other than for the sole purpose of a scheme for a solvent amalgamation of that other party with one or more other companies or the solvent reconstruction of that other party]; a petition is filed, a notice is given, a resolution is passed, or an order is made, for or on connection with the winding up of the other party; an application is made to court, or an order is made, for the appointment of an administrator or if a notice of intention to appoint an administrator is given or if an administrator is appointed over the other party; the holder of a qualifying floating charge over the assets of that other party has become entitled to appoint or has appointed an administrative receiver; a person becomes entitled to appoint a receiver over all or any of the assets of the other party or a receiver is appointed over all or any of the assets of the other party; a creditor or encumbrancer of the other party attaches or takes possession of, or a distress, execution, sequestration or other such process is levied or enforced on or sued against, the whole or any part of its assets and such attachment or process is not discharged within 14 days; any event occurs, or proceeding is taken, with respect to the other party in any jurisdiction to which it is subject that has an effect equivalent or similar to any of the events mentioned in clause REF a804694 \h \w 20.2(d) to clause REF a104408 \h \w 20.2(i) (inclusive); the other party ceases, or threatens to cease, to carry on all or substantially the whole of its business; any Force Majeure Event prevents the other party from performing its obligations under this agreement for any continuous period of three months. For the purposes of clause REF a522422 \h \w 20.2(b), material breach means a breach (including an anticipatory breach) that is serious in the widest sense of having a serious effect on the benefit which the terminating party would otherwise derive from: a substantial portion of this agreement; or any of the obligations set out in clauses 12, 13, 14 or 18 or non-compliance with a Customer Mandatory Policy, over the term of this agreement. TC "21. Obligations on termination" \l 1Obligations on termination Each party shall promptly: return to the other party all equipment, materials and property belonging to the other party that the other party had supplied to it or a member of its Group in connection with the supply of the Products under this agreement; return to the other party all documents and materials (and any copies) containing the other partyТs Confidential Information; erase all the other partyТs Confidential Information from its computer systems (to the extent possible); and on request, certify in writing to the other party that it has complied with the requirements of this clause REF a501195 \h \w 21. TC "22. Consequences of termination" \l 1Consequences of termination On termination of this agreement the following clauses shall survive and continue in full force and effect: clause REF a495588 \h \w 13 (Insurance);] clause REF a334339 \h \w 15 (Indemnity); clause REF a338384 \h \w 16 (Limitation of liability); clause REF a530648 \h \w 18 (Confidentiality); clause REF a501195 \h \w 21 (Obligations on termination); clause REF a992536 \h \w 27 (Dispute resolution); and clause REF a244843 \h \w 35 (Governing law). clause REF a959136 \h \w 36 (Jurisdiction) Termination of this agreement shall not affect any rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of the agreement which existed at or before the date of termination. TC "23. Force majeure" \l 1Force majeure Force Majeure Event means any circumstance not within a party's reasonable control including, without limitation: acts of God, flood, drought, earthquake or other natural disaster; epidemic or pandemic; terrorist attack, civil war, civil commotion or riots, war, threat of or preparation for war, armed conflict, imposition of sanctions, embargo, or breaking off of diplomatic relations; nuclear, chemical or biological contamination or sonic boom; any law or any action taken by a government or public authority, including without limitation imposing an export or import restriction, quota or prohibition, or failing to grant a necessary licence or consent; collapse of buildings, fire, explosion or accident. Provided it has complied with clause REF a385699 \h \w 23.4, if a party is prevented, hindered or delayed in or from performing any of its obligations under this agreement by a Force Majeure Event (Affected Party), the Affected Party shall not be in breach of this agreement or otherwise liable for any such failure or delay in the performance of such obligations. The time for performance of such obligations shall be extended accordingly. The corresponding obligations of the other party will be suspended, and its time for performance of such obligations extended, to the same extent as those of the Affected Party. The Affected Party shall: as soon as reasonably practicable after the start of the Force Majeure Event[ but no later than 7 days from its start, notify the other party in writing of the Force Majeure Event, the date on which it started, its likely or potential duration, and the effect of the Force Majeure Event on its ability to perform any of its obligations under the agreement; and use all reasonable endeavours to mitigate the effect of the Force Majeure Event on the performance of its obligations. If the Force Majeure Event prevents, hinders or delays the Affected Party's performance of its obligations for a continuous period of more than four months, the party not affected by the Force Majeure Event may terminate this agreement by giving four weeks' written notice to the Affected Party. TC "24. Costs" \l 1Costs Except as expressly provided in this agreement, each party shall pay its own costs incurred in connection with the negotiation, preparation, and execution of this agreement. TC "25. Severance" \l 1Severance If any provision or part-provision of this agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this agreement. If any provision or part-provision of this agreement is invalid, illegal or unenforceable, the parties shall negotiate in good faith to amend such provision so that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the intended commercial result of the original provision. TC "27. Multi-tiered dispute resolution procedure" \l 1Multi-tiered dispute resolution procedure If a dispute arises out of or in connection with this agreement or the performance, validity or enforceability of it (Dispute) then [except as expressly provided in this agreement,] the parties shall follow the procedure set out in this clause: either party shall give to the other written notice of the Dispute, setting out its nature and full particulars (Dispute Notice), together with relevant supporting documents. On service of the Dispute Notice, the [EMPLOYEE TITLE] of the Supplier and [EMPLOYEE TITLE] of the Customer shall attempt in good faith to resolve the Dispute; if the [EMPLOYEE TITLE] of the Supplier and [EMPLOYEE TITLE] of the Customer are for any reason unable to resolve the Dispute within [30] days of service of the Dispute Notice, the Dispute shall be referred to the [SENIOR OFFICER TITLE] of the Supplier and [SENIOR OFFICER TITLE] of the Customer who shall attempt in good faith to resolve it; and if the [SENIOR OFFICER TITLE] of [Party 1] and [SENIOR OFFICER TITLE] of [Party 2] are for any reason unable to resolve the Dispute within [30] days of it being referred to them, the parties agree to enter into mediation in good faith to settle the Dispute in accordance with the CEDR Model Mediation Procedure. Unless otherwise agreed between the parties within [NUMBER] days of service of the Dispute Notice, the mediator shall be nominated by CEDR. To initiate the mediation, a party must serve notice in writing (ADR notice) to the other party to the Dispute, referring the dispute to mediation. A copy of the ADR notice should be sent to CEDR. Unless otherwise agreed between the parties, the mediation will start not later than [NUMBER] days after the date of the ADR notice. No party may commence any court proceedings under clause REF a959136 \h \w 36 in relation to the whole or part of the Dispute until [NUMBER] days after service of the ADR notice, provided that the right to issue proceedings is not prejudiced by a delay.] If the Dispute is not resolved within [NUMBER] days after service of the ADR notice[,] [or] either party fails to participate or ceases to participate in the mediation before the expiry of that [NUMBER] day period[, or the mediation terminates before the expiry of that [NUMBER] day period], the Dispute shall be finally resolved by [the courts of England and Wales OR arbitration proceedings] in accordance with clause REF a959136 \h \w 36. TC "28. Further assurance" \l 1Further assurance At its own expense, each party shall, and shall use all reasonable endeavours to procure that any necessary third party shall, promptly execute and deliver such documents and perform such acts as may [reasonably] be required for the purpose of giving full effect to this agreement. TC "29. Variation" \l 1Variation No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives). TC "30. Waiver" \l 1Waiver A waiver of any right or remedy under this agreement or by law is only effective if given in writing and shall not be deemed a waiver of any subsequent breach or default. A failure or delay by a party to exercise any right or remedy provided under this agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict any further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy. TC "31. Notices" \l 1Notices Any notice given to a party under or in connection with this agreement shall be in writing and shall be: delivered by hand or by pre-paid first-class post or other next working day delivery service at its registered office. Any notice shall be deemed to have been received: if delivered by hand, on signature of a delivery receipt or at the time the notice is left at the proper address; if sent by pre-paid first-class post or other next working day delivery service, at 9.00 am on the second Business Day after posting or at the time recorded by the delivery service. This clause does not apply to the service of any proceedings or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution. A notice given under this agreement is not valid if sent by email. TC "32. Entire agreement" \l 1Entire agreement This agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. Each party acknowledges that in entering into this agreement it does not rely on, and shall have no remedies in respect of, any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this agreement. Each party agrees that it shall have no claim for innocent or negligent misrepresentation based on any statement in this agreement. Nothing in this clause shall limit or exclude any liability for fraud. TC "33. Third party rights" \l 1Third party rights Save for any affiliate of the Customer this agreement, does not give rise to rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement. TC "34. Counterparts" \l 1Counterparts This agreement may be executed in any number of counterparts, each of which when executed shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement. TC "35. Governing law" \l 1Governing law This agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales. TC "36. Jurisdiction" \l 1Jurisdiction Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this agreement or its subject matter or formation. TC "36. Jurisdiction" \l 1Special Terms The terms and conditions set out in Schedule 1 shall have effect and form part of this agreement (the УSpecial TermsФ). Notwithstanding any other provision in this agreement, in the event of any conflict, apparent conflict or ambiguity in or between any part of this agreement and these Special Terms, these Special Terms shall take precedence. This agreement has been entered into on the date stated at the beginning of it. Special Terms TFM SPECIAL TERMS SPECIAL TERMS SUPPLEMENTARY DEFINITIONS In this Schedule 1, the following definitions shall apply: "Affiliate" means, in relation to any company: (a) a company which is either a holding company or a subsidiary of such company; or (b) a company which is a subsidiary of a holding company of which such company is also a subsidiary, and for these purposes "holding company" and "subsidiary" have the meanings ascribed to them in section 1159 of the Companies Act 2006; "Apprentice" a formal arrangement for a person aged sixteen (16) or over to earn a wage and work alongside experienced staff to gain job-specific skills through a recognised and approved apprenticeship scheme including but not limited to the Apprenticeship Matching Service, the apprenticeship matching service organised by Careers Wales; "Authority" means Transport for Wales (company number 09476013); "CAHA" means the Claims Allocation and Handling Agreement dated 1 April 1994 (as may be amended from time to time); "CAHA Registrar" means the registrar appointed in accordance with CAHA; "Careers Wales" means Career Choices Dewis Gyrfa Ltd, registered company number 07442837, a wholly owned subsidiary of the Welsh Government; "Central Government Body" means a body listed in one of the following sub-categories of the Central Government classification of the Public Sector Classification Guide, as published and amended from time to time by the Office for National Statistics: Government Department; Non-Departmental Public Body or Assembly Sponsored Public Body (advisory, executive, or tribunal); Non-Ministerial Department; or Agency; "Claims" has the meaning given to it in paragraph  REF _Ref83044702 \r \h \* MERGEFORMAT 15.5(b) of these Special Terms; "Completion" means completion of the works and services to be performed by the Customer under the Infrastructure Agreement; "Documentation" means all documents, items of information, data, reports, drawings, specifications, plans, software, designs, inventions and/or other material produced or supplied by or on behalf of the Customer in the performance of this agreement in hard copy and electronic form including all updates, upgrades and modifications of the same; "Environmental Information Regulations" means the Environmental Information Regulations 2004 together with any guidance and/or codes of practice issued by the Information Commissioner or any Central Government Body in relation to such Regulations; "Freedom of Information Act" means the Freedom of Information Act 2000 together with any guidance and/or codes of practice issued by the Information Commissioner or any relevant Central Government Body in relation to the Freedom of Information Act 2000; "IA Adjudicator" has the meaning given to it in paragraph  REF _Ref67005433 \r \h \* MERGEFORMAT 17 of these Special Terms; "Information Commissioner" means the United Kingdom's supervisory authority responsible for monitoring the application of the Freedom of Information Act and the Environmental Information Regulations; "Infrastructure Agreement" means the agreement dated 12 October 2018 between Keolis Amey Wales Cymru Limited (company number 11391059) (the "ODP") and the Customer, as amended from time to time and as novated by the ODP to the Authority; "Infrastructure Manager" has the meaning set out in the Railways and Other Guided Transport Systems (Safety) Regulations 2006; "Living Wage" means an hourly rate which is calculated independently (and updated annually) by the Living Wage Foundation, or such other body as may replace the Living Wage Foundation from time to time, according to the basic cost of living in the United Kingdom; "Losses" means all costs (including legal costs and costs of enforcement), expenses, liabilities, injuries, direct, indirect or consequential loss, damages, claims, demands, and compensation, which are legally enforceable; "Minimum Records" has the meaning given to it in paragraph  REF _Ref83044660 \r \h \* MERGEFORMAT 14.1 of these Special Terms; "Natura 2000" means any Special Area of Conservation ("SAC") as defined under the Conservation (Natural Habitats &c.) Regulations 1994 and the Offshore Marine Conservation (Natural Habitats &c.) Regulations 2007, and any Special Protection Area ("SPA") as defined under the EC Birds Directive (EC Directive 2009/147/EC) and any other site afforded the same protection as SACs and SPAs by the Authority or The Welsh Ministers; "Others" means people or organisations who are not the Authority, the Customer, the Supplier, the adjudicator, or any employee, other sub-contractor or supplier of the Customer. For the avoidance of doubt, "Others" includes but is in no way limited to the partners selected to deliver construction civil engineering works and infrastructure maintenance in respect of the Core Valley Lines, the Office of Rail and Road, those third party stakeholders with an interest in the delivery of infrastructure manager services under the Infrastructure Agreement, providers of passenger rail services on the Core Valley Lines and services on the Wales and Cross-Border Line, the infrastructure manager (where this role is not performed by the Customer), and licensees; "Polluter Pays Principle" means the principle according to which the polluter should pay for measures to reduce pollution according to the extent of either the damage done to society or the exceeding of an acceptable level (standard) of pollution; "Prohibited Act" means: offering, giving or agreeing to give to any officer or agent of the Authority, any gift or consideration of any kind: as an inducement or reward; or for doing or not doing (or for having done or not having done) any act in relation to the obtaining or performance of this agreement or any other contract with the Authority; or for showing or not showing favour or disfavour for any person in relation to this agreement with the Authority; or for entering into this agreement in connection with which commission has been paid or has been agreed to be paid by it or on its behalf, or to its knowledge unless before the relevant contract is made, particulars of any such commission and of the terms and conditions of any such agreement for the payment thereof have been disclosed in writing to the Authority; or the commission of an offence under the Bribery Act 2010; or entering into any form of collusion with other suppliers of services similar to the services or with other actual or potential bidders for this agreement; or defrauding or attempting to defraud the Authority; "Request for Information" means a request for information or an apparent request under the Freedom of Information Act or the Environmental Information Regulations; "Required Standard" means the degree of skill, care, diligence, experience, prudence and foresight to be expected of a skilled, professionally qualified, experienced and competent professional contractor and rail infrastructure provider engaged in manufacturing and supplying materials of a similar nature, scope, value and complexity to the Products and under the same or similar circumstances, where such contractor is seeking to comply with its contractual obligations and all applicable laws and Statutory Requirements; "Safety Breach" means a material breach of: this agreement; or the Infrastructure Agreement by the Customer, in each case caused (or, where relevant, contributed to) by the gross incompetence or wilful default of the Supplier or any of its employees, sub-contractors or agents, which has materially affected the safe operation of Network Rail's network or the CVL assets or the CVL physical system or the CVL transformation or associated projects or the safety of any person; "Secretary of State" means the Secretary of State for Transport; "Standards" means the individual requirements contained within standards documents and codes of practice issued to the Supplier by the Customer and/or specified in or referred to in this agreement (as applicable); "Statutory Requirements" means any laws, statutes, by-laws, codes, common law or other laws or legislation made by a competent authority and all subordinate legislation, rules, regulations, ordinances, orders, notices, directives, franchises, guidance notes and circulars promulgated pursuant to the same (to the same extent legally effective); "TUPE" means the Transfer of Undertakings (Protection of Employment) Regulations 2006; and GENERAL The parties shall act as stated in this agreement and in a spirit of mutual trust and co-operation. The parties shall work together in a collaborative manner acting in good faith to achieve successful supply of the Products under this agreement. The Supplier shall co-ordinate its activities with the Customer, the Authority and Others in accordance with the instructions of the Customer and shall co-operate with the Customer, the Authority and Others in obtaining and providing information which they require in connection with their works and the Products. The Supplier shall use best endeavours to supply the Products and correct defects in such a way as not to cause delay or disruption to the Customer, the Authority and/or Others. In the event that supplying the Products or correcting defects causes delay or disruption to the Customer, the Authority and/or Others, the Supplier shall take all reasonable steps to mitigate and minimise such delay or disruption. The Supplier shall manufacture and supply the Products in accordance with the Required Standard. In exercising this Required Standard, the Supplier shall comply with the instructions of the Customer. The Supplier shall proceed regularly and diligently and use all reasonable endeavours to prevent and/or reduce any delay in the manufacture or supply of the Products. The Supplier shall operate a quality system enabling it to comply with the Customer's quality management system. In manufacturing and supplying the Products and its obligations under this agreement, the Supplier shall comply with the applicable law, Standards, consents and the Statutory Requirements to the extent that they impose duties, obligations or restrictions on the Supplier and in the event that the Supplier does not fulfil its obligations under this agreement due to the infringement of any applicable law, Standard, or Statutory Requirement and the Customer thereby incurs costs to which it would not otherwise be liable, the amount of such costs shall be reimbursed by the Supplier to the Customer as a debt due on demand. The Supplier shall be liable for any defects in the Products unless the Supplier can prove that the Supplier did comply with its obligations under this agreement. The Supplier shall not create, or (where relevant) permit its sub-contractors of any tier to create, any lien or encumbrance on any property of the Authority (including, where relevant) any premises, property or sites. The Supplier shall report to the Contractor details of any serious accident or fatality to any person employed by or contracted to it on the Site as soon as possible after an accident occurs. Each goods vehicle used by the Supplier, or (where relevant) any of its sub-contractors of any tier, in connection with this agreement shall display the vehicle licence disc relevant to the goods operator's licence under which the vehicle is operated. In the absence of an operator's licence disc, the vehicle shall carry documentation giving the operator's licence number, name and address. The Supplier shall, and (where relevant) shall procure that its sub-contractors of any tier shall, comply with the requirements given in this agreement or notified by the Contractor from time to time for the routing of their vehicles. The Supplier nevertheless acknowledges that, in specifying the requirements (or relaying the requirements of the Authority), the Contractor does not warrant in any way that the route(s) will be available in full or in part for the whole or any part of the supply and delivery of the Products. SUSPENSION AND TERMINATION The Supplier acknowledges that the Authority may at any time instruct the Customer to stop or not start any works to be provided under the Infrastructure Agreement and may later instruct that it may restart or start it. The Customer may, as a consequence, instruct the Supplier to stop or not start any manufacturer or supply of the Products to be provided under this agreement. The Supplier shall comply with any such instruction by the Customer and shall: during any such suspension, protect, store and secure the Products (and any part thereof) against any deterioration, loss or damage; and take all reasonable steps to avoid and/or mitigate the costs arising from such suspension whilst nevertheless complying with its obligations under this agreement. In the event that the Infrastructure Agreement terminates at any time: the Customer shall be entitled to terminate forthwith this agreement; and either party shall terminate this agreement if it is provided with written instructions from the Authority to do so. On any termination or expiry of this agreement, the Supplier shall: use all reasonable endeavours to mitigate any losses, costs, liabilities or expenses arising in connection with such termination or expiry; and without limitation to clause 16.3 of this agreement, not be entitled to recover any amount in respect of any direct loss, or loss of profits, loss of fees, loss of chance or other similar losses, or any indirect losses or consequential losses arising out of termination or in connection with such termination or expiry. NOVATION/TRANSFER The Customer shall be entitled, without limitation, to assign, novate or otherwise transfer all of its rights and obligations under this agreement without the consent of the Supplier to the Authority (or to an Authority nominee) immediately prior to any expiry or termination of the Infrastructure Agreement. If the Customer exercises its rights under paragraph  REF _Ref66999428 \r \h \* MERGEFORMAT 4.1 then the Supplier shall fully co-operate with the Customer and the Authority to achieve such assignment, novation or transfer, including by promptly entering into any other documents reasonably requested by the Customer in relation to the exercise of such rights. MANUFACTURER'S WARRANTIES Without prejudice to any other right the Customer may have, the Supplier shall, and shall ensure that its materials and equipment suppliers shall, provide its/their warranties for the period of time agreed between the parties, or, where there is no such agreement, for a period of 24 months from the date on which the Materials are actually delivered (if the Materials are delivered in consignments, in the case of Materials comprised in a consignment, from the done on which such consignment is actually delivered). The Supplier shall, and shall ensure that its materials and equipment suppliers shall, assign the warranties to either the Authority or to Network Rail, at no cost to the Customer, the Authority or Network Rail. The Supplier shall supply, or procure the supply of, manufacturers' warranties in favour of the Authority and the Customer to the Authority and the Customer respectively for all Products, in each case on terms which are satisfactory to the Authority or the Customer (as applicable). Without prejudice to the rights of the Authority and the Customer, during the defects rectification period, the Supplier and the Customer shall be entitled to rely and claim upon such manufacturers' warranties as assigned and/or supplied to the Customer, the Authority or Network Rail by the Supplier or its suppliers. OTHER SUPPLIER WARRANTIES The Supplier warrants and undertakes to the Customer as a condition of this agreement that: the Products (including any design and/or specification) will: be in accordance with any performance or output specification or requirements contained or referred to in this agreement; be safe to construct, use, service and decommission; comply with all Statutory Requirements; comply with all applicable law; comply with all relevant Standards; and be integrated with the designs of Others; the Supplier shall manufacture and supply the Products so that they comply with any relevant Customer, Authority or Network Rail standards in force at the date of this agreement; it has all the resources including financial, technical and human resources as are required to carry out its obligations in accordance with this agreement; the Products will be manufactured using only materials and goods which are of sound and good quality; and the Supplier places no reliance on any information received by it from the Customer and that the Supplier will verify the accuracy of all information before using it. LOCAL SUPPLIER, smE OR THIRD SECTOR enterprise By no later than 15 January in each year (and within 14 days of the date of expiry or termination of this agreement), the Supplier shall inform the Customer in writing whether it was a local supplier (operating or based within Wales), small and medium size enterprise or third sector enterprise (including community partnership or social enterprise) during the calendar year (or part thereof) which ended on the immediately preceding 31 December or upon the expiry or termination of this agreement at the date of such expiry or termination (as applicable). ETHICAL AND SUSTAINABLE PROCUREMENT OBLIGATIONS The Supplier undertakes that all its personnel and (where relevant) those of its sub-contractors involved in the manufacture and supply of the Products shall comply with all of the Authority's policies and standards that are relevant to the Products or its obligations under this agreement, including those relating to occupational health and safety, security, business ethics, work place harassment, drugs and alcohol and illegal substances and any other on site regulations specified by the Authority or the Customer for personnel working at Authority or Customer locations (as applicable) or accessing the Authority's or the Customer's computer systems (where relevant). The Customer shall provide the Supplier with copies of such policies on request, or seek the provision of such policies from the Authority. Without prejudice to paragraph  REF _Ref66999925 \r \h \* MERGEFORMAT 8.1, the Supplier shall comply with the Customer's policies including the Customer's anti-bribery policies and the Customer's equality, diversity and inclusion policy. In manufacturing and supplying the Products, the Supplier shall: perform this agreement, and any relevant subcontract, in accordance with the Modern Slavery Act 2015; not effect any compulsory redundancies of employees who have transferred to the Supplier under TUPE and who were employed immediately prior to 28 March 2020 in the provision of services similar to the services provided to the Authority by the Customer under the Infrastructure Agreement; pay not less than the Living Wage to its/their employees provided that this requirement does not apply to Apprentices; keep accurate and complete records of the training and apprenticeships offered by the Supplier (and any of its UK based subcontractors) in performing this agreement and make the same available to the Customer on request, and shall deliver to the Customer by no later than 15 January in each year (and within 14 days of the date of expiry or termination of this agreement) a breakdown of the number of training and apprenticeships offered by the Supplier and its supply chain in performing this agreement during the calendar year (or part thereof) which ended on the immediately preceding 31 December or upon the expiry or termination of this agreement at the date of such expiry or termination (as applicable); ensure that zero-hours contracts are not used unfairly or as a means to: avoid, or facilitate avoidance of, the payment of tax and National Insurance contributions and the relevant minimum wages; unduly disadvantage workers in terms of pay and employment rights, job security and career opportunities; or avoid health and safety responsibilities; and ensure that the materials used by it comply with the requirements of "BES 6001 Responsible Sourcing of Construction Products"; and use all reasonable endeavours to ensure that the following resources are not used in the Products: 'dumped' steel which is steel provided at a cost that is subsidised by a foreign government; timber without Forest Stewardship Council (FSC) certification; and any other materials or resources the use of which would cause material damage to the reputation of the Customer and/or the Authority through lack of ethical resourcing. HEALTH AND SAFETY AND ENVIRONMENTAL OBLIGATIONS In manufacturing and supplying the Products, the Supplier shall: use reasonable endeavours to minimise the impact of waste, including, in the following descending order of priority, through: the prevention of waste; the minimisation of waste; the re-use of waste; the recycling of waste; and the disposal of waste, and shall implement the waste management plan (if any) notified to it by the Customer; minimise water usage; minimise energy usage; use all reasonable endeavours to use recycled aggregates, recycled paint and recycled paper; support the Customer's low carbon impact strategy: by minimising greenhouse gas emissions arising from the manufacture and supply of the Products in accordance with the principles and goals set out in the Welsh Government publication "Climate Change Strategy for Wales"; and in relation to traffic and traffic miles, by monitoring and minimising movements to and from any relevant sites for the transporting of the workforce and materials, and providing all information in respect of the same to the Customer upon request; take into account the Authority's objective of zero carbonisation; to the extent applicable in the circumstances, assist the Customer in meeting its obligation to assist the Authority in meeting its obligations under the following: the Environment (Wales) Act 2016; Wales's overarching waste strategy document dated 1 February 2016, known as the "Towards Zero Waste Strategy"; the Construction and Demolition Sector Plan dated November 2012; and the recommendations of the Welsh Government prospectus for green growth, known as the "Green Growth Wales Paper"; have regard to and provide support to the Authority in undertaking responsibilities under the Active Travel (Wales) Act 2013, and to support the Customer in supporting the Authority in respect of the same, including to support an increase in walking and cycling; shall use its best endeavours not to do anything that would have an adverse effect on the integrity of any Natura 2000 site and shall have due regard to conserving and enhancing biodiversity and in particular, have due regard to: the United Nations Environmental Programme Convention on Biological Diversity of 1992; any list of living organisms and types of habitat published by the National Assembly for Wales under section 42 of the Natural Environment and Rural Communities Act 2006; and and conserving biodiversity includes, in relation to a living organism or type of habitat, restoring or enhancing a population or habitat; and take all reasonable precautions to reduce or prevent pollution of air, soils and water, and meet the costs of fully rectifying any pollution caused by Products in accordance with the Polluter Pays Principle. The Supplier shall, where the procurement of electricity is within the Supplier's control and electricity from renewable sources is available for procurement, procure all of the electricity that is used in the manufacture and/or supply of the Products from Renewable Sources as defined by section 32Z2(2) of the Electricity Act 1989. The Supplier shall provide all information that may be required by the Customer from time to time to calculate the estimated carbon emissions that will be produced the manufacture and/or supply of the Products. The Supplier shall record the sustainability benefits it achieves in the manufacture and/or supply of the Products and shall provide to the Customer all information that may be required by the Customer from time to time in relation to such benefits. PROHIBITED ACTS AND SAFETY BREACHES The Supplier shall not commit any Prohibited Act and/or Safety Breach, and shall use its reasonable endeavours in manufacturing and supplying the Products to procure that its sub-contractors and agents shall not commit any Prohibited Act and/or Safety Breach. The Customer may audit and check any and all such records as are necessary in order to monitor compliance with this clause at any time during performance of this agreement and thereafter until a period of 12 years after Completion has expired and the Supplier acknowledges that the Authority shall have equivalent rights. If any Prohibited Act and/or Safety Breach comes to the attention of the Supplier in relation to this agreement, the Supplier shall notify the Customer by the most expeditious means available. The Supplier shall co-operate with the Customer and/or the Authority in the investigation of any Prohibited Act and/or Safety Breach and implement any changes in the procedures or working practices employed under the contract as may be necessary to ensure that the likelihood or opportunity for a recurrence of such Prohibited Act and/or Safety Breach is minimised. The Supplier acknowledges that if the Supplier or (where relevant) any of its sub-contractors of any tier (or employee or agent of the Supplier or such sub-contractor) commits any Safety Breach or Prohibited Act, then the Authority may (at its sole discretion) either: terminate the Infrastructure Agreement in whole or in part; or serve a warning notice upon the Customer, in which case the Customer shall be entitled to require the removal of the relevant employee, sub-contractor or employee of the relevant sub-contractor or to terminate this agreement in each case with immediate effect and procure the provision of the Products by another person or from a third party, and the Supplier shall indemnify the Customer from and against any loss, costs, liability or damage incurred or suffered by the Customer as a consequence, including any such Losses which arise out of or in connection with the consequent termination of this agreement. CONFIDENTIALITY Nothing in this agreement shall prevent the Customer from disclosing this agreement and the Supplier's confidential information: to its Affiliates; to its advisers, consultants and subcontractors; to the Secretary of State for Transport, the Office of Rail and Road, The Welsh Ministers or the Authority, and their respective professional advisers; to Affiliates of The Welsh Ministers and/or the Authority; and to any other Infrastructure Manager with regard to any relevant systems, access or infrastructure related issue. FREEDOM OF INFORMATION The Supplier acknowledges that the Authority and the Secretary of State are subject to the requirements of the Freedom of Information Act and the Environmental Information Regulations and accordingly the Supplier shall assist and co-operate with the Customer, the Authority and/or the Secretary of State to enable the Authority and/or the Secretary of State to comply with their information disclosure obligations under the Freedom of Information Act and/or the Environmental Information Regulations. The Supplier shall: transfer to the Customer any Requests for Information received by the Supplier as soon as practicable and in any event within one (1) Business Day of receiving any such Request for Information; provide the Customer with a copy of all information in its possession or power in the form that the Customer, the Authority and/or the Secretary of State requires within three (3) Business Days of the Customer's, the Authority's and/or the Secretary of State's request (or within such other period as the Customer, the Authority or the Secretary of State may specify); and provide all necessary assistance as reasonably requested by the Customer, the Authority and/or the Secretary of State to enable them to respond to any Request for Information within the time for compliance set out in Section 10 of the Freedom of Information Act or Regulation 5 of the Environmental Information Regulations as applicable. The Supplier acknowledges that the Authority and/or the Secretary of State shall be responsible for determining in their absolute discretion, and notwithstanding any other provision in this agreement or any other agreement, whether any information is exempt from disclosure in accordance with the provisions of the Freedom of Information Act and/or the Environmental Information Regulations. The Supplier shall not respond directly to any Request for Information unless expressly authorised to do so by the Customer, the Authority and/or the Secretary of State. The Supplier further acknowledges that notwithstanding any provision to the contrary in this agreement, the Authority may be obliged under the Freedom of Information Act and/or the Environmental Information Regulations and any related Code of Practice or other guidance to disclose information concerning the Supplier: in certain circumstances without consulting the Customer and/or the Supplier; or following consultation with the Customer and/or the Supplier and having taken its/their views into account. CAHA In the event that the Supplier (i) is engaged in the connection with the supply of goods or services for the maintenance or operation of railway assets; but (ii) is not party to the CAHA, the following shall apply: this paragraph  REF _Ref88417510 \r \h  \* MERGEFORMAT 13 applies where a claim, which arises out of or is connected with this agreement, is made by a third party who does not have a contract with the Supplier against the Contractor or the CAHA Registrar which may result in a claim being made against the Supplier, or the Supplier which may result in a claim being made against the Contractor or the CAHA Registrar (whether by the Supplier or otherwise); the Supplier irrevocably appoints the Contractor as its agent (in consultation where necessary with railway industry parties and their insurers) to defend or agree to arrangements for defence of the claim in accordance with the CAHA. In relation to such a claim, the Supplier shall be bound by the terms of the CAHA as if it were a party to it; and where such a claim results in a payment to the third party, the Supplier agrees that liability for such payment and the costs of handling and defending the claim shall be allocated in accordance with the CAHA. In the event of any dispute, it agrees to participate in the procedure set out in clause 22 of the CAHA, PROVIDED THAT paragraphs (b) and (c) above shall not apply to any claim in respect of which the Supplier admits that it is liable and that no railway industry party is liable. In such a case, the Supplier itself may defend the claim. MINIMUM RECORDS In this paragraph  REF _Ref83052548 \r \h  \* MERGEFORMAT 14: "Minimum Records" means: all necessary information for the evaluation of claims or Compensation Events (as such term is defined in the Infrastructure Agreement) by the Customer under the Infrastructure Agreement which relate to this agreement, whether or not relating to the Supplier or to any of its sub-contractors of any tier; management accounts, information from management, information systems and any other management records; accounting records (in hard copy as well as computer readable data); contract and subcontract files (including proposals of successful and unsuccessful bidders, bids, rebids, etc.); original estimates; estimating worksheets; correspondence; schedules including capital works costs, timetable and progress towards completion of the manufacture and supply of the Products; general ledger entries detailing cash and trade discounts including companywide discounts and rebates; commitments (agreements and leases) greater than г5,000 (five thousand pounds); detailed inspection records; accounts and records of all amounts paid and payable to the Supplier under this agreement, and test and commissioning results. The Supplier shall, and (where relevant) shall procure that its sub-contractors of any tier shall, maintain and retain the Minimum Records for a minimum of twelve (12) years from Completion with respect to all matters for which the Supplier and the Supplier's sub-contractors (of any tier) are responsible under this agreement. The Supplier shall procure that each of its sub-contracts contains open-book audit rights in favour of the Customer, the Authority and its/their authorised representatives (including external auditors). The Supplier shall, and (where relevant) shall procure that its sub-contractors of any tier shall, undertake their obligations and exercise any rights which relate to the performance of this agreement on an open-book basis. The Supplier acknowledges and agrees that the Customer, the Authority and its/their authorised representatives may, from time to time during the term of this agreement and until the expiry of a period of 12 years following Completion, audit on an open-book basis and check any and all information regarding any matter relating to the performance of or compliance with the Infrastructure Agreement, this agreement including any aspect of the Supplier's (or its subcontractors') operations, method statements, costs and expenses, sub-contracts, and financial arrangements, or any document referred to therein or relating thereto, and the arrangements made by the Supplier (or its subcontractors) to comply with its obligations under this paragraph  REF _Ref83052548 \r \h  \* MERGEFORMAT 14 . The Supplier further acknowledges and agrees that the Customer's rights pursuant to this paragraph  REF _Ref83052548 \r \h  \* MERGEFORMAT 14 include the right to audit and check and to take copies of and extracts from any document or record of the Supplier, including Minimum Records, and the Supplier acknowledges that the Authority shall also be so entitled. The Supplier shall, and (where relevant) shall procure that its sub-contractors of any tier shall, promptly provide all reasonable co-operation in relation to any audit or check including, to the extent reasonably possible in each particular circumstance, by: granting or procuring the grant of access to any premises of the Supplier or its sub-contractors or otherwise used in the performance of this agreement; granting or procuring the grant of access to any equipment or system (including all computer hardware and software and databases) used exclusively in the performance of this agreement, wherever situated and whether the Supplier's own equipment or otherwise; making any contracts and other documents and records required to be maintained under this agreement (including Minimum Records) (whether exclusively or non-exclusively) available for audit and inspection; providing a reasonable number of copies of any sub-contracts and other documents or records reasonably required by the Supplier's and/or the Authority's auditor and/or granting copying facilities to the Supplier's and/or the Authority's auditor for the purposes of making such copies; and complying with the Customer's and/or the Authority's reasonable requests for access to staff and senior personnel engaged by the Supplier in the performance of this agreement. Access may be at any time without notice provided there is good cause for access without notice. Use of Logos The Supplier shall not use the Authority's roundel either on its own or in combination with any other crest or logo nor cause or permit it to be used, nor shall it use the Customer's crest or logo nor cause or permit it to be used. RELATED DISPUTES If a matter disputed by the Customer under or in connection with this agreement is also a matter disputed under or in connection with the Infrastructure Agreement, the Supplier hereby agrees that the Customer may, with the consent of the Authority, refer the dispute under or in connection with this agreement to the adjudicator under the Infrastructure Agreement ("IA Adjudicator") at the same time as the referral under the Infrastructure Agreement. The IA Adjudicator will then decide the disputes together, and the adjudication procedure of Appendix 7 of Schedule 3B to the Infrastructure Agreement shall apply to the Supplier (and references to the 'Parties' in the adjudication procedure shall be interpreted to include the Supplier). The parties shall comply with any reasonable request by the IA Adjudicator for more time to decide the disputes referred to the IA Adjudicator. THIRD PARTY RIGHTS Notwithstanding clause 33 of this agreement, the Authority shall be entitled under the Contracts (Rights of Third Parties) Act 1999 to enforce any and all of the rights and benefits granted to it under these Special Terms, provided that the Customer and the Supplier may vary or (subject to the Collateral Warranty) terminate this agreement without the consent of the Authority. INDEMNITIES Without limitation to paragraph  REF _Ref83051570 \r \h \* MERGEFORMAT 17.2 below, the Supplier shall, on demand, hold the Customer fully protected and indemnified in respect of all losses, liabilities, costs, charges, expenses, actions, proceedings, claims or demands incurred by or made on the Customer (including losses and liabilities incurred by the Customer towards the Authority, or made on the Customer by the Authority, under or in connection with the Infrastructure Agreement) in connection with any death, personal injury, loss or damage suffered by passengers or by any third party using or affected by the Products, which is caused or contributed to by the Supplier, its employees, agents and/or (where relevant) sub-contractors of any tier. The Supplier is responsible for and indemnifies the Customer against all Losses (including Losses incurred by the Customer towards the Authority under or in connection with the Infrastructure Agreement), which are legally enforceable and properly mitigated, in respect of events or matters which are at its risk including: personal injury to or death of any person, loss of or damage to property real or personal of the Customer or the Authority other than to the Products, and any other Losses arising under any Third Party Agreements (as defined in the Infrastructure Agreement). Without prejudice to the foregoing, the Supplier provides this indemnity against: all Losses arising from any infringement of any intellectual property right of any third party (including a subcontractor of the Supplier) arising out of the design, construction or use of the Products; and all Losses arising from any failure by the Supplier to use the Required Standard. The Supplier's indemnities under this paragraph  REF _Ref83045214 \w \h \* MERGEFORMAT 20 remain in force the duration of this agreement, and continue to survive the expiry or termination of this agreement along with any other provisions of this agreement necessary to give effect to these indemnities, to expire 12 years after Completion. NO LIMITATION OR EXCLUSION OF LIABILITY Notwithstanding any provision to the contrary in this agreement, the Supplier acknowledges and agrees that it shall not be entitled to exclude or limit its liability in respect of: any failure by the Supplier to comply with any applicable law and/or Statutory Requirements; the use by the Customer or the Authority and Others of any Intellectual Property Rights provided by or on behalf of the Supplier, including any infringement of any third party's intellectual property rights; any failure by the Supplier to comply with the Third Party Agreements (as defined in the Infrastructure Agreement); any damage to or loss of any third party property, real or personal; and any bodily injury, sickness, disease or death, of any person whatsoever. Nothing in this agreement shall exclude or limit any liability of the Supplier in respect of gross negligence, death or personal injury, fraud, illegal acts, deliberate default, reckless misconduct or abandonment of its obligations by the Supplier. The Products and Product Prices Reporting & Specification SupplierТs Obligations and undertakings All Goods shall match the PurchaserТs requirements, as detailed herein and in the agreed Purchase Order. The Supplier shall:- Respond to the PurchaserТs enquiries by the date specified for return; Ensure that all information presented is complete, accurate and up to date; Hold the insurances specified within this Agreement and provide the required evidence of such insurances; Communicate to the Purchaser any changes to the SupplierТs structure; Keep the Purchaser up to date with the order times for long lead items especially if lead times change; Forecast in Reports difficulties with delivery/lead times; For Rail activity, maintain records of its Network Rail Product Acceptance certificates for each and every product to be supplied under this Agreement; Maintain records of all quality issues/defects raised with its Goods and all instances in which Goods had to be repaired or replaced; Contact the Purchaser immediately if the Supplier suspects there may be quality related issues with any of the Goods supplied; Adhere to the PurchaserТs policies: - specifically supplier code of conduct, anti-bribery, sustainability, safety. Standards and Specifications The Suppler shall comply with the current latest appropriate Standards as agreed. In particular Network Rail Standard/Railway Group Standards/Legislation applicable to the Goods being supplied. Customer's Mandatory Policies The Customer's Mandatory Policies: Modern Slavery and Human Trafficking Policy Anti-bribery and Anti-corruption Policy Ethics Policy Data and Privacy Policy Ц GDPR Health & Safety Policy Sustainability Policy Environmental Policy Drugs & Alcohol Policy Signed by [ ] for and on behalf of [SUPPLIER].................... DirectorSigned by [ ] for and on behalf of AMEY RAIL LIMITED.................... 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About this document While standard terms and conditions for the supply of goods are suitable for many ongoing supply arrangements, there may be advantages to putting a formal supply of goods agreement in place in certain circumstances. Supplier reasons. A supplier may be keen to put a formal agreement in place for some or all of the following reasons: To establish long-term business continuity. To assist forward planning of the use of product manufacturing lines. To keep out the competition. To cover high product start-up costs. To allow stockpiling in low seasonal demand periods in the knowledge of sure sales. Customer reasons. A customer will be motivated by some or all of the following: Bigger price discounts and rebates. Security of supply. Preferential ordering and delivery timescales. Exclusivity of supply. For an overview of some of the key legal and commercial considerations relating to supply agreements in general, see Practice note, Supply contracts: overview and, in particular, the section, Long-term supply contracts. The standard document is drafted on the following assumptions: There is a single supplier and a single customer, both of which are private companies incorporated in England and Wales. The parties are dealing with each other in the course of their respective businesses (meaning that the UK rules on protecting consumers (in particular, the Consumer Rights Act 2015 will not apply). No services will be provided under the agreement (meaning that the Supply of Goods and Services Act 1982 will not apply). The agreement has a medium to long term, that is, between two and five years long. The agreement is subject to English law. This agreement is not suitable for use in business-to-consumer transactions. If the customer wishes to incorporate its own standard terms and conditions of purchase into the agreement, see Standard clause, Conditions of sale, which can be inserted into this agreement. Legal issues Sale of Goods Act 1979 Contracts for the sale of goods are subject to the Sale of Goods Act 1979 (SGA). The SGA implies four conditions into contracts for the sale of goods: The transferor has the right to transfer title to goods transferred under the contract (section 12(1)). The goods will correspond with their description (section 13). The goods will be of a satisfactory quality and fit for their purpose (section 14). Goods transferred by reference to a sample will correspond with the sample (section 15). The customer can reject goods that breach sections 13 to 15 of the SGA as not conforming to the contract for sale, unless the breach is so slight that it would be unreasonable for the customer to do so, in which case the breaches shall be treated as breaches of warranty - that is, they will give rise to a right for damages only (section 15A). In addition, the SGA implies the following warranties into contracts for the sale of goods: The goods are free from undisclosed charges or encumbrances (section 12(2)). The buyer will enjoy quiet possession of the goods (section 12(3)). Exclusion or restriction of terms implied by the SGA The terms implied by the SGA into supply of goods agreements can be excluded or varied by the express agreement of the parties to the contract or by a course of dealing (section 55, SGA), but only so far as permitted by the Unfair Contract Terms Act 1977 (UCTA). An express contract term will not exclude a term implied by the SGA unless inconsistent with it (section 55(2), SGA). Note also that the exact language used matters if trying to exclude the conditions implied by the SGA. For a detailed consideration of the terms implied into contracts for sale by the SGA, the extent to which they can be excluded or restricted, and the language which must be used to be effective, see Practice notes: Limiting liability: statutory and common law controls on limitation clauses. Supply contracts: overview. Unfair Contract Terms Act 1977 The standard document is an agreement to be entered into by two businesses which is on neither party's standard terms of business. UCTA applies to such agreements as follows: Any attempted restriction or exclusion of liability for death or personal injury resulting from a party's negligence is wholly ineffective (section 2(1), UCTA). Any attempted restriction or exclusion of liability in respect of breaches of the implied term as to title contained in section 12 of the SGA is wholly ineffective (sections 6(1)(a), UCTA). Any attempted restriction or exclusion of liability for other losses caused by negligence or misrepresentation is valid only to the extent it satisfies the reasonableness test set out in section 11 of UCTA (section 2(2), UCTA and section 3, Misrepresentation Act 1967). Any attempted restriction or exclusion of liability in respect of breaches of sections 13, 14 and 15 of the SGA is valid only to the extent it satisfies the reasonableness test set out in section 11 of UCTA (section 6(1A), UCTA). For a detailed consideration of UCTA and information on limiting liability in agreements, see Practice notes, Limiting liability: drafting and negotiating and Limiting liability: statutory and common law controls on limitation clauses. Competition law The parties should consider whether the agreement raises any competition law issues. Where an agreement contains an element of exclusivity (an exclusive purchase or sale obligation), or a volume commitment (a minimum purchase obligation), the agreement has the potential to affect competition. This may particularly be an issue where one or both parties has a significant market position, or the obligations relate to a large proportion of the total market for the goods concerned, such that these obligations could have the effect of foreclosing competitors from access to the market. In practice, the majority of supply agreements will either not have a sufficiently appreciable effect on competition for an exclusivity or volume commitment obligation to cause a problem, or the agreement will fall within an exemption from the application of either the EU and UK competition legislation that prohibits restrictive agreements. Other provisions may cause more serious problems: If the agreement contains restrictions on resale of the products or resale price maintenance, the legality of the entire agreement will be cast into doubt. Such restrictions will be deemed to have an appreciable restrictive effect, regardless of the parties' market position. Further, these restrictions prevent the agreement as a whole from benefiting from an exemption. All restrictive provisions, and potentially the whole agreement, will be void and unenforceable. Pricing or market-sharing restrictions may also expose the parties' to fines for breach of EU or UK competition law. Certain non-competition provisions will not benefit from exemption and are likely to raise competition concerns, and so potentially be unenforceable, although their inclusion will not prejudice the applicability of the exemption to the remainder of the agreement. For more detailed consideration of the application of competition rules to supply agreements, see Practice note, Supply contracts: overview: Application of EU competition law and Application of UK competition rules. Tax The following tax rules may be relevant: VAT. The supplier will be required to account for VAT on the supply of the products unless the supplier falls below the VAT registration threshold, the supply is not a taxable supply (that is, it is exempt or outside the scope of VAT), the supply is zero-rated, or the supplier and customer are members of the same VAT group (see the Drafting note, VAT). Transfer pricing. If the parties to the agreement are part of the same group, they will need to consider whether the UK's transfer pricing rules apply. For information on how transfer pricing rules affect commercial agreements between group companies, see Practice note, Transfer pricing issues in commercial agreements. Bribery Act 2010 The Bribery Act 2010 came into force on 1 July 2011. Of particular concern to businesses in a commercial context is the corporate offence of failure to prevent bribery by an "associated person", under which a commercial organisation will be guilty of an offence if a person associated with it bribes another person intending to obtain or retain business for the commercial organisation, or to obtain or retain an advantage in the conduct of business for the commercial organisation (section 7, Bribery Act). This is a strict liability offence, and the only defence available to the commercial organisation is that it had in place "adequate procedures" to prevent bribery by its associated persons. Under the Bribery Act, a person (A) is associated with a relevant commercial organisation (C) if A performs services for or on behalf of C (section 8, Bribery Act). According to the Ministry of Justice (which has issued guidance on the adequate procedures defence), where a supplier of goods can be properly said to be performing services for its customer, rather than simply acting as the seller of the goods to the customer, it may also be an associated person of the customer (paragraph 38, Ministry of Justice: Guidance about procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing). The risk of a section 7 offence may arise in certain circumstances, for example if the supplier is providing any services in addition to the goods, or the supplier is an exclusive supplier of the goods. An example of bribery in this context would be if sums are paid by a supplier of goods in order to expedite customs procedures in the country of export. In such cases, a customer should consider whether it is appropriate to deploy a general compliance clause, such as clause 14, or specific anti-bribery procedures and drafting, such as due diligence on the supplier, requiring the supplier to comply with the customer's anti-bribery policies, and the inclusion of anti-bribery clauses in the supply agreement. For further information and an example of an anti-bribery clause, see Standard clause, Anti-bribery clause (short form). For background and all Practical Law materials on the Bribery Act, see Bribery Act 2010 toolkit. Modern Slavery Act 2015 Section 54 of the Modern Slavery Act (MSA) requires commercial organisations carrying on business in the UK with a global annual turnover of ┬г36 million or more to complete a slavery and human trafficking statement for each financial year, setting out the steps they have taken to ensure that there is no slavery or human trafficking in its business or in its supply chains. Including anti-slavery and trafficking obligations in its contracts (via business policies or otherwise) is one of the steps an organisation can take. For information on the MSA and for Practical Law's materials on the MSA, see Modern Slavery Act 2105: toolkit. Negotiating and drafting issues Drafting approach Unless specifically instructed to the contrary, it is usually appropriate to adopt a balanced approach when drafting a commercial agreement. In any arrangement where the parties are to have an ongoing relationship, it is generally in both parties' long-term best interests for them both to be happy with the terms of the agreement, and very often all a heavily biased draft will achieve is an increase in the time and cost of negotiations, and a lessening of the goodwill between the parties. As such, although the standard document is drafted to favour the customer, in the majority of clauses the bias is not extreme. Where the bias is pronounced, attention is drawn to the fact. If a more extreme version of a clause is required, Standard document, Terms and conditions for the supply of goods (pro-customer) may be of assistance, as this document is more strongly biased towards the customer. Input from the parties The parties to a commercial agreement are generally more heavily involved in the drafting process than parties to other corporate agreements and significant input will be needed from the parties when drafting the agreement. This is because a large element of a commercial agreement deals with business mechanics and requires a knowledge of the parties' operations that most external advisers do not have. One party should be asked to produce the first draft of the schedule setting out and describing the products, which should then be agreed between the parties. Both parties will need to review the main operative clauses of the agreement carefully to make sure that the mechanics described for the supply of the products are compatible with their actual business operations and the obligations they accept are realistically achievable. Alternative agreements Supply of goods agreement: short form (with contact details cover sheet; pro-customer). Manufacturing agreement. Consignment agreement. Brexit On 29 March 2017, the UK government gave formal notice of the UK's intention to leave the EU under Article 50(2) of the Treaty on the European Union. The direct legal implications of the UK leaving the EU for supply of goods contracts are unclear. The current legal framework will not change until the exit negotiations between the UK and the EU are finalised. However, the UK's exit may affect existing laws on the supply of goods. Areas that may be subject to change include product liability and labelling, and VAT. For more information on Brexit in the context of commercial agreements, see Practice note, Brexit: implications for commercial law and Article, Brexit and commercial contracts: assessing the impact. From a drafting perspective, some standard provisions may need to be adapted in light of the UK's impending exit from the EU. Parties may also wish to provide for situations in which Brexit affects their ability to perform or their costs of performing the contract: see Drafting note, Brexit clauses below. Brexit clauses A "Brexit clause" aims to mitigate the adverse effect of Brexit on the contract, by triggering some change in the parties' rights and obligations if the legal and business environment changes. Drafters of supply of goods agreements will need to consider whether Brexit might have an adverse impact on the contract. If so, will the draft contract give enough protection, or is a bespoke Brexit clause needed? For example, regarding price, the drafter might ask themselves: Should Brexit trigger a price review? Which index (if any) will be most appropriate to measure post-Brexit price increases? Should Brexit trigger a right to terminate or some other consequence? The drafter may conclude that the party for whom they act can rely on the price review and termination clauses already in the draft agreement. Alternatively, having identified specific Brexit risks, the drafter may recommend that the parties define Brexit trigger events and consequences of a change in the economics or performance of the contract. Which approach the parties should take can only be assessed by the drafter with an understanding of the transaction and the Brexit risks involved. For a discussion of the key issues to consider, and examples of long and short form Brexit clauses, see Practice note, Drafting for Brexit: Brexit clauses. We are monitoring the progress of Brexit and will update our materials to reflect new developments as and when appropriate. Supply of goods agreement (pro customer) Party 1 and Party 2 This agreement is dated [DATE] PARTIES Parties The standard document is drafted on the basis that there is a single customer and a single supplier. If required, the agreement may be adapted to add other customers and/or suppliers. (1) [FULL COMPANY NAME], a company incorporated and registered in England and Wales with company number [NUMBER] whose registered office is at [REGISTERED OFFICE ADDRESS] Supplier (2) [FULL COMPANY NAME], a company incorporated and registered in England and Wales with company number [NUMBER] whose registered office is at [REGISTERED OFFICE ADDRESS] Customer BACKGROUND Background This section, which is sometimes called recitals, gives a narrative recitation of the background and purpose of the agreement. It can be a useful point to introduce unusual or complicated features of the agreement, which can be defined and then picked up later in the agreement. Legal issues As a matter of general construction, the background does not form part of the agreement's operative provisions. That is to say, it does not have direct legal consequences, although in cases of dispute it may be used as an interpretative guide to operative provisions which are subsequently found to be obscure or ambiguous in meaning, or otherwise become the subject of dispute. Negotiating and drafting issues The supplier is optionally stated to be the manufacturer of the products. If this is not the case, the agreement will need to be amended at various places, particularly clause 5. (A) The Supplier carries on the business of [manufacturing and] selling the Products. (B) The Customer wishes to buy, and the Supplier wishes to supply, the Products on the terms and conditions set out in this agreement. Agreed terms 1. Interpretation Interpretation For information on interpretation clauses, see the integrated drafting notes to Standard clause, Interpretation. Definitions Great care needs to be taken with definitions, as the construction of key parts of the agreement depends on them. Be consistent. Where a capitalised term is used, don't introduce it without capitals later on or use a different form of words to mean the same thing. Examine each definition carefully to make sure it means what you intend it to mean and, where necessary, change the drafting to reflect the intention of the parties. If any definitions are not required they should be deleted; equally, additional definitions may need to be inserted. 1.1 The following definitions and rules of interpretation in this clause apply in this agreement. Actual Purchase Amount the combined Product Price of Products purchased by the Customer during a year (or part year). ADR notice has the meaning given in clause 27.1(c). Affected Party has the meaning given in clause 23.2. Business Day a day, other than a Saturday, Sunday or public holiday in England, when banks in London are open for business. Claim has the meaning given in clause 15.2. Commencement Date [[SPECIFY DATE] OR the date of this agreement]. Commencement Date As the agreement is a simple contract, it will take effect immediately on being signed, unless the parties provide otherwise. If the parties wish the agreement to come into effect on another date, stating that the agreement takes effect on a defined commencement date permits this. If the agreement is to take effect on the date of signature, define the commencement date as the date of signing the agreement. Confidential Information has the meaning given in clause 18.1. Co-obligors has the meaning given in clause 26.1. Deficit the difference between the Minimum Purchase Amount and the Actual Purchase Amount. Delivery completion of delivery of Products specified in an Order in accordance with clause 6.2 or clause 6.5(a). Delivery Date the date specified for delivery of Products specified in an Order in accordance with clause 4.3(c). Delivery Location the location specified for delivery of Products specified in an Order in accordance with clause 4.3(c). Delivery Location The delivery location for orders is to be specified by the customer when placing an order. This allows the customer to have products delivered to multiple locations. If products will always be delivered to the same location, for instance, the customer's premises, the parties may wish to define the delivery location as such, and amend clause 4.3 accordingly. Discount Statement has the meaning given in clause 9.7. Dispute has the meaning given in clause 27.1. Dispute Notice has the meaning given in clause 27.1(a). Expert has the meaning given in clause 12.1. Force Majeure Event has the meaning given in clause 23.1. БВГДЕЖЗИЙКЛМНОПРСТУФХЦЧШЩЪЫЬЭЮЯабвгдежзийклмноп░▒▓│┤╡╢╖╕╣║╗╝╜╛┐└┴┬├─┼╞╟╚╔╩╦╠═╬╧╨╤╥╙╘╒╓╫╪┘┌█▄▌▐▀рстуфхцчшщъыьэюяЁёЄєЇїЎў°∙·№¤   ¤■  Group in relation to a company, that company, any subsidiary or holding company [from time to time OR at the date of this agreement] of that company[, and any subsidiary [from time to time OR at the date of this agreement] of a holding company of that company]. holding company has the meaning given in clause 1.6. Intellectual Property Rights [patents, utility models, rights to inventions, copyright and neighbouring and related rights, trade marks and service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off or unfair competition, rights in designs, database rights, rights to use, and protect the confidentiality of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world. Mandatory Policies the Customer's business policies [and codes] [attached at OR listed in] Schedule 3 OR [SPECIFY RELEVANT POLICIES BY NAME]][, as amended by notification to the Supplier from time to time. Mandatory Policies Tailor the definition to reflect the policies the customer requires the supplier to comply with. These may include policies on modern slavery and human trafficking, values and ethics. For example: Modern Slavery Act 2015 anti-slavery and human trafficking policy. Ethics policy: see Bribery Act 2010: sample statement of ethics. Bribery Act 2010 anti-corruption policies. Data protection policy. Privacy policy. Environmental policies. See also the discussion at Drafting note, Customer's Mandatory Policies about methods of making the mandatory policies available to the supplier. Minimum Purchase Amount Products with a combined Product Price of not less than ┬г[AMOUNT]. month a calendar month. Order an order for Products submitted by the Customer in accordance with clause 4. Order Number the reference number to be applied to an Order by the Supplier in accordance with clause 4.4. Products the products set out in Schedule 1 and, where the context requires, the Products ordered by and supplied to the Customer. Products Depending on context, the term "products" is used to identify the products that are the subject of the agreement, or to refer to products ordered and supplied to the customer. The products (in the first sense of the term) and their prices are to be set out in Schedule 1. The primary responsibility for preparing and agreeing Schedule 1 will rest with the parties. Product Price Review has the meaning given in clause 10. Product Prices the prices of the Products as determined in accordance with clause 9.1 and Product Price: means the price of an individual Product as determined in accordance with that clause. Representatives has the meaning given in clause 18.2. Specification the specification of the Products set out in Schedule 2. Specification The specifications for the products are to be set out in Schedule 2. The primary responsibility for preparing and agreeing the Schedule will rest with the parties. subsidiary has the meaning given in clause 1.6. Term the term of the agreement, as determined in accordance with clause 19. VAT value added tax [or any equivalent tax] chargeable in the UK [or elsewhere]. year 1 January to the following 31 December. Year If you wish to define a year by reference to the commencement date, replace the definition with the following: "the 12 month period starting on the Commencement Date and each subsequent consecutive 12 month period". See also Drafting note, Purchase obligations (optional). 1.2 Clause, Schedule and paragraph headings shall not affect the interpretation of this agreement. 1.3 A person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality). 1.4 The Schedules form part of this agreement and shall have effect as if set out in full in the body of this agreement and any reference to this agreement includes the Schedules. 1.5 A reference to a company shall include any company, corporation or other body corporate, wherever and however incorporated or established. 1.6 A reference to a holding company or a subsidiary means a holding company or a subsidiary (as the case may be) as defined in section 1159 of the Companies Act 2006 [and a company shall be treated, for the purposes only of the membership requirement contained in sections 1159(1)(b) and (c), as a member of another company even if its shares in that other company are registered in the name of (a) another person (or its nominee), whether by way of security or in connection with the taking of security, or (b) its nominee]. In the case of a limited liability partnership which is a subsidiary of a company or another limited liability partnership, section 1159 of the Companies Act 2006 shall be amended so that: (a) references in sections 1159(1)(a) and (c) to voting rights are to the members' rights to vote on all or substantially all matters which are decided by a vote of the members of the limited liability partnership; and (b) the reference in section 1159(1)(b) to the right to appoint or remove a majority of its board of directors is to the right to appoint or remove members holding a majority of the voting rights. 1.7 Unless the context otherwise requires, words in the singular shall include the plural and vice versa. 1.8 Unless the context otherwise requires, a reference to one gender shall include a reference to the other genders. 1.9 This agreement shall be binding on, and enure to the benefit of, the parties to this agreement and their respective personal representatives, successors and permitted assigns, and references to any party shall include that party's personal representatives, successors and permitted assigns. 1.10 A reference to a statute or statutory provision is a reference to it as [amended, extended or re-enacted from time to time OR it is in force as at the date of this agreement]. 1.11 A reference to a statute or statutory provision shall include all subordinate legislation made [from time to time OR as at the date of this agreement] under that statute or statutory provision. 1.12 A reference to writing or written includes fax [and email OR but not email]. 1.13 Any obligation in this agreement on a person not to do something includes an obligation not to agree or allow that thing to be done. 1.14 References to a document in agreed form are to that document in the form agreed by the parties and initialled by or on their behalf for identification. 1.15 Any reference to an English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be deemed to include a reference to that which most nearly approximates to the English legal term in that jurisdiction. 1.16 References to clauses and Schedules are to the clauses and Schedules of this agreement; references to paragraphs are to paragraphs of the relevant Schedule. 1.17 Unless otherwise expressly provided, the obligations and liabilities of [PARTIES] under this agreement are joint and several. 1.18 Any words following the terms including, include, in particular, for example or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms. 2. Supply of the products 2.1 During the Term, the Supplier shall supply, and the Customer shall purchase, such quantities of Products as the Customer may order under clause 4 in accordance with the terms and conditions of this agreement. Agreement to supply This is the key operative clause under which the supplier agrees to supply the goods to the customer by reference to orders placed by the customer. It should always be included. 2.2 The Customer shall in each year purchase the Minimum Purchase Amount from the Supplier, or, in respect of any period of time during the Term which is less than a year, the pro rata proportion of the Minimum Purchase Amount. The combined Product Price of the Products purchased by the Customer in a year (or part year) shall be calculated by reference to the Product Prices in force on the first day of that year (or part year), exclusive of VAT, discounts and any other incidental costs payable in respect of purchases of the Products. 2.3 If the Actual Purchase Amount is less than the Minimum Purchase Amount (or pro rata proportion, as the case may be), then, except to the extent that the shortfall in purchases was caused by the Supplier's default or by a Force Majeure Event, the Supplier may [require the Customer to pay the Supplier the Deficit OR take the Deficit into account when carrying out the next Product Price Review negotiations under clause 10]. Purchase obligations (optional) Although pro-supplier, the optional minimum purchase obligations are included as part of a balanced agreement. A supplier will generally seek some kind of purchase commitment from the customer in return for entering into a long-term supply agreement, particularly if the products are non-standard, and the supplier would have difficulty selling the products on the open market, or if the supplier will have to incur significant costs in order to manufacture the products, for instance, setting up new manufacturing lines. Typically, a supplier will look for a minimum purchase obligation, or an exclusive purchase obligation which obliges the customer to purchase all or a fixed proportion of its requirements for the products from the supplier. This clause imposes a minimum purchase obligation on the customer. The minimum purchase obligation is defined in terms of spend. Alternatively, it could be defined in terms of quantity. However, if the supplier is to supply several different products under the agreement, and the prices of individual products vary considerably, an obligation expressed in terms of quantity may not be satisfactory for the supplier. Legal issues Consider whether the inclusion of a minimum purchase obligation gives rise to competition law issues. See Drafting note, Legal issues. Negotiating and drafting issues The clause offers the supplier two possible remedies where the value of the customer's purchases of products in any year is not equal to the Minimum Purchase Amount. The supplier will prefer the first option because of the certainty of recovery it provides. It is likely that the first option will be treated as a liquidated damages clause, but see Practice note, Contracts: agreed remedies: Liquidated damages on penalty clauses. The customer will prefer the second option for the opposite reason, but should expect to meet resistance from the supplier, who will argue (correctly) that an agreement to take the deficit into account when negotiating the next product price review is no more than an "agreement to agree". Note that the second option will be redundant if the product prices are to be fixed for the term. If using the second option, the supplier will be left at a disadvantage if the agreement terminates before a deficit has been made up through the product prices: the supplier may wish to add language to deal with this situation. For example: "If a Deficit arises but before it has been fully recovered through adjustments to the Product Prices the agreement terminates for any reason, the Customer shall pay to the Supplier an amount equal to the outstanding balance of the Deficit as at the time of termination." Consider defining the minimum purchase obligation by reference to purchases of volume. For example: "The Customer shall in each year purchase Products with a combined volume of not less than [NUMBER] tonnes (Minimum Purchase Amount) from the Supplier, or, in respect of any period of time during the Term which is less than a year, the pro rata proportion of the Minimum Purchase Amount." For the purposes of illustration, the agreement defines the minimum purchase amount by reference to calendar years. The parties may prefer to assess the minimum purchase amount by reference to 12-month periods beginning on the commencement date, rather than calendar years. If so, the agreement will need to be amended at various places to reflect this, particularly the definition of year, the provisions relating to the timing of product price adjustments (clause 2.4, clause 9.1 and clause 9.10) and discounts (clause 9.5). Consider an exclusive purchase obligation as an alternative to a minimum purchase obligation (but see Drafting note, Legal issues). If the parties agree to increase the minimum purchase amount by fixed amounts each year during the term, replace the first sentence in clause 2.2 with the following sentence: "In each year the Customer shall purchase Products with a combined Product Price of not less than the Minimum Purchase Amount. The Minimum Purchase Amount for each year of this agreement shall be as follows: Year 1: ┬г[AMOUNT] Year 2: ┬г[AMOUNT] Year 3: ┬г[AMOUNT]" If taking this approach clause 2.4 should not be used. 2.4 The Minimum Purchase Amount shall be adjusted on [1 January of each year] to reflect any increases in the Product Prices during the previous year. Minimum purchase amount (optional) If the minimum purchase amount is defined in terms of spend, the supplier will need to adjust the minimum purchase amount periodically to reflect increases in the product prices. This is in order to maintain its value in real terms. Negotiating and drafting issues The date 1 January is included for illustration purposes only. Amend this clause as necessary so that adjustments to the minimum purchase amount take effect at the same time as adjustments to the product prices. 3. Forecasts Forecasts Some suppliers find it helpful to require the customer to provide forecasts of its requirements for products, particularly where the demand for products is seasonal. Amend the clause to reflect the commercial agreement between the parties with regard to the frequency of forecasts. 3.1 During the Term, the Customer shall give the Supplier: (a) not less than [five] days before the beginning of each month, a forecast of the Products it expects to purchase during the [three] months following that month; and (b) [not less than [one] month before the end of each year, a forecast of the Products it expects to purchase during the following year]. Customer forecast This clause requires the customer to provide forecasts of its requirements for products on a rolling basis throughout the term. The clause may be amended to provide that the first forecast should be provided on or shortly after the date of signing. 3.2 Forecasts shall be given in writing or, if given orally, shall be confirmed in writing within [two] Business Days. The Customer shall act in good faith when forecasting its requirements for Products. Forecast requirements The supplier is vulnerable to the customer providing inaccurate forecasts. For instance, the supplier might, relying on excessive estimates, incur significant costs increasing its production capacity. The requirement of good faith offers some protection against the customer deliberately abusing the forecast system. For greater certainty, the supplier could insert a provision allowing the supplier to recoup some or all of the costs it incurs as a direct result of relying on the customer's forecasts. 3.3 Forecasts provided under this clause 3 shall not constitute Orders. Forecasts not constitute Orders Include this clause to prevent forecasts being binding orders. 3.4 If the Supplier anticipates that it will be unable to meet the Customer's forecasted requirements provided in accordance with this clause 3: (a) the Supplier shall inform the Customer [in writing] as soon as practicable; (b) without limiting any other right or remedy that the Customer may have, the Customer may at its option agree alternative delivery dates for the relevant Products, or obtain from any other person substitute products for the Products which the Supplier anticipates it will be unable to supply; and (c) substitute products purchased from a third party supplier as a result of the Supplier anticipating being unable to meet the Customer's forecasted requirements for Products shall for the purposes of clause 2.2 be deemed to have been purchased from the Supplier [at the price paid to the third party supplier] . Supplier's inability to meet forecasts The customer will wish to be informed as soon as possible if the supplier anticipates that it will not be able to meet the customer's forecasted requirements so that the customer can make alternative arrangements in respect of the relevant products. The customer does not have an express contractual right to terminate the agreement if the supplier anticipates it will be unable to meet forecasted requirements. It does, however, have an express right of termination if the supplier fails to deliver an order on the delivery date. If the customer wants to be able to terminate the agreement if the supplier anticipates being unable to meet its forecasted requirements, the customer should include specific wording here, expressly providing a right to terminate in that event, or include specific wording to that effect in the termination clause. 4. Orders Orders This clause sets out provisions in respect of the ordering process. As agreeing the mechanics of this process is largely a commercial matter, these provisions should be seen as indicative only. In general, order process mechanics are driven by the supplier's working practices. This clause is drafted on the assumption that the customer will place orders for products on a periodic basis. For an example of an order process clause that may be used if the parties have agreed that the customer may place orders at any time, see Standard clause, Order process: supply of goods agreements. 4.1 Not less than [five] days before the beginning of each month during the Term, the Customer shall give the Supplier its Order for that month. Order process This clause deals with the order process mechanics. Amend to reflect the parties' agreement. 4.2 The Supplier shall [use its best endeavours to] supply Products in accordance with the Customer's Orders, except that, to the extent that an Order exceeds the most recent forecast provided to the Supplier in accordance with clause 3.1(a), the Supplier shall [only be obliged to use its commercially reasonable endeavours to supply the Products ordered in excess of forecasts (and shall not be under any obligation to supply the Products ordered in excess of forecasts if the Customer's demand exceeds the Supplier's production capacity) OR be free to accept or reject the part of the Order that relates to the Products ordered in excess of forecasts]. Extent of obligation to supply One of the standard issues in a long-term supply arrangement is the extent to which the supplier is obliged to meet the customer's orders. The supplier will not wish to be subject to an unqualified obligation, but the customer will want certainty of supply. A compromise is to provide for a forecast system under which the supplier agrees to meet the customer's orders for forecasted quantities of products, and is subject to a lesser obligation to meet orders for products in excess of forecast quantities. This clause offers two options in respect of the supplier's obligation to meet orders for excess products: the first option favours the customer, the second the supplier; which is used will come down to the parties' relative bargaining strength. A determined supplier may even succeed in watering down its absolute obligation to meet orders for forecasted quantities of products by including the "best endeavours" language (although an obligation to use best endeavours is still very significant: see Practice note, Contracts: structure and terms of commercial contracts: Best or reasonable endeavours?). If the supplier agrees to use commercially reasonable endeavours to supply excess products, it may wish to add language to make it clear that provisions relating to the consequences of late delivery do not apply to orders for excess products that the supplier is unable to meet. For an alternative approach to order fulfilment where orders constitute offers that the supplier is free to accept or decline, see Standard document, Terms and conditions for the supply of goods (pro-supplier): clauses 2.2 and 2.3. 4.3 Each Order shall: (a) be given in writing or, if given orally, shall be confirmed in writing within [two] Business Days; (b) specify the type and quantity of Products ordered, [and the Products' code numbers]; and (c) [unless the parties agree that the Customer may specify the date and location after placing the Order,] specify the Delivery Date [by OR on] which the Products ordered are to be delivered, and the Delivery Location. [If the Delivery Date and/or Delivery Location are to be specified after the placing of an Order, the Customer shall give the Supplier reasonable advance notice of the relevant information.] 4.4 The Supplier shall assign an Order Number to each Order received from the Customer and notify such Order Numbers to the Customer. Each party shall use the relevant Order Number in all subsequent correspondence relating to the Order. Order mechanics Clauses 4.3 and 4.4 deal with order process mechanics and, as such, are primarily for the parties to agree. Clause 4.3 has significance for clause 6 in that it determines the delivery date and delivery location. 4.5 The Customer may [at any time prior to despatch of the Products OR within [NUMBER] days of placing an Order] amend or cancel an Order by written notice to the Supplier. If the Customer amends or cancels an Order, its liability to the Supplier shall be limited to payment to the Supplier of all costs reasonably incurred by the Supplier in fulfilling the Order up until the date of receipt of the notice of amendment or cancellation, except that where the amendment or cancellation results from the Supplier's failure to comply with its obligations under this agreement the Customer shall have no liability to the Supplier in respect of it. 4.6 If the Supplier declines an Order for Products in excess of forecasts, and the Customer purchases substitute products from a third party supplier as a result, such substitute products shall for the purposes of clause 2.2 be deemed to have been purchased from the Supplier [at the price paid to the third party supplier]. Declining Orders (optional clause) Consider including this clause where the supplier is free to decline those parts of orders that relate to products in excess of forecasts. 5. [Manufacture, ]quality and packing Manufacture, quality and packing This clause sets out the supplier's obligations in respect of the manufacture and packing of the products. It includes undertakings from the supplier in respect of the quality of the products which reinforce the conditions implied by the SGA. Amend clause 5 as necessary to reflect whether the supplier is the manufacturer of the products. 5.1 The Supplier shall at all times maintain sufficient [manufacturing capacity, stocks of raw materials and packaging, and] stocks of Products to enable it to meet the Customer's forecasted requirements to Products as notified to the Supplier in accordance with clause 3. Obligation to maintain stock (optional clause) This clause reinforces the supplier's obligation to meet the customer's orders up to the forecasted quantities. It is not strictly necessary if the supplier has accepted an absolute obligation under clause 4, but the customer may wish to include it for additional reassurance about the certainty of supply. If the supplier has only accepted an obligation to use its best or reasonable endeavours to meet the customer's orders, the clause will have greater significance. 5.2 The Supplier shall manufacture, pack and supply the Products in accordance with [its [SPECIFY ANY ACCREDITATIONS] and] all generally accepted industry standards and practices that are applicable. Relevant accreditation (optional clause) This clause may be relevant where the supplier manufactures the products: some customers may require suppliers to hold industry accreditations, for example, in the case of a food manufacturer, the BRC accreditation. Ask the customer if there are any relevant accreditations that should be specified here. 5.3 The Products supplied to the Customer by the Supplier under this agreement shall: (a) conform to the Specification; (b) be of satisfactory quality (within the meaning of the Sale of Goods Act 1979, as amended) and fit for any purpose held out by the Supplier or made known to the Supplier by the Customer; (c) [be free from defects in design, material and workmanship and remain so for [12] months after Delivery; and] Free from defects Include clause 5.3(c) if the undertaking is compatible with the nature of the products. The undertaking will be relevant to finished or manufactured products, but not in the case of perishable foodstuffs, for instance. (d) comply with all applicable statutory and regulatory requirements. Quality of products prescribed by law Parties to supply of goods agreements usually negotiate specific warranties and undertakings concerning the quality of the goods that operate in addition or in place of the general warranties that are implied by law (see Drafting note, Legal issues). The nature and extent of the warranties and undertakings will depend on the parties' respective commercial strength. Commonly, the customer will require the supplier to give warranties or undertakings in respect of the quality of the products and their conformity to the specification. Clause 5.3 provides undertakings about the quality of the products which follow the conditions implied by sections 13-15 of the SGA, but are wider than the SGA conditions in that the products are warranted to be fit for any purpose made known to the supplier by the customer (that is, removing the SGA requirement that the customer relied on the supplier's skill and judgement and that it was reasonable to do so), and the warranty relating to design, material and workmanship has a potential duration of 12 months from delivery. The conditions by the SGA are expressly preserved at clause 7.3, as breach of them will prima facie entitle the customer to terminate the agreement. The customer should consider whether there are any other specific warranties or undertakings that it wishes to obtain from the supplier. 5.4 The Supplier shall ensure that the Products are properly packed and secured in such manner as to enable them to reach their destination in good condition. 5.5 The Supplier shall obtain and maintain in force for the Term all licences, permissions, authorisations, consents and permits needed to [manufacture and] supply the Products in accordance with the terms of this agreement. Obligation to obtain licences and consents The onus is on the supplier to obtain and maintain any licences and consents required in connection with its supply of the products. If the supplier has to pay a fee to obtain or maintain licences it would not obtain or maintain but for its obligations to supply the products, it may wish to add wording providing that the customer is to be responsible for paying such fees (assuming this cost is not already built into the product prices). Consider specifying any licences and consents that the parties are aware need to be obtained or maintained. 5.6 The Supplier shall comply with all applicable laws, enactments, orders, regulations and other instruments relating to the [manufacture,] packing, packaging, marking, storage, handling, and delivery of the Products. 5.7 The Customer shall have the right to enter the Supplier's premises to: (a) inspect the manufacturing facilities and the equipment used by the Supplier in the manufacture of the Products; (b) inspect and take samples of the raw materials, the packaging and the Products; and (c) inspect stock levels of [raw materials and packaging OR Products]. Inspection of stock and samples Clause 5.7(b) allows the customer to verify that the products conform to the specification and that the other quality-related requirements are being observed. Clause 5.7(c) allows the customer to verify the amounts of stock held by the supplier. Only include this sub-clause if including clause 5.1. 5.8 Inspections carried out pursuant to clause 5.7 shall be carried out during business hours on reasonable notice to the Supplier[, provided that, in the event of an emergency, the Supplier shall grant the Customer immediate access to its premises]. 5.9 If following an inspection the Customer [reasonably] considers that the Products are not or are not likely to be as warranted under clause 5.3, the Customer shall inform the Supplier and the Supplier shall immediately take such action as is necessary to ensure that the Products are or will be as warranted under clause 5.3. The Customer shall have the right to re-conduct inspections and take further samples after the Supplier has carried out its remedial actions. 6. Delivery Delivery       !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}¤   А The SGA contains detailed rules relating to the time and place of delivery. The drafting objective of this clause is to ensure that the statutory rules which are inappropriate to the parties' needs are replaced by express provisions reflecting the parties' agreement, and that any other provisions the parties wish to make concerning delivery are incorporated into the agreement. The clause also deals with the important question of the remedies available to the customer in the event of late deliveries (see clause 6.4). For a consideration of the law on delivery under sale of goods contracts, see Practice note, Drafting standard terms and conditions for the supply of goods: Delivery. 6.1 The Supplier shall deliver the Products specified in each Order to the Delivery Location [on the Delivery Date OR by the Delivery Date]. [The Supplier shall not deliver an Order more than [five] Business Days in advance of the Delivery Date without the prior written consent of the Customer.] Delivery specifics Delivery location. Unless otherwise specified in the agreement, delivery will be deemed to take place at the supplier's premises (section 29(2), SGA). Whether the products are delivered by the supplier or collected by the customer is a purely commercial decision. Clause 6.1 provides that the supplier shall deliver orders to the delivery location specified by the customer when placing the order (see clause 4.3). A customer will generally provide for the supplier to deliver the goods to the customer's premises, or any other premises that the customer has notified to the supplier. A supplier will not automatically require the customer to collect the goods as many suppliers are set up to deliver their goods. A further option is for delivery to take place at the supplier's carrier's premises. See also Drafting note, Delivery specifics and the commentary on Delivery location. For an example of a clause that provides that the customer is to collect orders, see Standard document, Terms and conditions for the supplier of goods (pro-supplier): clause 4.1. Delivery date. Unless otherwise specified in the agreement, the supplier is only required to deliver the products within a "reasonable time" (section 29(3), SGA). From the customer's perspective, the statutory position is unlikely to be satisfactory, and commercial parties will usually make express provision about the delivery date. Whether delivery is to take place "by" or "on" the delivery date is a matter for agreement by the parties and will depend on factors such as the nature of the products and the customer's stockholding policy. An alternative approach would be to say: "The Supplier shall deliver the Products specified in the Order within [28 days] of it being placed. Deliveries shall be made [between 9.00am and 5.30pm on a Business Day] to the Delivery Location." Delivery time. There is a presumption that a delivery must be made at a reasonable hour: the SGA provides that a delivery may not be effective if it is not made at a reasonable hour (section 29(5), SGA). What is a reasonable hour is a question of fact that will depend on the customer's and supplier's business practices and also on industry practices. The parties may, if they wish, stipulate that "deliveries shall be made between 9.00am and 5.30pm on a Business Day". If delivery timing is critical, the parties should make express provision for this. Delivery costs. See Drafting note, What is included in Product Price for a discussion of how delivery costs are treated. 6.2 Delivery of an Order shall be complete on [its delivery by the Supplier to a carrier OR the completion of unloading of the Order at the Delivery Location OR its arrival at the Delivery Location]. Completion of delivery "Delivery" means the voluntary transfer of possession from the seller to the buyer (section 61, SGA). As delivery is critical to the transfer of the risk in the products (see clause 8), it is in both parties' interests to define precisely when delivery occurs. The customer will prefer to specify that delivery only takes place once the products have arrived and been unloaded at the customer's chosen delivery location. Conversely, the supplier will prefer delivery to take place on the products' arrival at the delivery location, and, if it is using a carrier, may attempt to provide that delivery takes place on delivery of the products to the carrier. 6.3 [The Supplier may deliver Orders by instalments, which may be invoiced and paid for separately OR The Supplier shall not deliver Orders by instalments except with the prior written consent of the Customer. Where Orders are to be delivered by instalments, they may be invoiced and paid for separately]. References in this agreement to Orders shall, where applicable, be read as references to instalments. Delivery by instalments Unless the agreement specifies that orders may be delivered by instalments, or the circumstances indicate that delivery by instalments was envisaged by the parties, the customer is not obliged to accept delivery by instalments (section 31(1), SGA). Because clause 6.3 provides that references to orders are to be read as references to instalments, the customer will have the right under clause 6.4 to terminate the agreement if an instalment is delivered late, and to reject subsequent instalments. If products delivered as part of an instalment are defective, the customer will be entitled to reject the defective products or to reject the instalment as a whole, but will not automatically have the right to terminate the entire agreement (see Drafting note, Acceptance and defective products for a more detailed discussion of the customer's rights and remedies in the event the supplier delivers defective products). 6.4 If an Order is not delivered on the specified Delivery Date, then, without limiting any other right or remedy the Customer may have, the Customer may: (a) refuse to take any subsequent attempted delivery of the Order; Refusal to take subsequent delivery By refusing to take a subsequent delivery the customer avoids the potential situation of the supplier delivering the order after the customer no longer has any use for it and being invoiced for the unwanted order. It may also help the customer avoid claims by the supplier that the customer has waived its right to strict performance in respect of delivery. (b) terminate this agreement with immediate effect; (c) obtain substitute products from another supplier and recover from the Supplier any costs and expenses reasonably incurred by the Customer in obtaining such substitute products. Substitute products obtained from a third party supplier pursuant to this clause 6.4(c) shall be deemed to count towards the Minimum Purchase Amount for the purposes of clause 2.2; and (d) subject to clause 16, claim damages for any other costs, expenses or losses resulting from the Supplier's failure to deliver the Order on the Delivery Date, provided that the Supplier shall have no liability for any failure or delay in delivering an Order to the extent that such failure or delay is caused by the Customer's failure to comply with its obligations under this agreement. Liability for delay in delivery Clause 6.4 makes express contractual provision for the consequences of making late delivery, stating that late delivery of any order shall entitle the customer to terminate the entire agreement and claim damages. Punctual deliveries are of great importance to the customer, as can be seen from the fact that customers nearly always provide for the strongest remedies against suppliers for late delivery. The supplier should not be liable for late delivery where the delay is caused by the customer's failure to do something that is required in advance of delivery, for example, where the customer has failed to give adequate notice of the delivery location under clause 4.2. The supplier may prefer to widen the carve-out at the end of clause 6.4 by substituting the words "the Customer's actions" for "the Customer's failure to comply with its obligations under this agreement". A more aggressive supplier may consider substituting the following wording: "provided always that the Supplier shall only be responsible for any failure or delay in delivering Orders to the extent it has failed to comply with its obligations under this agreement." Legal issues If the time for delivery of orders is of the essence, the customer will be entitled to terminate the entire agreement if one order is late. The time for delivery of goods is very readily found to be of the essence in commercial contracts for the sale of goods, but it is still in the customer's interests to state expressly that this is the case. Stating that the customer will be entitled to terminate the agreement for late delivery of an order achieves this end. For detailed consideration of this phrase, see Practice note, Time of the essence. Negotiating and drafting issues The time for delivery of orders will be of the essence if the parties use the phrase "time is of the essence" (a judicially recognised phrase) in relation to deliveries, or if they state that late delivery of an order entitles the customer to terminate the agreement. We have adopted the second drafting approach on the grounds that it is plainer English. As an additional or alternative remedy for late delivery, the customer may wish to reserve the right to reduce the sum payable for the order by a pre-agreed amount for every day that the order is late, subject to an upper limit: "The Customer may deduct [NUMBER]% from the total price payable for the Order for every day's delay, up to a maximum of [NUMBER]%." For an example of a clause where the customer is given only minimal remedies for late delivery (because time is not of the essence), see Standard document, Terms and conditions for the supply of goods (pro-supplier): clause 4. 6.5 If the Customer fails to accept delivery of an Order on the specified Delivery Date, then, except where such failure or delay is caused by the Supplier's failure to comply with its obligations under this agreement: (a) the Order shall be deemed to have been delivered at 9.00am on the Delivery Date; and (b) the Supplier shall store the Order until delivery takes place, and charge the Customer for all related costs and expenses (including insurance). Failure to accept delivery It is in the supplier's interests to provide that if for any reason the customer will not take delivery of an order on the agreed delivery date, the supplier may store the goods at the customer's cost (see clause 6.5(b)). The customer will find it hard to argue against being made responsible for costs arising from delays it causes. Providing that delivery shall be deemed to have taken place allows the supplier to invoice the customer under clause 11.1 for the order (clause 6.5(a)) and causes the risk in the products comprising the order to pass to the customer under clause 8. If time is not of the essence for delivery of orders then the customer's failure to take delivery of the products on the agreed delivery date does not in itself justify the supplier disposing of them to someone else. Section 48(3) of the SGA enables the supplier to resell perishable goods without notice to the customer if the price is not paid when due, but as clause 11.2 provides that invoices for products are only payable "by the end of the month following the month in which [the invoices] were received OR within 30 days of receipt", this may not be of much assistance to the supplier. If the products are perishable, the supplier would be sensible to make specific provision in the agreement enabling it to dispose of the products. 6.6 Each delivery of Products shall be accompanied by a delivery note from the Supplier showing the Order Number, the date of the Order, the type and quantity of Products included in the Order[, including the code numbers of the Products,] and, in the case of Products being delivered by instalments, the outstanding balance of Products specified in an Order remaining to be delivered. Delivery note This clause deals with order process mechanics. As such, it is primarily for the parties to agree what information the delivery note should contain. 6.7 [The parties agree that if in respect of an Order the Supplier delivers up to and including [NUMBER]% more or less than the quantity of Products ordered, the Customer shall not be entitled to reject the Order[, but a pro rata adjustment shall be made to the Order invoice].] Inexact deliveries (optional clause) Consider including this clause where the products are difficult to count or weigh precisely. In this situation, the supplier may, in practice, deliver slightly more or less than the exact quantity of products specified in an order. Under the SGA, any variation from the agreed quantity constitutes a breach of contract that entitles the customer to reject the order in its entirety (unless the excess or shortfall is so slight that it would be unreasonable for it to do so (section 30, SGA). A supplier will not wish to be penalised for minor discrepancies that naturally occur in the course of things. Clause 6.7 allows the parties to specify in advance what the acceptable tolerances. A customer will generally accept a tolerance of up to 5% more or less than the quantity ordered. Where the excess or shortfall exceeds this amount, the customer will be able to rely on section 30 of the SGA. The customer will generally be unwilling to accept a tolerance much greater than 5%: delivery of a significant shortfall may force the customer to obtain the balance of the products on the open market at a higher price. Equally, the customer will be unwilling to accept excess products if it has to pay for them, or has severe storage constraints. The parties should also consider the issue of whether payment should be adjusted to reflect an excess or shortfall delivery of products. If the permitted variations are for more than a very small amount, the parties are likely to wish to provide for a pro rata adjustment to the order invoice. 6.8 If the Supplier requires the Customer to return any packaging materials to the Supplier, that fact must be clearly stated on the delivery note accompanying the relevant Order, and any such returns shall be at the Supplier's expense. 7. Acceptance and defective products Acceptance and defective products This clause deals with the customer's rights and remedies in the event the supplier delivers defective products. The right to reject defective products is one of the customer's most important rights. This clause sets out pre-agreed remedies for the customer. In addition, because clause 7.3 expressly preserves the conditions implied by the SGA relating to quality, description, fitness for purpose and correspondence with sample, the customer will also have the right to terminate the agreement if defective products are delivered. The customer should be careful to make sure it does not lose the benefit of these conditions by agreeing to the inclusion of wording in the agreement that excludes or alters terms by law. Typically, such wording might be introduced into warranty, limitation of liability or entire agreement provisions. Customers need to be careful that they do not lose its rights to reject defective products by reason of section 35 of the SGA, which sets out various circumstances in which they will be deemed to have accepted the products (section 11(4) of SGA provides that a customer may not reject goods that it has accepted). Clause 7 is intended to replace the section 35 rules with express contractual provisions setting out the circumstances in which acceptance will and will not take place. For a discussion of the section 35 rules, see Practice note, Supply contracts: overview: Acceptance. Instalments If products delivered as part of an instalment are defective, the customer will be entitled to reject the defective products in the instalment or to reject the instalment as a whole, but it will only be entitled to terminate the whole agreement if the delivery of an instalment containing defective products represents a breach going to the root of the contract (which will be a question of fact and construction in each case) (section 31(2), SGA). The customer may, if it wishes, insert express wording reserving the right to terminate the entire agreement and reject all the products if there is a defect in the products in any one instalment. 7.1 The Customer shall not be deemed to have accepted any Products until [it has had a reasonable time to inspect them following Delivery, or, in the case of a latent defect in the Products, until a reasonable time after the latent defect has become apparent OR it has had [NUMBER] Business Days following Delivery to inspect them, or, in the case of a latent defect in the Products, following the latent defect becoming apparent]. Inspection after delivery Clause 7.1 provides that acceptance shall only take place once the customer has had a period in which to inspect the products and identify defects. The customer is granted a longer period in respect of latent defects. The customer may prefer to give itself a "reasonable time" in which to identify defects, instead of a specific number of business days. What is "reasonable" will depend on the nature of the products and the surrounding circumstances. 7.2 If any Products delivered to the Customer do not comply with clause 5.3, or are otherwise not in conformity with the terms of this agreement, then, without limiting any other right or remedy that the Customer may have, the Customer may reject those Products and: (a) require the Supplier to repair or replace the rejected Products at the SupplierтАЩs risk and expense within [five] Business Days of being requested to do so; or (b) require the Supplier to repay the price of the rejected Products in full (whether or not the Customer has previously required the Supplier to repair or replace the rejected Products); and (c) claim damages for any other costs, expenses or losses resulting from the Supplier's delivery of Products that do not conform with the terms of this agreement. Remedies for defective products Clause 7.2 sets out the customer's contractual remedies if that the supplier delivers defective products. Provided that defects are notified within the prescribed time limits, most suppliers will readily accept an obligation to replace, repair or refund the price of the defective products. Difficulties may arise over the question of compensation. While being supplied with a product that works may put the customer in the position it should have been in at the outset, it does not address the issue of all the losses that could have resulted from the original failure. These can far exceed the value of the product supplied. Depending on what has been agreed in relation to liability at clause 16, the supplier may resist the inclusion of clause 7.2(c) in its current form. See Drafting note, Limitation of liability below. 7.3 The Customer's rights and remedies under this clause 7 are in addition to the rights and remedies available to it in respect of the statutory conditions relating to description, quality, fitness for purpose and correspondence with sample implied into this agreement by the Sale of Goods Act 1979. Substitution of rejected Products This clause expressly preserves the customer's rights and remedies under sections 13 to 15 of the SGA, which prima facie allow the customer to reject defective products and terminate the whole agreement. 7.4 The terms of this agreement shall apply to any repaired or replacement Products supplied by the Supplier. Repaired or replacement Products The supplier's liability in respect of defective products will not be discharged if the repaired or replacement products are in their turn defective because clause 7.4 provides that the terms of the agreement apply to repaired or replacement products. 7.5 If the Supplier fails to promptly repair or replace rejected Products in accordance with clause 7.2(a), the Customer may, without affecting its rights under clause 7.2(c), obtain substitute products from a third party supplier, or have the rejected Products repaired by a third party, and the Supplier shall reimburse the Customer for the costs it incurs in doing so. Substitution of rejected Products Clause 7.5 provides the customer with a practical solution if the supplier delays in repairing or replacing defective products. 7.6 If the parties dispute whether any Products comply with clause 5.3, either party may refer the matter to an Expert for determination in accordance with clause 12. 8. Title and risk Title and risk This clause specifies when risk and ownership in the products will pass to the customer. Legal issues Title. The transfer of title is at the heart of every contract of sale of goods. It has important consequences, particularly in terms of the transfer of risk and the rights of a party if the other becomes insolvent before the contract is completed. The SGA separates the passing of title in goods from the passing of possession or payment of the price. However, most commercial parties choose to connect the transfer of title to one or the other. A customer will prefer to link the transfer of property to the earlier of payment and delivery; a supplier to payment. Risk. If products are destroyed before the risk in them passes to the customer, the supplier will remain liable to deliver the equivalent quantity of products. Conversely, if the goods are destroyed after risk has passed to the customer, the customer will remain liable for the price of the products. Risk and title are tied together by section 20(1) of the SGA which provides that, unless otherwise agreed, the risk in goods passes to the customer when the property in the goods are transferred to it. This rule creates a conflict for a supplier: it will wish to pass the risk to the customer as soon as the goods leave its possession, but equally will not wish to pass title in the goods until payment has taken place, which generally happens after the goods have left the supplier's possession. Conversely, a customer will wish to put off the moment when risk passes for as long as possible, and for title to pass at the earliest possible moment. Most commercial parties agree to sever the statutory connection between the passing of risk and title and to connect the transfer of risk to delivery, which is so closely linked to possession. 8.1 The risk in Products delivered to the Customer shall pass to the Customer on Delivery. Passing of risk Clause 8.1 provides that risk in products will pass at the time of delivery. This effectively separates the passing of risk from the passing of property, and makes the completion of delivery critical to the transfer of risk. This position is generally accepted by customers. The supplier will wish the risk to pass as soon as possible and certainly at the time the goods leave its possession, so may seek to provide that risk passes when the products leave its premises, particularly if using a carrier. 8.2 Title to Products delivered to the Customer shall pass to the Customer on Delivery. Passing of title Payment is only to take place after delivery, so clause 8.2 provides that ownership in the products will pass on delivery (see Drafting note, Legal issues). If the customer is to pay for products in advance of delivery, it should substitute the following wording: "Title to Products shall pass to the Customer on the earlier of payment and the completion of Delivery in accordance with clause 6.2." For an example of a clause where the supplier retains title until the products have been paid for, see Standard document, Terms and conditions for the supply of goods (pro-supplier): clause 6.2. 9. Product prices Product prices This clause sets out the parties' agreement with regard to pricing. It should be amended to reflect the parties' pricing arrangements. Each party to a long-term supply agreement will be concerned to make sure that the product prices remain favourable to it throughout the term. The customer will wish to ensure that the supplier is continually looking to reduce the costs of manufacturing and supplying the products (and consequently, the product prices), and that the product prices are competitive when compared with the prices charged by the supplier to its other customers or on the open market. The supplier will be keen to ensure that it can pass on the effect of inflation and other changes to the costs of manufacturing and supplying the products. Accordingly, long-term supply agreements usually contain a variety of clauses providing for the adjustment of the product prices during the term. 9.1 The Product Prices for the period from the Commencement Date to [31 December [YEAR]] shall be the prices set out in Schedule 1. The Product Prices for subsequent years shall be determined in accordance with clause 10. Price reviews The standard document assumes that the product prices will be reviewed on a periodic basis. See Standard clause, Changes to the costs of supplying the products: supply of goods agreements for wording setting out the product prices where the product prices are to be fixed for the term. For illustration purposes, the agreement assumes that the initial product prices will remain in force until the end of a calendar year (which may or may not be the year the agreement was entered into) and will then be reviewed on an annual basis, with the new product prices taking force on 1 January of each year. The parties may prefer product price adjustments to take effect on a different date in which case the agreement will need to be amended in a number of places; see Drafting note, Purchase obligations (optional). 9.2 The Product Prices are exclusive of amounts in respect of VAT. The Customer shall, on receipt of a valid VAT invoice from the Supplier, pay to the Supplier such additional amounts in respect of VAT as are chargeable on a supply of Products. VAT Clause 9.2 provides that amounts in respect of VAT are excluded from the product prices and requires the customer to pay additional amounts in respect of VAT against delivery by the supplier of a valid VAT invoice (which the customer will need to recover its input tax from HMRC). This is necessary because, unless the agreement expressly provides otherwise, the consideration for the supply of products would be deemed to be VAT-inclusive (section 19(2) VATA 1994). As between businesses, prices are typically agreed on a VAT-exclusive basis (because businesses can generally recover all or part of the amounts in respect of VAT they pay as input tax). If the parties belong to the same VAT group clause 9.2 is not strictly required, as supplies of goods between them are disregarded for VAT purposes under section 43(1) of VATA 1994 and VAT invoices may not be issued in respect of such supplies (see Practice note, Groups of companies: tax: Value added tax). However, if clause 9.2 is not included and the parties cease to be members of the same VAT group (for example, following the disposal of one of the parties outside the group), the supplier will not be able to require the customer to pay additional amounts in respect of VAT. 9.3 The Product Prices are [exclusive OR inclusive] of the costs of packaging, insurance and carriage of the Products[, which shall be paid by the Customer]. What is included in Product Price For certainty, state whether costs such as packaging, delivery and insurance are included in the product prices. Excluded costs will generally appear as additional items on the order invoice. Negotiating and drafting issues The supplier is generally responsible for the cost and expenses of packaging the products. If the agreement is silent, section 29(6) of the SGA provides that the supplier shall bear the expenses of and incidental to putting the goods into a deliverable state. Delivery costs are generally treated as being for the account of the customer. 9.4 The Customer shall be entitled to the Supplier's standard discount for prompt payment. Discount for prompt payment This is a standard inclusion in a long-term supply agreement. 9.5 If the value of the Customer's purchases of Products in a year (or part year) [equals or exceeds the Minimum Purchase Amount, the following volume discounts shall apply to all its purchases of Products during that year OR exceeds the Minimum Purchase Amount, the following volume discounts shall apply to purchases of Products made in that year after the Minimum Purchase Amount has been achieved]: Sales volumes (in ┬г1000s) Percentage discount 0-20 [NUMBER]% 21-50 [NUMBER]% 51 and over [NUMBER]%
Volume discounts Volume discounts can either apply to all products bought during a specified period, subject to satisfying a minimum level of purchases, or, alternatively, only to those products bought over and above the minimum threshold during that period. If the discount applies only to products bought over and above a minimum threshold, it should be more substantial than if it applies to all purchases of products. Note that the minimum threshold for a volume discount need not correlate to any minimum purchase obligation. Note that the agreement provides for discounts to be calculated by references to a calendar year. Amend clauses 9.5, 9.6 and 9.7 as necessary to reflect the parties' commercial agreement. See also Drafting note, Purchase obligations (optional) on the subject of time periods. 9.6 Volume discounts shall be calculated by reference to the Product Prices in force on the first day of the year (or part year), which shall for the purposes of calculating the discounts be exclusive of any VAT, other discounts[, and any incidental costs payable in respect of the Products]. Volume discounts Amend clause 9.6 to be consistent with clause 9.3. 9.7 After the end of each year, the Supplier shall submit a statement to the Customer showing the quantities of Products purchased during that year and the volume discount that is due (Discount Statement). Unless the Customer disputes the Discount Statement, the Supplier shall [pay the volume discount to the Customer in cleared funds to the bank account nominated in writing by the Customer OR issue the Customer with a credit note for the amount of the volume discount] within [30] days of receipt of the Discount Statement OR set off such discount against future Order invoices]. Discount Statement The supplier may choose to issue the discount in the form of a credit note, which would allow the customer to choose when to offset the note against its future purchases of products, and which might encourage the customer to purchase other products from the supplier. Encouraging further purchases of products will have less significance in an agreement that imposes a purchase obligation on the customer. 9.8 [The Supplier shall use all reasonable endeavours during the Term to reduce its manufacturing, supply and other costs for the Products[, including implementing cost savings initiatives and seeking more competitive supplies of raw materials and equipment] OR The Supplier will reduce its manufacturing, supply and other costs for the Products by at least [NUMBER]% per annum each year during the Term.] [[NUMBER]% of the OR The] net benefit of cost reductions shall be [applied to reduce the Product Prices with immediate effect OR The net benefit of cost reductions shall be taken into account at the next Product Price Review].] Cost reductions A customer entering into a long term supply agreement may seek to include a cost reduction clause to ensure that the supplier is committed to reducing the costs of the products and the production process during the life of the supply agreement. Such reductions may be gained from internal improvements put in place by the supplier or from external improvements arising in the marketplace, for example, technology advances. An aggressive customer may seek a concrete cost reduction commitment from the supplier, such as a percentage reduction. If the customer wishes to formalise cost reduction efforts, consider adding the following clause: "On or before 1 January of each year the parties will discuss and use their best efforts to agree a cost reduction plan for that year, which shall include a programme of measures to maximise production efficiencies and save costs, together with timings and targets for such measures." 9.9 The Supplier agrees that if at any time during the Term it sells any Product to a comparable customer for less than the Product Price then in force for that Product, it shall reduce the relevant Product Price to match the lower price for so long as the lower price is available (but for no longer) [and shall refund the Customer the difference between the Product Price and the lower price in respect of its purchases of the Product after the Supplier began charging the lower price]. For the purposes of this clause, тАЬcomparableтАЭ means a customer that purchases products in substantially similar volumes as the Customer on broadly similar terms and conditions. Most favoured customer This clause gives the customer the benefit of basic "most favoured nation" or "customer" price terms. In practice, the difficulty with this sort of clause is proving (short of resorting to litigation), as opposed to merely suspecting, that the supplier is giving better terms to other customers. However, including the provision at least makes it possible to have the argument.
10. Price review, supplier records and disputes 10.1 The parties shall meet in [SPECIFY MONTH] of each year to review and, where appropriate, agree changes to the Product Prices (Product Price Review). Agreed changes shall take effect on [1 January of the following year]. The first Product Price Review shall be held in [SPECIFY MONTH AND YEAR]. In agreeing Product Prices for the following year, the parties shall have regard to the following factors: (a) changes to the Supplier's costs of [manufacturing and] distributing the Products; (b) the volumes of Products ordered by, and supplied to, the Customer; (c) the price at which the Supplier supplies the Products to comparable customers; (d) the prices at which comparable products are supplied by other suppliers in the open market; (e) any cost reductions achieved by the Supplier since the last Product Price Review (to the extent that they have not already been taken into account in the Product Prices); and (f) any Deficit. 10.2 If within [one] month of beginning a Product Price Review the parties cannot agree the Product Prices for the following year, either party may refer the matter to an Expert for determination in accordance with clause 12. The Expert shall determine the Product Prices for the relevant year, taking into account the factors for consideration listed in clause 10. 10.3 If the Product Prices for a year are not agreed or determined by [31 December of the previous year], the Product Prices in force during the previous year shall apply pending agreement or determination of the new Product Prices. Once the new Product Prices are agreed or determined, they shall apply with effect from [1 January of the relevant year] and shall be deemed to come into force from that date for the purposes of determining the Minimum Purchase Amount in accordance with clause 2.2. Within one month of agreeing or determining the new Product Prices, the Customer shall pay the Supplier any outstanding sums due in respect of its purchases of Products in the relevant year, together with any applicable VAT, or the Supplier shall refund the Customer for any excess amounts paid on Products purchased in the relevant year, and shall repay any VAT due to be repaid, as appropriate. Price review mechanisms These clauses set out a simple price review mechanism. For illustration purposes, the agreement assumes that the initial product prices will remain in force until the end of a calendar year (which may or may not be the year the agreement was entered into) and will then be reviewed on an annual basis, with the new product prices taking force on 1 January of each year. The parties may prefer product price reviews to take place more or less frequently and at a different time of year, in which case clause 10.1 and a number of other provisions will need to be amended: see Drafting note, Purchase obligations (optional). Clause 10.1 should be amended to reflect the factors the parties agree should be taken into consideration. If the parties do not include a periodic price review mechanism such as this one in the agreement, the supplier will wish to incorporate some other mechanism that allows it to adjust the product prices in order to pass on changes in the costs of manufacturing and supplying the products. For an example of such a mechanism, see Standard clause, Changes to the cost of supplying the products: supply of goods agreements. 10.4 The Supplier shall provide all such evidence as the Customer may reasonably request in order to verify: (a) invoices submitted by the Supplier; (b) Discount Statements; and (c) [cost reductions achieved by the Supplier (including the dates on which cost reductions were achieved)]. Supplier information to allow customer to verify amounts payable Clause 10.4 provides the customer with a simple right to verify the sums payable under the agreement. In addition, the Supplier shall, on request, allow the Customer to inspect and take copies of (or extracts from) all relevant records and materials of the Supplier relating to the supply of the Products as may be reasonably required in order to verify such matters. 10.5 All disputes concerning the Product Prices shall be resolved in accordance with clause 277, except as provided in clause 10.2. Disputes on product prices See the Drafting note, Expert determination below. 11. Terms of payment Terms of payment This clause sets out the obligations of the parties in relation to payment for the products. It should be amended to reflect the parties' payment arrangements. The most common periods for payment are monthly and quarterly, although some businesses prefer to use their own accounting periods, for example, of four week periods. If the parties are part of the same corporate group, they will need to consider whether transfer pricing rules apply to the sums payable for the products. See Drafting note, Legal issues above. 11.1 The Supplier shall be entitled to invoice the Customer for each Order on or at any time after Delivery. Each invoice shall quote the relevant Order Numbers. Invoices This clause stipulates when the supplier may invoice the customer for supplied products. Amend to reflect the parties' commercial agreement. 11.2 The Customer shall pay invoices in full [by the end of the month following the month in which they were received OR within 30 days of receipt]. Payment shall be made to the bank account nominated in writing by the Supplier. Interest on late payment This clause stipulates when payment for products becomes due. Amend to reflect the parties' commercial agreement. 11.3 If a party fails to make any payment due to the other under this agreement by the due date for payment, then, without limiting the other party's remedies under clause 20.2, the defaulting party shall pay interest on the overdue amount at the rate of [4] % per annum above [FULL NAME OF BANK]'s base rate from time to time. Such interest shall accrue on a daily basis from the due date until the date of actual payment of the overdue amount, whether before or after judgment. The defaulting party shall pay the interest together with the overdue amount. In relation to payments disputed in good faith, interest under this clause is payable only after the dispute is resolved, on sums found or agreed to be due, from [the due date OR [NUMBER] days after the dispute is resolved] until payment. Interest rates In commercial contracts, interest on late payments is often agreed at between 2% and 4% above a published base rate (often the supplierтАЩs bank or the Bank of England). Too low a rate might fail to displace the implied right to at least 8% interest on the contract price, under the Late Payment of Commercial Debts (Interest) Act 1998, especially if it follows a long interest-free credit period. Too high a rate might be unenforceable as a penalty. However, where the Late Payment Act applies, it might be hard to argue that a clause matching the statutory rate of interest is unenforceable as a penalty. Although courts and arbitrators can give interest on most claims for debt or damages, it is convenient to have an agreed rate applicable as of right to all late payments. The customer may also wish to exclude the higher rates payable under the Late Payment Act, where applicable. The implied right to interest under the Late Payment Act gives the seller more than 8% simple interest, plus a small fixed payment on each new debt. It does not apply to all contractual payments, only to sums paid by the buyer as the price of goods and services. For more information, see Practice notes, Interest clauses and Interest under the Late Payment of Commercial Debts (Interest) Act 1998. 11.4 If the Customer disputes any invoice or other statement of monies due, the Customer shall immediately notify the Supplier in writing. The parties shall negotiate in good faith to attempt to resolve the dispute promptly. The Supplier shall provide all such evidence as may be reasonably necessary to verify the disputed invoice or request for payment. If the parties have not resolved the dispute within 30 days of the Customer giving notice to the Supplier, the dispute shall be resolved in accordance with clause 27, except for any dispute relating to a Discount Statement, which shall be referred to an Expert for determination in accordance with clause 12. Where only part of an invoice is disputed, the undisputed amount shall be paid on the due date as set out in clause 11.2. [The Supplier's obligations to supply the Products shall not be affected by any payment dispute.] Procedure for payment disputes Clause 11.4 provides the parties with a framework for resolving payment disputes, which includes referral of the dispute for resolution under the multi-tiered dispute resolution procedure set out at clause 27, or for determination by an independent expert in accordance with clause 12. See also the Drafting note, Expert determination below. 11.5 Each party may, without limiting any other rights or remedies it may have, set off any amounts owed to it by the other party [under this agreement] against any amounts payable by it to the other party [under this agreement]. Set-off This clause builds on the parties' existing rights of set-off under the general law. For information on set-off clauses, see Practice note, Set-off clauses and the integrated drafting notes to Standard clause, Set-off. 11.6 All payments payable to the Supplier or the Customer under this agreement shall become due immediately on its termination. This clause 11.6 is without prejudice to any right to claim for interest under the law or under this agreement. Payments due on termination Accelerating the due date for outstanding payments on termination is standard practice in supply arrangements, and the supplier will always wish to include such a provision. 12. Expert determination Expert determination This clause provides for the selection and appointment of an expert for the purposes of determining certain disputes that may arise between the parties. Expert determination can be an effective means of settling a technical issue or dispute between contracting parties. As a dispute resolution method, it is less formal than the procedures of arbitration and litigation, and it allows the appointment of an expert who is familiar with the relevant technical issues. Commercial parties will generally seek an expert determination in respect of two broad categories of dispute: where a valuation is required; and where an expert opinion is needed on a technical matter. See Practice note, Expert determination for a general discussion of the use of experts to determine disputes. For more information on expert determination clauses, see the integrated drafting notes to Standard clause, Expert determination. 12.1 An Expert is a person appointed in accordance with this clause to resolve certain matters as specified in this agreement. 12.2 Where under this agreement a party wishes to refer a matter to an Expert, the parties shall first agree on the appointment of an independent Expert and agree with the Expert the terms of their appointment. 12.3 Where the parties propose to appoint an Expert, the Expert shall be: (a) in the case of a dispute relating to the Specification, [manufacture,] quality or condition of the Products, [SPECIFY TECHNICAL EXPERT BY NAME OR BY PROFESSIONAL QUALIFICATION]; and (b) in the case of a dispute relating to Discount Statements, Reconciliation Statements, Product Prices, Product Price Reviews, or Product Price Adjustments, [SPECIFY CHARTERED ACCOUNTANT BY NAME OR BY QUALIFICATION]. If the parties are unable to agree on an Expert or the terms of the Expert's appointment within seven days of either party serving details of a suggested expert on the other, either party shall then be entitled to request [NAME OF BODY ENTITLED TO MAKE NOMINATION] in the case of a dispute falling under clause 12.3(a) and the Institute of Chartered Accountants in England and Wales in the cases of a dispute falling under clause 12.3(b) to appoint as Expert an [PROFESSIONAL QUALIFICATION] of repute with [international] experience in [TYPE OF MATTER] [and for the [NAME OF BODY ENTITLED TO MAKE NOMINATION] to agree with the Expert the terms of their appointment]. 12.4 The Expert is required to prepare a written decision [including reasons] and give notice (including a copy) of the decision to the parties within a maximum of three months of the matter being referred to the Expert. 12.5 If the Expert dies or becomes unwilling or incapable of acting, or does not deliver the decision within the time required by this clause, then: (a) either party may apply to [NAME OF BODY ENTITLED TO MAKE NOMINATION] to discharge the Expert and to appoint a replacement Expert with the required expertise; and (b) this clause shall apply to the new Expert as if they were the first Expert appointed. 12.6 All matters to be determined in accordance with this clause must be conducted, and the Expert's decision shall be written, in the English language. 12.7 The parties are entitled to make submissions to the Expert [including oral submissions] and will provide (or procure that others provide) the Expert with such assistance and documents as the Expert reasonably requires for the purpose of reaching a decision. 12.8 To the extent not provided for by this clause, the Expert may in their reasonable discretion determine such other procedures to assist with the conduct of the determination as they consider just or appropriate[, including (to the extent considered necessary) instructing professional advisers to assist them in reaching their determination]. 12.9 Each party shall with reasonable promptness supply each other with all information and give each other access to all documents, personnel and things as the other party may reasonably require to make a submission under this clause. 12.10 The Expert shall act as an expert and not as an arbitrator. The Expert shall determine the matters referred to them under the agreement [which may include any issue involving the interpretation of any provision of this agreement, their jurisdiction to determine the matters and issues referred to them and their terms of reference]. The Expert may award interest as part of their decision. The Expert's written decision on the matters referred to them shall be final and binding on the parties in the absence of manifest error or fraud. 12.11 [In determining matters referred to it under this agreement,] the Expert shall take into account [SPECIFY BRIEFLY ANY MATTERS THAT THE EXPERT IS TO TAKE INTO ACCOUNT]. 12.12 [Each party shall bear its own costs in relation to the reference to the Expert OR The Expert may direct that any legal costs and expenses incurred by a party in respect of the determination shall be paid by another party to the determination on the general principle that costs should follow the event, except where it appears to the Expert that, in the circumstances, this is not appropriate in relation to the whole or part of such costs]. The Expert's fees and any costs properly incurred by them in arriving at their determination (including any fees and costs of any advisers appointed by the Expert) shall be borne by the parties [equally or in such other proportions as the Expert shall direct]. 12.13 All matters concerning the process and result of the determination by the Expert shall be kept confidential among the parties and the Expert. 12.14 Each party shall act reasonably and co-operate to give effect to the provisions of this clause and otherwise do nothing to hinder or prevent the Expert from reaching their determination. 12.15 The Expert and [Nominating Body] shall have no liability to the parties for any act or omission in relation to this appointment, save in the case of bad faith. 13. Insurance Insurance This clause sets out the supplier's obligations to maintain insurance policies in respect of the products. In view of the customer's potential liability to third parties for the products, the customer will be keen to ensure that the supplier maintains insurance to cover its own potential liabilities in respect of the products. Insurance is closely linked to limitation of liability issues: where a party seeks to limit its liability under or in connection with a contract by reference to a fixed cap, UCTA requires courts to consider the extent to which insurance cover was available to cover that liability when assessing the reasonableness of that cap (section 11(4)). In practice, few companies will wish to accept potential liability for losses that are not covered by insurance. Insurance is also linked to the product prices: the supplier's insurance costs will be factored into the product prices and the customer may find that requiring the supplier to take out additional insurance policies will result in an unwelcome increase in the product prices. Equally, given the correlation between insurance and liability, and insurance and product prices, the customer may find that an attempt to negotiate an increase to the supplier's liability cap is countered by the argument that because the supplier's current level of risk is factored into the product prices, and the cost of insuring for a greater level of risk would affect the price of the products. It is essential that the supplier checks with its insurers that the terms of the insurance clause do not invalidate its insurance cover. See Practice note, Supply contracts: overview: Insurance: practical considerations for a discussion of this and other practical issues relating to insurance obligations. The customer should be aware that requiring the supplier to insure against a certain risk does not mean that the supplier is liable for any losses associated with that risk; if the customer is seeking to reallocate its risk in connection with particular events, it should consider taking an indemnity from the supplier, or excluding its liability under the limitation of liability clause. 13.1 During this agreement [and for a period of [one year] afterwards] the Supplier shall maintain in force the following insurance policies with reputable insurance companies: (a) public liability insurance for not less than ┬г[AMOUNT] million per claim; and (b) product liability insurance for not less than ┬г[AMOUNT] million for claims arising from any single event and not less than ┬г[AMOUNT] million in aggregate for all claims arising in a year. Relevant insurance policies The customer could reasonably expect the supplier to hold product liability insurance and public liability insurance in respect of the products. Additionally, the customer may require the supplier to take out product guarantee insurance and product recall insurance. The insurer may not always be willing to note the customer's interest on the supplier's insurance policy, particularly if the insurer envisages that it might be asked to note several different interests. [The Supplier shall ensure that the Customer's interest is noted on each insurance policy, or that a generic interest clause has been included.] 13.2 On taking out and on renewing each policy, the Supplier shall promptly send a copy of the receipt for the premium to the Customer. On the Customer's written request, the Supplier shall provide the Customer with copies of the insurance policy certificates and details of the cover provided. Proof of insurance policies The supplier may object to the extra level of business bureaucracy. 13.3 The Supplier shall ensure that any subcontractors also maintain adequate insurance having regard to the obligations under this agreement which they are contracted to fulfil. Insurance held by subcontractors This clause is important to the customer, as it will want to know that the subcontractor can meet any liability incurred. 13.4 The Supplier shall: (a) do nothing to invalidate any insurance policy or to prejudice the Customer's entitlement under it; and (b) notify the Customer if any policy is (or will be) cancelled or its terms are (or will be) subject to any material change. Material change to policy terms This clause builds on the supplier's obligation to maintain the insurance policies set out in clause 13.1. The supplier may not be able to avoid the terms of its insurance policies being altered in the future. However, the customer will wish to be informed of material changes so that it can initiate discussions with the supplier about mitigating the resulting increase in risk. 13.5 The Supplier's liabilities under this agreement shall not be deemed to be released or limited by the Supplier taking out the insurance policies referred to in clause 13.1. Insurance does not limit supplier's liability This clause is essentially a restatement of the law, particularly as the parties make express provision as to liability in clause 16, but its inclusion may give the customer comfort. 13.6 If the Supplier fails or is unable to maintain insurance in accordance with clause 13.1, or fails to provide evidence that it has paid the current year's premiums in accordance with clause 13.2, the Customer may, so far as it is able, purchase such alternative insurance cover as it deems to be reasonably necessary and shall be entitled to recover all reasonable costs and expenses it incurs in doing so from the Supplier. Customer's purchase of alternative insurance Clause 13.6 is unusual and only a strong customer would attempt to include it. 14. Compliance with laws and policies Compliance with laws and policies Although both parties will have to comply with relevant laws in any event, this clause aims to bring that obligation to the supplier's attention. Critically, it also obliges the supplier to comply with the customer's business policies. Include the obligation to procure compliance in clause 14.1 if the customer is concerned to have the ability to terminate the agreement not just in respect of the supplier's behaviour but also its group's. Note that a definition of "Group" will need to be added to the agreement if it does not already include one. 14.1 In performing its obligations under the agreement, the Supplier shall [and shall procure that each member of its Group] comply with: (a) all applicable laws, statutes, regulations [and codes] from time to time in force; and (b) the Mandatory Policies. 14.2 The Customer may terminate the agreement with immediate effect by giving written notice to the Supplier if the Supplier commits a breach of clause 14.1. Termination The express right to terminate for breach of this compliance obligation can be included here or instead can be included in the agreement's general termination clause (clause 20). For a sample termination clause, see Standard clause, Termination. 15. Indemnity Indemnity For information on indemnity clauses generally, see the integrated drafting notes to Standard clause, Indemnity. 15.1 The Supplier shall indemnify the Customer against all liabilities, costs, expenses, damages and losses (including but not limited to any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest, penalties and legal and other [reasonable] professional costs and expenses) suffered or incurred by the Customer arising out of or in connection with: (a) any claim made against the Customer for actual or alleged infringement of a third party's Intellectual Property Rights arising out of, or in connection with, the supply or use of the Products; Intellectual property rights indemnity In general, the customer cannot be expected to know whether the products infringed a third party's intellectual property rights. Accordingly, it is usual to allocate this risk to the supplier. The customer's only major remaining concern will then be whether the supplier has the resources to meet its claim. (b) any claim made against the Customer by a third party arising out of, or in connection with, the supply of the Products, to the extent that such claim arises out of the breach, negligent performance or failure or delay in performance of this agreement by the Supplier, its employees, agents or subcontractors; and Defective products Drafting note, Defective products relates specifically to liability for defective goods. There is an element of apparent overlap between this clause and clause 15.1(c). However, clause 15.1(c)is drafted with the Consumer Protection Act 1987 in mind, and accordingly covers the situation where the supplier has not been guilty of a breach or some other default, which clause 13.1.(b) does not. In addition, the indemnity in this clause is limited to liability for death, personal injury and property damage, which is in keeping with the treatment of damages under the Consumer Protection Act 1987. (c) any claim made against the Customer by a third party for death, personal injury or damage to property arising out of, or in connection with, defective Products, to the extent that the defect in the Products is attributable to the acts or omissions of the Supplier, its employees, agents or subcontractors. General indemnity against third party claims This provision is a general indemnity against third party claims arising from the supplier's breach or default performing the agreement. It is not a direct indemnity from the supplier to the customer in respect of the supplier's breaches or defaults in performing the agreement. 15.2 If any third party makes a claim, or notifies an intention to make a claim, against the Customer which may reasonably be considered likely to give rise to a liability under this indemnity (Claim), the Customer shall: (a) as soon as reasonably practicable, give written notice of the Claim to the Supplier, specifying the nature of the Claim in reasonable detail; (b) not make any admission of liability, agreement or compromise in relation to the Claim without the prior written consent of the Supplier (such consent not to be unreasonably conditioned, withheld or delayed), provided that the Customer may settle the Claim (after giving prior written notice of the terms of settlement (to the extent legally possible) to Supplier, but without obtaining Supplier's consent) if Customer reasonably believes that failure to settle the Claim would be prejudicial to it in any material respect; (c) give the Supplier [and its professional advisers] access at reasonable times (on reasonable prior notice) to its premises and its officers, directors, employees, agents, representatives or advisers, and to any relevant assets, accounts, documents and records within the power or control of the Customer , so as to enable the Supplier and its professional advisers to examine them and to take copies (at the Supplier's expense) for the purpose of assessing the Claim; and (d) subject to Supplier providing security to the Customer to the Customer's reasonable satisfaction against any claim, liability, costs, expenses, damages or losses which may be incurred, take such action as the Supplier may reasonably request to avoid, dispute, compromise or defend the Claim. Indemnified party's obligations See the integrated drafting notes to clause 1.4 of Standard clause, Indemnity in relation to the conduct of intellectual property rights claims. 15.3 If a payment due from the Supplier under this clause is subject to tax (whether by way of direct assessment or withholding at its source), the Customer shall be entitled to receive from the Supplier such amounts as shall ensure that the net receipt, after tax, to the Customer in respect of the payment is the same as it would have been were the payment not subject to tax. Tax on payment The extent to which the common law rules on mitigation apply to indemnity claims is unclear (see Practice note, Contracts: indemnities but it is advisable to provide expressly that the indemnified party will make efforts to mitigate its losses. Most indemnified parties will accept this obligation. 15.4 Nothing in this clause shall restrict or limit the Customer's general obligation at law to mitigate a loss which it may suffer or incur as a result of a matter that may give rise to a claim under this indemnity. 16. Limitation of liability Limitation of liability It is standard practice for businesses to attempt to restrict their potential liabilities when entering into contracts. In supply agreements, the issue of liability will be of more relevance to the supplier than to the customer. This clause seeks to limit the parties' liability to each other for: Breaches of the contract. Any use or resale by the customer of the products, or of any products incorporating the products. Any representation, statement or tortious act or omission arising under or made in connection with the contract. Exclusion or limitation of liability clauses need to be approached with care. The parties should be aware that if they seek to impose exclusions that are too wide, or liability caps that are too low, they run the risk of the entire exclusion clause being deemed ineffective. In this event, the claiming party's ability to recover damages will be limited only by the common law rules on recovery. Legal issues All purported restrictions of liability must comply with the applicable statutory and common law controls. A supply of goods agreement between two businesses will be subject to the provisions of UCTA but, as the standard document is a "bespoke" agreement, UCTA's application will be limited to the narrow application described in Drafting note, Legal issues. The Misrepresentation Act 1967 and the Consumer Protection Act 1987 also regulate exclusions and limitations of liability in sale of goods contracts, although the Consumer Protection Act is unlikely to be directly relevant as between the supplier and a business customer. Accordingly, in relation to the standard document:       !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxz¤   {|}~А Liability for death or personal injury caused by negligence may not be excluded or limited (section 2(1), UCTA). Liability for fraud or fraudulent misrepresentation may not be excluded or limited as a matter of public policy. Liability for breach by the supplier of the condition as to title or the warranty as to quiet possession implied by section 12 of the SGA may not be excluded or limited (section 6(1)(a), UCTA). Liability for defective products arising under the Consumer Protection Act 1987 may not be excluded or limited (section 7, Consumer Protection Act 1987). Liability for losses caused by negligence (other than death or personal injury) may only be excluded or restricted to the extent it is reasonable to do so (section 2(2), UCTA). Liability for losses caused by misrepresentation may only be excluded or restricted to the extent it is reasonable to do so (section 3, Misrepresentation Act 1967). Liability for breaches by the supplier of sections 13-15 of the SGA in relation to the quality of the products may only be excluded or restricted to the extent it is reasonable to do so (section 6(3), UCTA). What is a reasonable exclusion or limitation is assessed by reference to the circumstances that were, or ought reasonably to have been, known to the parties when the agreement was made (section 11(1), UCTA) (UCTA reasonableness test). The key considerations when assessing the reasonableness of a party who seeks to limit its liability to a specified sum of money (for instance, "the supplier's total liability under or in connection with this agreement shall not exceed ┬г5 million") are: The resources available to that party to meet the liability. The extent to which insurance cover is available to cover the liability (section 11(4), UCTA). For a detailed discussion of exclusion and limitation of liability clauses, see Practice notes, Limiting liability: drafting and negotiating and Limiting liability: statutory and common law controls on limitation clauses. Negotiating and drafting issues General A limitation of liability clause should never exclude or restrict liability for matters where the law prohibits this, and it is good practice to state expressly that such liability is not excluded or restricted. It would be reasonable to expect a supplier to undertake some liability in negligence for damage to tangible property, as insurance should be easily obtainable for this type of loss. Attempts to exclude all liability for consequential or indirect losses should be treated with caution (see Consequential loss below). Attempts to exclude all liability for financial losses should be treated with caution (see Financial loss in the bullet point below). Clear wording must be used to exclude or restrict liability for negligence (see Negligence below). Clear wording must be used to exclude or restrict liability for deliberate breaches (see Deliberate breaches below). Limitation clauses are not regarded by the courts with the same hostility as exclusion clauses. For a discussion of an approach of a party seeking to protect itself from unlimited liability, see Practice note, Limiting liability: drafting and negotiating: An approach to negotiations, and for a party likely to make a claim see Negotiating for the likely claimant. Commonly used expressions in limitation clauses For more information about words and phrases commonly found in limitation clauses including "indirect and consequential loss", "economic loss", "negligence" and "gross negligence", "deliberate or wilful", see Practice note: Contract: limiting liability and in particular the section Common words and phrases in limitation clauses. Insurance The supplier should contact its insurers to discuss the types of loss in respect of which it might obtain insurance and the appropriate upper limits. They must also make sure that the limitation of liability clause does not invalidate their insurance cover. See also Drafting note, Insurance. Structure Exclusion clauses should, as far as possible, be drafted in the form of a series of clauses, sub-clauses and sub-paragraphs. Therefore, if one sub-clause is held unreasonable, it can be severed from the other provisions, which will remain enforceable. See Drafting note, Severance. WARNING: you are strongly advised to read Drafting note, Limitation of liability on this clause before use. 16.1 This clause sets out the entire financial liability of the parties (including any liability for the acts or omissions of their respective employees, agents and subcontractors) to each other in respect of: (a) any breach of this agreement; (b) any use made or resale of the Products by the Customer, or of any product incorporating any of the Products; and (c) any representation, statement or tortious act or omission (including negligence) arising under or in connection with this agreement. General limit of liability This clause sets out the parties' intention to limit their liability under or in connection with the agreement. 16.2 Nothing in this agreement shall limit or exclude the liability of either party for: (a) death or personal injury resulting from negligence; or (b) fraud or fraudulent misrepresentation; or (c) breach of the terms implied by section 12 of the Sale of Goods Act 1979; or (d) breach of section 2 of the Consumer Protection Act 1987; or Specific carve out from the general limit or exclusion of liability Clause 16.2(a) to (d) make a virtue of necessity by stating that the parties are not seeking to exclude or restrict liability where to do so would be illegal or ineffective. (e) the indemnities contained in clause 15; or Indemnities exempt from limitation of liability Clause 16.2(e) exempts the indemnities given under clause 15.1 from any exclusion or limitation of liability under the agreement. From the customer's perspective, indemnities in its favour should be unlimited; the supplier may however attempt to limit its exposure under them, either by including them under the general contractual caps, or by imposing specific caps on the relevant indemnity. If the supplier has agreed to give any other indemnities under the agreement, the customer should attempt to list them in clause 16.2 too. (f) the deliberate default or wilful misconduct of that party, its employees, agents or subcontractors. No limit on liability for default or deliberate breach If the customer wants to ensure that the supplier's liability for deliberate breaches will not be limited by clause 14, it should include clause 16.2(f). The clause refers to "deliberate default" and "wilful misconduct", as these terms have already been considered judicially and therefore should provide greater certainty than the term "deliberate breach": see Practice note, Contract: limiting liability: Common words and phrases in limitation clauses and in particular the section "Deliberate or wilful". 16.3 Without prejudice to clause 16.2, neither party shall be liable to the other, whether in contract, tort (including negligence) or restitution, or for breach of statutory duty or misrepresentation, or otherwise, for any: (a) loss of profit; or (b) loss of goodwill; or (c) loss of business; or (d) loss of business opportunity; or (e) loss of anticipated saving; or (f) loss or corruption of data or information; or (g) special, indirect or consequential damage or loss Indirect or consequential loss Indirect and consequential loss has traditionally been interpreted to mean loss that is recoverable as damages under the second limb of Hadley v Baxendale. That is, losses that are not the natural results of the breach in the usual course of things, but are likely to arise from a special circumstance of the case. These are only recoverable as damages for breach of contract if the paying party knew or should have known of the special circumstance when it made the contract. However, in Star Polaris LLC v HHIC-Phil Inc [2016] EWHC 2941 (Comm), because of the context of the contract in which the words indirect and consequential loss appeared, the court was prepared to depart from the usual meaning of those words. For a discussion of the meaning of the words "indirect and consequential loss", see Practice note, Contract: limiting liability: Common words and phrases in limitation clauses. Financial loss Clause 16.3 sets out different types of financial loss that the parties may wish to exclude. The clause should be used with caution (see Practice note, Contract: limiting liability: Common words and phrases in limitation clauses and in particular the section "Economic loss"). suffered by the other party that arises under or in connection with this agreement. 16.4 Without prejudice to clause 16.2 [or clause 16.3], the Supplier's total liability arising under or in connection with this agreement, whether arising in contract, tort (including negligence) or restitution, or for breach of statutory duty or misrepresentation, or otherwise, shall be limited to ┬г[AMOUNT]. Liability cap Clause 16.4 seeks to limit the supplier's aggregate liability under the contract to a fixed financial amount. In determining the amount to be inserted in this condition, the parties must have regard to the reasonableness test in UCTA. For a discussion of the factors relevant to the UCTA reasonableness test see Practice note, Limiting liability: statutory and common law controls on limitation clauses: The UCTA reasonableness test. For a discussion of factors to be taken into account in setting an appropriate upper limit on liability see Practice note, Limiting liability: drafting and negotiating: Capping liability. The customer may wish to omit this clause; however, as the supplier will certainly include it when it revises the draft agreement, the customer may do better to include a clause that sets a high cap, which it can then use as a basis for negotiations. 16.5 [Without prejudice to clause 16.2 [or clause 16.3], the Customer's total liability arising under or in connection with this agreement, whether arising in contract, tort (including negligence) or restitution, or for breach of statutory duty or misrepresentation, or otherwise, shall be limited as follows: (a) for non-payment of invoices for Products purchased, to the amount unpaid, and any interest due on such amount pursuant to clause 11.3; or (b) for any other type of liability, to ┬г[AMOUNT].] Clause 16.5 While less obviously necessary, the customer may also wish to limit its liability under or in connection with the agreement. The limitations should not apply to its liability to pay for the products. In determining the amount to be inserted in this condition, the parties must have regard to the reasonableness test in UCTA. See the Drafting note, Limitation of liability and Practice note, Supply contracts: overview for a consideration of factors to be taken into account in setting an appropriate upper limit on liability. 17. Assignment and other dealings Assignment and other dealings Neither party may assign the benefit of the agreement or subcontract its obligations under the agreement to a third party without the other party's prior consent. An express carve-out in respect of intra-group assignments and subcontracting arrangements is included. Practically speaking, the question of assignment of a supply of goods agreement to a non-group company is only likely to arise if either supplier or customer sells their business, or if the supplier wishes to factor the debts arising under the agreement. The standard document assumes that the parties would wish to reserve a right of consent to such an assignment or transfer. For information on clauses regarding assignment and other dealings with the agreement, see the integrated drafting notes to Standard clause, Assignment and other dealings. 17.1 Subject to [clause 17.2, neither party shall assign, transfer, mortgage, charge, subcontract, declare a trust over or deal in any other manner with any or all of its rights and obligations under this agreement without the prior written consent of the other party [(such consent not to be unreasonably withheld or delayed)]. 17.2 Either party may, after having given prior written notice to the other party, assign or subcontract any or all of its rights and obligations under this agreement to a member of its Group [for so long as that company remains a member of its Group]. [A party who assigns its rights under this agreement shall procure that such company assigns such rights back to it [or to such other member of its Group as it may nominate] immediately before that company ceases to be a member of its Group. A party who subcontracts the performance of any or all of its obligations under this agreement to a member of its Group shall immediately resume the performance of such obligations on such company ceasing to be a member of its Group[, or delegate the performance of such obligations to such other member of its Group as it may nominate]. 18. Confidentiality Confidentiality This clause imposes basic mutual confidentiality obligations on the parties. It also requires each party to ensure that the employees, officers, agents, consultants and sub-contractors will respect the confidential nature of the information and makes it responsible for any failure to do so. For information on confidentiality clauses, see the integrated drafting notes to Standard clause, Confidentiality. For an overview of the main considerations in protecting confidentiality in a commercial setting see Practice note, Protecting confidential information: overview. 18.1 Each party undertakes that it shall not at any time during this agreement and for a period of [two] years after termination disclose to any person any confidential information concerning the business, affairs, customer, clients or suppliers of the other party or of any member of its Group, including information relating to a party's operations, processes, plans, product information, know-how, designs, trade secrets, software, market opportunities and customers (Confidential Information), except as permitted by clause 18.2. 18.2 Each party may disclose the other partyтАЩs Confidential Information: (a) to its employees, officers, agents, consultants or subcontractors (Representatives) who need to know such information for the purposes of exercising the party's rights or carrying out its obligations under or in connection with this agreement, provided that the disclosing party takes all reasonable steps to ensure that its Representatives comply with the confidentiality obligations contained in this clause 18 as though they were a party to this agreement. The disclosing party shall be responsible for its Representatives' compliance with the confidentiality obligations set out in this clause; and (b) as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority. 18.3 Each party reserves all rights in its Confidential Information. No rights or obligations in respect of a party's Confidential Information other than those expressly stated in this agreement are granted to the other party or to be implied from this agreement. In particular, no licence is hereby granted directly or indirectly under any patent, invention, discovery, copyright or other intellectual property right held, made, obtained or licensable by either party now or in the future. 19. Commencement and term Commencement and term As with any commercial agreement, the length of the term will be a matter of agreement for the parties. Note that the standard document gives the customer the option of imposing a minimum term at clause 20.1. For information on clauses dealing with commencement and term, and other drafting options relating to an agreement's term, see the integrated drafting notes to Standard clause, Commencement and duration clauses. 19.1 This agreement shall commence on the Commencement Date and shall continue, unless terminated earlier in accordance with clause 20, until [[DATE] OR the [third] anniversary of the Commencement Date], when it shall terminate automatically without notice (Term). 20. Termination Termination A termination clause should always be included in the agreement, as it is not always certain when an event will give rise to a common law right of termination. Consider whether the parties should be able to terminate the agreement for breach without first completing the multi-tiered dispute resolution procedure set out at clause 27. 20.1 Without affecting any other right or remedy available to it, either party may terminate this agreement on giving not less than [six] months' written notice to the other party[, provided that any notice to terminate served under this clause 20.1 shall not expire before the [second] anniversary of the Commencement Date]. Termination on notice Under clause 20.1, each party has the right to terminate the agreement on six months' notice. A notice period of this length would be fairly normal for a significant supply agreement, as the parties will need time to make alternative arrangements. It's good practice to specify the length of the notice period that a party must give, as the default position at common law is simply that a party must give a "reasonable" amount of notice. This clause also includes optional wording allowing the customer to specify a minimum term. 20.2 Without affecting any other right or remedy available to it, either party may terminate this agreement with immediate effect by giving written notice to the other party if: (a) the other party fails to pay any undisputed amount due under this agreement on the due date for payment and remains in default not less than [14] days after being notified in writing to make such payment; (b) the other party commits a material breach of any other term of this agreement which breach is irremediable or and (if such breach is remediable) fails to remedy that breach within a period of [30] days after being notified in writing to do so; (c) the other party repeatedly breaches any of the terms of this agreement in such a manner as to reasonably justify the opinion that its conduct is inconsistent with it having the intention or ability to give effect to the terms of this agreement; Termination for repeatedly breaching the agreement Recurring breaches can cause considerable problems for the non-defaulting party. The right to terminate a contract for a series of minor persistent breaches effectively amounting to a material breach of obligations is generally accepted in commercial agreements. (d) the other party suspends, or threatens to suspend, payment of its debts or is unable to pay its debts as they fall due or admits inability to pay its debts or is deemed unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986 as if the words "it is proved to the satisfaction of the court" did not appear in sections 123(1)(e) or 123(2) of the IA 1986; (e) the other party commences negotiations with all or any class of its creditors with a view to rescheduling any of its debts, or makes a proposal for or enters into any compromise or arrangement with any of its creditors [other than for the sole purpose of a scheme for a solvent amalgamation of that other party with one or more other companies or the solvent reconstruction of that other party]; (f) a petition is filed, a notice is given, a resolution is passed, or an order is made, for or on connection with the winding up of the other party [other than for the sole purpose of a scheme for a solvent amalgamation of that other party with one or more other companies or the solvent reconstruction of that other party]; (g) an application is made to court, or an order is made, for the appointment of an administrator or if a notice of intention to appoint an administrator is given or if an administrator is appointed over the other party; (h) the holder of a qualifying floating charge over the assets of that other party has become entitled to appoint or has appointed an administrative receiver; (i) a person becomes entitled to appoint a receiver over all or any of the assets of the other party or a receiver is appointed over all or any of the assets of the other party; (j) a creditor or encumbrancer of the other party attaches or takes possession of, or a distress, execution, sequestration or other such process is levied or enforced on or sued against, the whole or any part of its assets and such attachment or process is not discharged within [14] days; (k) any event occurs, or proceeding is taken, with respect to the other party in any jurisdiction to which it is subject that has an effect equivalent or similar to any of the events mentioned in clause 20.2(d) to clause 20.2(i) (inclusive); (l) the other party ceases, or threatens to cease, to carry on all or substantially the whole of its business; [or] (m) [there is a change of control of the other party (within the meaning of section 1124 of the Corporation Tax Act 2010); or] Termination on change of control The parties should consider whether a change of control should give rise to a right of termination. If the customer is sold, will the supplier be prepared to continue supplying the goods? "Control" can be defined in a number of ways: in this agreement it is defined by reference to section 1124 of the Corporation Tax Act 2010, which defines control by the ability to direct a company's affairs through voting power or the holding of shares. Alternatively, control can be defined by reference to ownership. A variation on this clause would be to provide that on a change of control the parties will have the opportunity to renegotiate the terms of the agreement, with a right of termination if the parties cannot reach agreement. This type of clause is most likely to benefit a supplier who wishes to increase the product prices now that the customer has changed hands. (n) any Force Majeure Event prevents the other party from performing its obligations under this agreement for any continuous period of three months. Termination for force majeure event Clause 20.2 sets out the events giving rise to the right to terminate the agreement with immediate effect. 20.3 For the purposes of clause 20.2(b), material breach means a breach (including an anticipatory breach) that is serious in the widest sense of having a serious effect on the benefit which the terminating party would otherwise derive from: (a) a substantial portion of this agreement; or (b) any of the obligations set out in clauses [NUMBERS], Termination for material breach (optional) Clause 20.3 allows the parties to pre-agree that breaches of specified clauses will constitute material breaches of obligations, thereby triggering a right to terminate for the non-defaulting party under clause 20.2(b). Note that non-payment of invoices already gives rise to a right of termination for the supplier (clause 20.2(a)). over [the term of this agreement OR any [NUMBER]-month period during the term of this agreement]. In deciding whether any breach is material no regard shall be had to whether it occurs by some accident, mishap, mistake or misunderstanding. 21. Obligations on termination Obligations on termination This clause sets out the parties' obligations on termination of the agreement. 21.1 Each party shall promptly: (a) return to the other party all equipment, materials and property belonging to the other party that the other party had supplied to it or a member of its Group in connection with the supply of the Products under this agreement; (b) return to the other party all documents and materials (and any copies) containing the other partyтАЩs Confidential Information; (c) erase all the other partyтАЩs Confidential Information from its computer systems (to the extent possible); and (d) on request, certify in writing to the other party that it has complied with the requirements of this clause 21. 22. Consequences of termination Consequences of termination This provision makes it clear that certain provisions of the agreement will survive termination of the agreement, such as the provisions on confidentiality and limitations of liability. For information on clauses dealing with the consequences of termination, see the integrated drafting notes to Standard clause, Consequences of termination. 22.1 On termination of this agreement the following clauses shall survive and continue in full force and effect: (a) clause 13 (Insurance); (b) clause 15 (Indemnity); (c) clause 16 (Limitation of liability); (d) clause 18 (Confidentiality); (e) clause 21 (Obligations on termination); (f) clause 27 (Dispute resolution); and (g) clause 35 (Governing law). (h) clause 36 (Jurisdiction) 22.2 Termination of this agreement shall not affect any rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of the agreement which existed at or before the date of termination. 23. Force majeure Force majeure Note that if a force majeure event prevents a party from fulfilling its obligations under the agreement for a continuous period of three months the other party has the right to terminate the agreement (clause 20.2(n)). For information on force majeure clauses generally, see the integrated drafting notes to Standard clause, Force majeure. 23.1 Force Majeure Event means any circumstance not within a party's reasonable control including, without limitation: (a) acts of God, flood, drought, earthquake or other natural disaster; (b) epidemic or pandemic; (c) terrorist attack, civil war, civil commotion or riots, war, threat of or preparation for war, armed conflict, imposition of sanctions, embargo, or breaking off of diplomatic relations; (d) nuclear, chemical or biological contamination or sonic boom; (e) any law or any action taken by a government or public authority, including without limitation imposing an export or import restriction, quota or prohibition[, or failing to grant a necessary licence or consent]; (f) collapse of buildings, fire, explosion or accident; [and] (g) any labour or trade dispute, strikes, industrial action or lockouts [(other than in each case by the party seeking to rely on this clause, or companies in the same group as that party)]; (h) non-performance by suppliers or subcontractors [(other than by companies in the same group as the party seeking to rely on this clause)]; and (i) interruption or failure of utility service. 23.2 Provided it has complied with clause 23.4, if a party is prevented, hindered or delayed in or from performing any of its obligations under this agreement by a Force Majeure Event (Affected Party), the Affected Party shall not be in breach of this agreement or otherwise liable for any such failure or delay in the performance of such obligations. The time for performance of such obligations shall be extended accordingly. 23.3 The corresponding obligations of the other party will be suspended, and its time for performance of such obligations extended, to the same extent as those of the Affected Party. 23.4 The Affected Party shall: (a) as soon as reasonably practicable after the start of the Force Majeure Event[ but no later than [NUMBER] days from its start], notify the other party [in writing] of the Force Majeure Event, the date on which it started, its likely or potential duration, and the effect of the Force Majeure Event on its ability to perform any of its obligations under the agreement; and (b) use all reasonable endeavours to mitigate the effect of the Force Majeure Event on the performance of its obligations. 23.5 If the Force Majeure Event prevents, hinders or delays the Affected Party's performance of its obligations for a continuous period of more than [NUMBER] [weeks], the party not affected by the Force Majeure Event may terminate this agreement by giving [NUMBER] [weeks'] written notice to the Affected Party. 24. Costs Costs БВГДЕЖЗИЙКЛМНОПРСТУФХЦЧШЩЪЫЬЭЮЯабвгдежзийклмноп░▒▓│┤╡╢╖╕╣║╗╝╜╛┐└┴┬├─┼╞╟╚╔╩╦╠═╬╧╨■   ■                                                                                                                                                                                            For information on costs clauses, see the integrated drafting notes to Standard clause, Costs. 24.1 Except as expressly provided in this agreement, each party shall pay its own costs incurred in connection with the negotiation, preparation, [and] execution [and registration] of this agreement [and any documents referred to in it]. 25. Severance Severance For information on severance clauses, see the integrated drafting notes to Standard clause, Severance. 25.1 If any provision or part-provision of this agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of this agreement. 25.2 If any provision or part-provision of this agreement is invalid, illegal or unenforceable, the parties shall negotiate in good faith to amend such provision so that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the intended commercial result of the original provision. 26. Several liability Several liability This clause need only be included if there are joint suppliers or joint customers under the agreement. See Standard clause, Joint and several liability for alternative wording if there are joint suppliers or customers and their liability under the agreement is to be joint. See also the integrated drafting notes to the clause for information on clauses dealing with the liability of co-obligors. 26.1 Unless expressly provided otherwise in this agreement, the liability of [NAMES OF CO-OBLIGORS] (Co-obligors) for their obligations under [clause [NUMBER] OR this agreement] shall be several and extend only to any loss or damage arising out of their own breaches. 26.2 Where more than one Co-obligor is liable for the same loss or damage, Schedule [NUMBER] shows the [proportions in which the Co-obligors have agreed, between themselves, to contribute to that liability OR proportion of that liability the [COUNTERPARTY] may claim against each Co-obligor]. 27. Multi-tiered dispute resolution procedure Multi-tiered dispute resolution procedure The ongoing nature of a supply of goods agreement means that, if a dispute arises, formal dispute resolution proceedings should be a last resort. By providing a structure within which the parties may be able to reach a relatively amicable resolution to their dispute in a relatively short timescale, a dispute resolution procedure clause can help to maintain a good commercial relationship between the parties, and can save significant amounts of time and money, when compared with litigation or arbitration. For information on multi-tiered dispute resolution procedure clauses, see the integrated drafting notes to Standard clause, Multi-tiered dispute resolution procedure. 27.1 If a dispute arises out of or in connection with this agreement or the performance, validity or enforceability of it (Dispute) then[ except as expressly provided in this agreement,] the parties shall follow the procedure set out in this clause: (a) either party shall give to the other written notice of the Dispute, setting out its nature and full particulars (Dispute Notice), together with relevant supporting documents. On service of the Dispute Notice, the [EMPLOYEE TITLE] of the Supplier and [EMPLOYEE TITLE] of the Customer shall attempt in good faith to resolve the Dispute; (b) if the [EMPLOYEE TITLE] of the Supplier and [EMPLOYEE TITLE] of the Customer are for any reason unable to resolve the Dispute within [30] days of service of the Dispute Notice, the Dispute shall be referred to the [SENIOR OFFICER TITLE] of the Supplier and [SENIOR OFFICER TITLE] of the Customer who shall attempt in good faith to resolve it; and (c) if the [SENIOR OFFICER TITLE] of [Party 1] and [SENIOR OFFICER TITLE] of [Party 2] are for any reason unable to resolve the Dispute within [30] days of it being referred to them, the parties agree to enter into mediation in good faith to settle the Dispute in accordance with the CEDR Model Mediation Procedure. Unless otherwise agreed between the parties within [NUMBER] days of service of the Dispute Notice, the mediator shall be nominated by CEDR. To initiate the mediation, a party must serve notice in writing (ADR notice) to the other party to the Dispute, referring the dispute to mediation. A copy of the ADR notice should be sent to CEDR. Unless otherwise agreed between the parties, the mediation will start not later than [NUMBER] days after the date of the ADR notice. 27.2 [The commencement of mediation shall not prevent the parties commencing or continuing court proceedings in relation to the Dispute under clause 36, which clause shall apply at all times. OR No party may commence any court proceedings under clause 36 in relation to the whole or part of the Dispute until [NUMBER] days after service of the ADR notice, provided that the right to issue proceedings is not prejudiced by a delay.] 27.3 If the Dispute is not resolved within [NUMBER] days after service of the ADR notice[,] [or] either party fails to participate or ceases to participate in the mediation before the expiry of that [NUMBER] day period[, or the mediation terminates before the expiry of that [NUMBER] day period], the Dispute shall be finally resolved by [the courts of England and Wales OR arbitration proceedings] in accordance with clause 36. 28. Further assurance Further assurance Negotiating and drafting issues The parties may prefer to make this clause subject to an element of reasonableness by inserting the word "reasonably" before "required". Where the parties have identified matters which will or may have to be dealt with following signing, they should make express provision in the agreement for them, and specify who shall be responsible for carrying out the required acts and for the associated costs. For further information on further assurance clauses, see the integrated drafting notes to Standard clause, Further assurance. 28.1 At its own expense, each party shall, and shall use all reasonable endeavours to procure that any necessary third party shall, promptly execute and deliver such documents and perform such acts as may [reasonably] be required for the purpose of giving full effect to this agreement. 29. Variation Variation For information on variation clauses, see the integrated drafting notes to Standard clause, Variation. 29.1 No variation of this agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives). 30. Waiver Waiver For information on waiver clauses, see the integrated drafting notes to Standard clause, Waiver. 30.1 A waiver of any right or remedy under this agreement or by law is only effective if given in writing and shall not be deemed a waiver of any subsequent breach or default. 30.2 A failure or delay by a party to exercise any right or remedy provided under this agreement or by law shall not constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict any further exercise of that or any other right or remedy. No single or partial exercise of any right or remedy provided under this agreement or by law shall prevent or restrict the further exercise of that or any other right or remedy. 30.3 A party that waives a right or remedy provided under this agreement or by law in relation to one party, or takes or fails to take any action against that party, does not affect its rights in relation to any other party. 31. Notices Notices Negotiating and drafting issues Consider whether the notices clause should specify an individual (to be described by name or function) that notices must be given to. This is likely to be a concern for a large organisation, as it may be essential that a notice is acted on promptly after its receipt. Amend to reflect whether notices may be served by email. If the parties permit notice to be served via email, note that clause 1.10 defines "writing" as excluding email, so this may need to be amended too. note that For information on notice clauses, see the integrated drafting notes to Standard clause, Notices and Practice note, Notice clauses. 31.1 Any notice [or other communication] given to a party under or in connection with this agreement shall be in writing and shall be: (a) delivered by hand or by pre-paid first-class post or other next working day delivery service at its registered office (if a company) or its principal place of business (in any other case); or (b) [sent by fax to its main fax number OR sent by email to the address specified in [SPECIFY RELEVANT DOCUMENT OR PLACE].] 31.2 Any notice [or communication] shall be deemed to have been received: (a) if delivered by hand, on signature of a delivery receipt [or at the time the notice is left at the proper address]; (b) if sent by pre-paid first-class post or other next working day delivery service, at [9.00 am] on the [second] Business Day after posting [or at the time recorded by the delivery service]. (c) if sent by [fax OR email], at [9.00 am] on the next Business Day after transmission. 31.3 This clause does not apply to the service of any proceedings or other documents in any legal action or, where applicable, any arbitration or other method of dispute resolution. 31.4 A notice given under this agreement is not valid if sent by email. 32. Entire agreement Entire agreement For information on entire agreement clauses, see the integrated drafting notes to Standard clause, Entire agreement. 32.1 This agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. 32.2 Each party acknowledges that in entering into this agreement it does not rely on[, and shall have no remedies in respect of,] any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this agreement. 32.3 Each party agrees that it shall have no claim for innocent or negligent misrepresentation [or negligent misstatement] based on any statement in this agreement. 32.4 Nothing in this clause shall limit or exclude any liability for fraud. 33. Third party rights Third party rights For information on third party rights clauses, see the integrated drafting notes to Standard clause, Third party rights. 33.1 [Unless it expressly states otherwise,] this agreement, does not give rise to rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this agreement. 34. Counterparts Counterparts For information on counterparts clauses, see the integrated drafting notes to Standard clause, Counterparts. 34.1 This agreement may be executed in any number of counterparts, each of which when executed [and delivered] shall constitute a duplicate original, but all the counterparts shall together constitute the one agreement. 35. Governing law Governing law For information on governing law clauses, see the integrated drafting notes to Standard clause, Governing law and Practice note, Governing law and jurisdiction clauses. 35.1 This agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales. 36. Jurisdiction Jurisdiction For information on jurisdiction clauses, see the integrated drafting notes to Standard clause, Jurisdiction and Practice note, Governing law and jurisdiction clauses. Unless the parties have provided specifically in the agreement that one or both parties are to have the option whether to litigate or arbitrate their claims, an agreement should have either an arbitration or a jurisdiction clause but not both. Whether the dispute is finally referred to arbitration rather than litigation is a matter for agreement between the parties. Commercial parties often see arbitration as a quicker and more flexible alternative to litigation, but this is not always true. Arbitration may be appropriate if the subject matter of the agreement is particularly technical, or if it has an international element. For a consideration of the relative advantages and disadvantages of both methods of dispute resolution, see Practice note, Why arbitrate?. 36.1 Each party irrevocably agrees that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this agreement or its subject matter or formation.
This agreement has been entered into on the date stated at the beginning of it. Schedule 1 The Products and Product Prices The products and product prices Schedule 1 sets out the products and the product prices. The primary responsibility for preparing and agreeing the schedule will rest with the parties. PRODUCT NAME [PRODUCT CODE NUMBER] PRODUCT PRICE [SPECIFY] [SPECIFY] [SPECIFY]
Schedule 2 Specification Specification Schedule 2 sets out the specifications for the products. The primary responsibility for preparing and agreeing the schedule will rest with the parties. [INSERT PRODUCT SPECIFICATIONS] Schedule 3 Customer's Mandatory Policies Customer's Mandatory Policies List and, if appropriate, attach the Mandatory Policies here. Whether the customer's policies are attached to the agreement will depend on how the customer usually makes these policies available to the supplier. This may be electronically or as part of the customer's procedures for taking on a new supplier. Equally, the supplier may insist that all policies it agrees to comply with must be attached to the agreement. If the policies are set out in the agreement, these can be separated as parts of a schedule, or alternatively attached as separate schedules. The Customer's Mandatory Policies: [Modern Slavery and Human Trafficking Policy]. [Corporate and Social Responsibility Policy]. [Anti-bribery and Anti-corruption Policy]. [Ethics Policy]. [Data and Privacy Policy].
Signed by [NAME OF DIRECTOR] for and on behalf of [NAME OF SUPPLIER] .................... Director Signed by [NAME OF DIRECTOR] for and on behalf of [NAME OF CUSTOMER] .................... Director
Execution It is standard practice in the UK for the execution clauses to appear after the schedules. Services agreements are usually executed as simple contracts, unless they contain a power of attorney or guarantee, in which case they should be executed as a deed. For information about execution formalities, see Practice note, Execution of deeds and documents.
European Union (Notification of Withdrawal) Act 2017 (March 2017) 2017-03-16 Practical Law Commercial We have updated the section Brexit in Drafting note, About this document to refer to the formal notice of the UK's intention to withdraw from the EU, and to include a new section on Brexit clauses. Star Polaris LLC v HHIC-Phil Inc 2017-02-16 Practical Law Commercial; We have updated the drafting note to Clause 16.3(g) (Indirect and consequential loss) to refer to Star Polaris LLC v HHIC-Phil Inc [2016] EWHC 2941. Modern Slavery Act 2015 2015-09-25 PLC Service We have added clause 14 (Compliance with laws and policies). The new definition of "Mandatory Policies" can be defined to include an anti-slavery policy for the purposes of section 54 of the Modern Slavery Act. 2015.
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