Long Term Goods Supply Agreement

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Long Term Goods Supply Agreement between a supplier who manufactures and sells goods and a customer who will purchase and resell the goods as finished products. This agreement is not for use when a customer is selling goods "as is."

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This Long Term Goods Supply Agreement is between a supplier who manufactures and sells products and a customer who will purchase the products from the supplier, finish such products (often combining them with other products into a new product) and then resell as a finished products. This agreement is not to be used in situations where the customer will resell the product “as-is” without improving or finishing such product.

It sets forth the quantities of products to be sold, minimum orders based on a percentage of the customer's requirements and timing of customer orders. It also sets forth: (i) that the customer shall notify the supplier, in writing, of any estimated forecasts for yearly orders; and (ii) how the customer will be notified by the supplier in the event of orders that are beyond its capacity.

This agreement also contains provisions regarding terms of sale including supplier's terms and conditions and restrictions on use of products, and product specifications and warranties. Provisions regarding delivery of the products, pricing and payment terms, available discounts and rights of termination are also addressed within this agreement.

This Long Term Goods Supply Agreement includes the following provisions:
  • Parties: The names of the supplier and customer;
  • Minimum Orders/Timing: Sets forth the minimum order a customer may place in any year and that these orders must be placed within a specific number of days before each quarter;
  • Reports: Customer will supply a report to supplier at the end of year which shows the total quantity of products, percentage ordered from supplier and average quarterly quantity ordered from supplier;
  • Manufacturer/Delivery: Supplier will make all efforts to manufacturer the necessary products and will deliver products to the premises supplied by the customer;
  • Signatures: This agreement must be signed by both supplier and customer.

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  3. Long Term Goods supply Agreement
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Long Term Goods
Supply Agreement

 

 

This Supply Agreement is made this ______ by and between ______, a[n] ______ [entity of supplier], whose principal place of business is located at ______, ______, ______ ______ ("Supplier") and ______, a[n] ______ [entity of customer], whose principal place of business is located at ______, ______, ______ ______ ("Customer").
 
Recitals:
 
A.   The Supplier carries on the business of manufacturing and selling the Products.
 
B.   The Customer carries on the business of manufacturing and selling Finished Products, and wishes to purchase the Products from the Supplier for that business, and the Supplier is willing to supply the Products to the Customer, on the terms of this agreement.
 
1.   Interpretation
 
1.1   Defined Terms
 
In this agreement, unless the context otherwise requires:
 
(a)   "EXPERT" means a person to whom a reference is made under Section 7;
 
(b)   "FINISHED PRODUCTS" means the products set out in the Schedule of Finished Products attached hereto as Exhibit ______ and incorporated herein by this reference;
 
(c)   "FORCE MAJEURE" means, in relation to either party, any circumstances beyond the reasonable control of that party (including, without limitation, any strike, lockout or other industrial action);
 
(d)   "PRODUCTS" means the products set out in the Schedule of Products attached hereto as Exhibit ______ and incorporated herein by this reference;
 
(e)   "QUARTER" means the period of three months commencing on ______, each consecutive period of three months thereafter, and any shorter period commencing on a day following the end of a Quarter and ending on the termination of this agreement; and "Quarterly" has a corresponding meaning;
 
(f)   "SPECIFICATION" means the specification of the Products set out in the Schedule of Specifications attached hereto as Exhibit ______ and incorporated herein by this reference or any other specification of the Products agreed in writing between the Supplier and the Customer from time to time;
 
(g)   "WRITING", and any similar expression, includes facsimile transmission and comparable means of communication, but not electronic mail;
 
(h)   "YEAR" means the period of 12 months from the date of this agreement and each consecutive period of 12 months thereafter during the period of this agreement.
 
1.2   Supplier's Standard Terms and Conditions
 
Any reference to this agreement includes a reference to the provisions of the standard terms of sale of the Supplier from time to time, except to the extent referred to in Section 3.1.
 
1.3   Headings
 
The headings in this agreement are for convenience only and shall not affect its interpretation.
 
2.   Sale of Products
 
2.1   Sale and Purchase of Products
 
During the period of this agreement the Supplier shall sell and the Customer shall purchase quantities of the Products that the Customer orders from time to time under Section 2.3, subject to the terms of this agreement.
 
2.2   Minimum Orders Based on Customer's Requirements
 
In each Year the Customer shall place orders with the Supplier for not less than ______% of the Customer's requirements of the Products (calculated by reference to the total quantities of the Products of which the Customer takes delivery from any person in that Year or which the Customer manufactures in that Year).
 
2.3   Timing of Orders
 
The Customer shall, not less than [spelled number of days] (______) days before the beginning of each Quarter, give the Supplier its order for the Products to be delivered during that Quarter; each order so given shall be final, except that the Supplier may at its discretion accept an amendment to an order which is requested by the Customer in Writing within [spelled number of days] (______) days after the order is given.
 
2.4   Requirement of Written Orders
 
Orders for the Products shall be given by the Customer to the Supplier in Writing or, if given orally, shall be confirmed by the Customer in writing not more than [spelled number of days] (______) days after the order is given by the Customer.
 
2.5   Forecasts
 
The Customer shall notify to the Supplier in Writing:
 
(a)   Its estimated orders of the Products for each Year, within [spelled number of months] (______) months prior to that Year;
 
(b)   Its estimated orders of the Products for each Quarter, within [spelled number of weeks] (______) weeks prior to that Quarter; and
 
(c)   Any revisions to those estimates, as soon as practicable after they are made.
 
2.6   No Obligation to Afford Priority to Customer
 
Whilst the Supplier agrees to take all steps reasonably required to fulfill its obligations under this agreement in the normal course, the Supplier shall not be obliged to give the Customer any priority over any other customer of the Supplier with regard to the supply or delivery of the Products.
 
2.7   Orders in Excess of Supplier's Capacity
 
If the Customer's orders for the Products exceed (or it appears from any of the estimates or revised estimates given pursuant to Section 2.5 that they will exceed) the output capacity or available stocks of the Supplier:
 
(a)   The Supplier shall as soon as practicable notify the Customer; and
 
(b)   Without limiting Section 9.3, the Customer may obtain from any other person the quantity of the Products which the Supplier is unable to supply in accordance with the Customer's orders, and that quantity shall be deemed for the purposes only of Section 2.2 to have been ordered from the Supplier, until the Supplier has given the Customer Written notice (together with supporting evidence reasonably acceptable to the Customer) that it is able and willing to resume the supply of that quantity in accordance with the Customer's orders, and the Customer has had a reasonable time to terminate any alternative arrangements which it may have made with any other person for the supply of that quantity.
 
2.8   Reports
 
The Customer shall ensure that within [spelled number of days] (______) days after the end of each Year its auditors prepare and submit to the Supplier a report showing:
 
(a)   The total quantity of the Products of which the Customer has taken delivery from any person in that Year or which the Customer has manufactured in that Year;
 
(b)   The percentage of that total quantity which the Customer ordered from the Supplier (or which it is deemed to have ordered pursuant to any provision of this agreement); and
 
(c)   The average Quarterly quantity that the Customer ordered from the Supplier in that Year.
 
 
3.   Terms of Sale
 
3.1   Sales Subject to Supplier's Terms and Conditions
 
All sales of the Products pursuant to this agreement shall be subject to the Supplier's standard terms of sale from time to time, except to the extent that:
 
(a)   Any provision of those terms of sale is inconsistent with any provision of this agreement, in which event the latter shall prevail; or
 
(b)   The Supplier and the Customer agree in writing to vary those terms of sale.
 
3.2   Restrictions on Customer's Use of Products
 
The Customer shall only use the Products sold to it by the Supplier in the manufacture of Finished Products and not resale of the Products in bulk.
 
4.   Specifications and Warranties
 
4.1   Specifications
 
(a)   All Products sold by the Supplier to the Customer pursuant to this agreement shall conform to the Specification in all respects; and, subject to Paragraph 5.4, the Customer may reject any quantity of the Products that is not in accordance with the Specification.
 
(b)   Any quantity of the Products supplied by the Supplier pursuant to this agreement shall be deemed not to comply with the Specification to which it is ordered if the Products are not capable of producing, by using normal commercial manufacturing techniques, Finished Products of equivalent specification to Finished Products produced by using those techniques from Products supplied by other suppliers.
 
(c)   The Supplier shall consult with the Customer from time to time during the continuance of this agreement in order to ensure that the Specification of the Products to be sold by the Supplier to the Customer is acceptable to both parties, but the Supplier shall not be obliged to agree to any change to the Specification requested by the Customer.
 
4.2   Warranties
 
Supplier agrees to warrant all Products in accordance with the terms of its standard warranty for each Product, as modified from time to time in Supplier's sole discretion.  Supplier's sole obligation to the Customer or the initial retail purchaser of any Product shall be limited to the repair or replacement, at Supplier's option, of defective Products returned to Supplier at the sole expense of the Customer or initial retail purchaser.
 
THE FOREGOING REMEDIES ARE EXCLUSIVE.  SUPPLIER MAKES NO OTHER EXPRESS WARRANTY OTHER THAN AS SET FORTH IN SECTION 4.1 ABOVE.  SUPPLIER DISCLAIMS, AND THE CUSTOMERS WAIVES, ANY AND ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  SUPPLIER SHALL IN NO CIRCUMSTANCES BE LIABLE IN CONTRACT, IN TORT OR OTHERWISE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT FORESEEABLE.  NO EMPLOYEE OR REPRESENTATIVE OF SUPPLIER IS AUTHORIZED TO MODIFY THIS WARRANTY, OR SUPPLIER'S STANDARD WARRANTY FOR ANY PRODUCT.
 
5.   Manufacture and Delivery of Products
 
5.1   Supplier's Reasonable Efforts to Manufacture Products
 
The Supplier shall use all reasonable efforts to manufacture and maintain sufficient stocks of the Products to fulfill its obligations under this agreement.
 
5.2   Supplier's Reasonable Efforts to Deliver Products
 
The Supplier shall use all reasonable efforts to deliver each of the Customer's orders for the Products on the date specified in the order, but the time of delivery shall not be of the essence and if, despite those efforts, the Supplier is unable for any reason to fulfill any delivery of the Products on the specified date, the Supplier shall not be deemed to be in breach of this agreement or have any liability to the Customer unless and until the Customer has given [spelled number of days] (______) days' written notice to the Supplier requiring the delivery to be made and the Supplier has not fulfilled the delivery within that period.
 
5.3   Delivery
 
Delivery of the Products shall take place at the Supplier's premises at ______ but the Supplier shall at the Customer's request arrange for suitable transport to the Customer's premises at ______ (or such other premises as the Customer may notify to the Supplier from time to time) and arrange insurance for the Products, in which case the Customer shall bear the costs of transport and insurance.
 
5.4   Acceptance and Rejection of Products
 
(a)   The Customer shall, within [spelled number of days] (______) days of the arrival of each delivery of the Products at the Customer's premises, notify the Supplier in Writing of any defect by reason of which the Customer alleges that the Products delivered are not in accordance with the Specification and which should be apparent on reasonable inspection.
 
(b)   If the Customer fails to give such a notice then, subject to Section 4, and except in respect of any defect which would not be apparent on reasonable inspection, the Products shall be conclusively presumed to be in all respects in accordance with the Specification, and accordingly the Customer shall be deemed to have accepted the delivery of the Products in question and the Seller shall have no liability to the Customer with respect to that delivery.
 
(c)   If the Customer rejects any delivery of the Products which are not in accordance with the Specification, the Supplier shall within [spelled number of days] (______) days of being requested to do so by the Customer supply replacement Products which are in accordance with the Specification (in which event the Supplier shall not be deemed to be in breach of this agreement or have any liability to the Customer) or shall notify the Customer that it is unable to do so, in which case (without limiting Section 9.3) the Customer may obtain from any other person the quantity of the Products which the Supplier has been unable to supply, and that quantity shall be deemed for the purposes only of Section 2.2 to have been ordered from the Supplier.
 
(d)   If there is any difference of opinion between the parties as to whether any Products supplied by the Supplier are in accordance with the Specification the matter shall, at the request of either the Supplier or the Customer, be determined by an Expert.
 
5.5   Risk of Loss
 
Risk in and responsibility for the Products shall pass to the Customer once they are loaded on to transport at the Supplier's premises.
 
6.   Pricing and Payment Terms
 
6.1   Standard Base Price
 
Subject to the following provisions of this clause, the price for each type of the Products shall be the Supplier's exfactory price for those Products.
 
6.2   Increases in Standard Base Prices
 
(a)   The Supplier may increase its exfactory prices for the Products at the end of each Year, or more frequently if the Supplier, in its sole discretion, considers the increase to be justified by any material increase in the prices of raw materials used by the Supplier in the manufacture of the Products, and the Supplier shall as soon as practicable notify the Customer of any such increase.
 
(b)   The Supplier may increase the price for the Products to cover extra expense as a result of the Customer's instructions or lack of instructions.
 
6.3   Shipping Costs and Sales Taxes
 
The price for the Products shall be exclusive of costs of packaging, carriage and insurance of the Products and any applicable sales tax or duty, which shall be added to the sum in question.
 
 
6.4   Available Discounts
 
The Customer shall be entitled to:
 
(a)   The Supplier's standard discount for prompt payment pursuant to its standard terms of sale;
 
(b)   Subject to compliance by the Customer with its obligations under Section 2.2 in any Year, a discount in respect of all quantities of the Products purchased by the Customer from the Supplier in that Year of ______% of the aggregate exfactory price (before the discount referred to in (a) above), and exclusive of the items referred to in Section 6.3 of the Products so purchased; and
 
(c)   A further discount in accordance with Section 6.5.
 
6.5   Discount Based on Average Quarterly Purchase Volume
 
If in any Year the average Quarterly quantity of the Products purchased by the Customer from the Supplier falls within any of the bands given in the table below, the Customer shall be entitled to a discount in respect of all the Products so purchased in that Year, calculated by taking the percentage specified opposite the relevant band and applying it to the aggregate exfactory price (before the discounts referred to in Section 6.4(a) and 6.4(b), and exclusive of the items referred to in Section 6.3) of the Products so purchased:
 
Volume
Discount
______
______%
 
 
For the purposes of the table given above, any average Quarterly quantity of the Products shall be taken as falling within a particular band if it is greater than the lower limit for that band and does not exceed the upper limit (if any) for that band.
 
6.6   Price Protection
 
If at any time during the continuance of this agreement the price for the Products (or where there is more than one type of Products, for any type of them), as calculated in accordance with the preceding provisions, exceeds the lowest exfactory price (net of all discounts, allowances and other deductions from the Supplier's exfactory list price) at which the Supplier offers equal or lesser quantities of the Products (or the type of Products in question) to any of its other customers, the price charged to the Customer under this agreement shall, on receipt by the Supplier of a Written request from the Customer together with supporting evidence, be reduced, for all deliveries of the Products after the date of that request, to that lowest net exfactory price for so long as it continues to apply, but on its ceasing to apply the price for the Products under this agreement shall revert to that calculated in accordance with the foregoing provisions (subject to any further application of this provision).
 
6.7   Payment Terms
 
The Supplier shall invoice the Customer by the ______ day of each Quarter for the price (calculated before any discount under Section 6.4) in respect of all deliveries of the Products made under this agreement during the previous Quarter, and the Customer shall pay the sums shown to be due (net of any discount pursuant to Section 6.4(a) to which the Customer is entitled) in cleared funds to the bank nominated by the Supplier within [spelled number of days] (______) days from the date on which each invoice is submitted by the Supplier.
 
6.8   Remittance of Discount
 
Within the period of [spelled number of days] (______) days after the date of receipt by the Supplier of each report submitted under Section 2.8, the Supplier shall pay to the Customer the amount of any discount to which the Customer is entitled under Section 6.4(b) and 6.4(c) in respect of the Year to which that report relates, unless within that period the Supplier notifies the Customer that it does not agree to either or both of those discounts, because the Customer has not complied with its obligations under Section 2.2 in respect of that Year or (as the case may be) the Supplier does not accept the average Quarterly quantity shown in that report; and if the Supplier does so notify the Customer:
 
(a)   The Supplier shall within that period pay to the Customer any such discount which it does agree and, on account of any such discount in respect of that Year which it does not agree, 50% of the discount which would be payable if the Customer had complied with its obligations under Section 2.2 or (as the case may be) the relevant quantity shown in the report was correct;
 
(b)   The amount of the discount which the Supplier does not agree shall, in default of agreement between the parties within [spelled number of days] (______) days, be determined by an Expert; and
 
(c)   Within [spelled number of days] (______) days after the determination of that amount by agreement between the parties or by the Expert, the Supplier shall pay to the Customer any sum by which the amount so determined exceeds the sum paid on account, or the Customer shall repay to the Supplier any sum by which the amount so determined is less than the sum paid on account, as the case may be.
 
6.9   Overdue Payments
 
If either party fails to pay on the due date any amount which is payable to the other under this agreement then, without limiting Section 9.3:
 
(a)   That amount shall bear interest from the due date until payment is made in full, both before and after any judgment, at ______%; and
 
(b)   In the case of an amount due from the Customer, the Supplier may suspend deliveries of the Products until the outstanding amount has been received by the Supplier from the Customer.
 
7.   Expert Determination
 
(a)   Where under any provision of this agreement any matter is to be determined by an Expert, it shall be referred on the Written request of either party to ______ or, if he is unable or unwilling so to act, such person as the parties agree in Writing or, in default of agreement, nominated on the application of either party by ______.
 
(b)   Any person to whom a reference is made under Section 7.1(a) shall act as an expert and not as an arbitrator and may appoint such technical expert or experts as he considers necessary to assist him in determining the matter referred to him.  The decision of the Expert (which shall be given by him in writing stating the reasons for his decision) shall be final and binding on the parties.
 
(c)   Each party shall provide any Expert with such information as he may reasonably require for the purposes of his determination; if either party claims any such information to be confidential to it then, provided that in the opinion of the Expert that party has properly claimed the information as confidential, the Expert shall not disclose the information to the other party or to any third party.
 
(d)   The costs of any Expert (including the costs of any technical expert appointed by him) shall be borne in such proportions as the Expert may determine to be fair and reasonable in all the circumstances or, if no such determination is made by the Expert, by the parties in equal proportions.
 
8.   Force Majeure
 
(a)   If either party is affected by Force Majeure it shall promptly notify the other party of the nature and extent of the circumstances in question.
 
(b)   Neither party shall be deemed to be in breach of this agreement, or otherwise be liable to the other, for any delay in performance or the nonperformance of any of its obligations under this agreement, to the extent that the delay or nonperformance is due to any Force Majeure of which it has notified the other party, and the time for performance of that obligation shall be extended accordingly.
 
(c)   If at any time the Supplier claims Force Majeure in respect of its obligations under this agreement with regard to the supply of the Products, the Customer may obtain from any other person such quantity of the Products as the Supplier is unable to supply, and that quantity shall be deemed for the purposes only of Section 2.2 to have been purchased from the Supplier.
 
9.   Duration and Termination
 
9.1   Term and Extension of Agreement
 
This agreement shall come into force on ______ and, subject to the following provisions of this clause, shall continue in force for an initial period of [spelled number of  years] (______) years and thereafter unless or until terminated by either party giving to the other party at any time not less than [spelled number of  months] (______) months' Written notice to expire on or at any time after the end of the initial period.
 
9.2   Supplier's Right to Terminate Based on Purchase Volume
 
If in any Year the quantity of the Products purchased by the Customer pursuant to this agreement falls short of ______, and the shortfall is not due to the inability of the Supplier to supply the Products, or the inability of the Customer to use the Products, as a result of Force Majeure, the Supplier may terminate this agreement by giving [spelled number of  days] (______) days' written notice to the Customer.
 
9.3   Right to Terminate upon Breach or Financial Difficulties
 
Either party shall be entitled forthwith to terminate this agreement by giving Written notice to the other party at any time in the event of:
 
 (a)   The other party committing a continuing or material breach of this agreement and, if the breach is capable of remedy, failing to remedy it within [spelled number of  days] (______) days after receipt of a Written notice giving full particulars of the breach and requiring it to be remedied;
 
(b)   The liquidation or insolvency of the other party; or
 
(c)   The appointment of a receiver or similar officer for the other party; or
 
(d)   The assignment by the other party for the benefit of all or substantially all of its creditors;
 
(e)   The entry by the other party into an agreement for the composition, extension, or readjustment of all or substantially all of its obligations;
 
(f)   The filing of a petition in bankruptcy by or against the other party under any bankruptcy or debtors' law for its relief or reorganization which is not dismissed within ninety (90) days;
 
(g)   The other party ceasing, or threatening to cease, to carry on business; or
 
(h)   The party delivering the notice reasonably apprehending that any of the events mentioned above is about to occur in relation to the other party and the notifying party notifies the other party accordingly.
 
 
 
9.4   Breaches Capable of Remedy
 
For the purpose of Section 9.3(a), a breach shall be considered capable of remedy if the party in breach can comply with the provision in question in all respects other than as to the time of performance (provided that time of performance is not of the essence).
 
9.5   Effect of Waivers
 
A waiver by either party of a breach of any provision of this agreement shall not be considered as a waiver of a subsequent breach of the same or another provision.
 
9.6   Effect of Termination
 
The rights to terminate this agreement given by this clause shall not prejudice any other right or remedy of either party in respect of the breach concerned (if any) or any other breach.  On the termination of this agreement for any reason, subject as otherwise provided in this agreement and to any rights or obligations that have accrued prior to termination, neither party shall have any further obligation to the other under this agreement.
 
10.   Nature of Agreement
 
10.1   Supplier's Use of Agents and Subcontractors
 
Subject to the Customer's consent (which shall not be unreasonably withheld) the Supplier may carry out its obligations under this agreement through any agents or subcontractors appointed by it in its absolute discretion for that purpose.
 
10.2   Assignment
 
Except as provided in Section 10.1, this agreement is personal to the parties, and neither of them may, without the Written consent of the other, assign, mortgage, charge (otherwise than by floating charge) or dispose of any of its rights hereunder, or subcontract or otherwise delegate any of its obligations under this agreement.
 
10.3   No Partnership
 
Nothing in this agreement shall create, or be deemed to create, a partnership between the parties.
 
10.4   Entire Agreement
 
This agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties, and may not be modified except by an instrument in Writing signed by the duly authorized representatives of the parties.
 
 
10.5   Severability
 
If any provision of this agreement is held by any court or other competent authority to be void or unenforceable in whole or part, the other provisions of this agreement and the remainder of the affected provisions shall continue to be valid.
 
10.6   Governing Law
 
This agreement shall be governed by and construed in all respects in accordance with the laws of ______, and the Customer agrees to submit to the jurisdiction of the ______ courts.
 
10.7   Notices
 
(a)   A notice or other information required or authorized by this agreement to be given by either party to the other may be given by hand or sent (by first class mail, facsimile transmission or comparable means of communication excluding electronic mail) to the other party at the address referred to in Section 10.7(d).
 
(b)   A notice or other information given by mail under Section 10.7(a) which is not returned to the sender as undelivered shall be deemed to have been given on the [spelled number of  days] (______) day after the envelope containing it was so mailed; and proof that the envelope containing any such notice or information was properly addressed, and sent by first class mail, and that it has not been so returned to the sender, shall be sufficient evidence that such notice or information has been duly given.
 
(c)   A notice or other information sent by facsimile transmission or comparable means of communication (excluding electronic mail) shall be deemed to have been duly sent on the date of transmission, provided that a confirming copy is sent by first class mail to the other party at the address referred to in Section 10.7 (d) within 24 hours after transmission.
 
(d)   A notice or other information or any legal proceedings concerning or arising out of this agreement shall be addressed to the company secretary of the party in question at its principal place of business identified above, or to such other officer or at such other address as may be notified by the party concerned in Writing from time to time.
 
SUPPLIER:
 
[Sig Block Party 1]
[Notary Party 1]
 
CUSTOMER:
 
[Sig Block Party 2]
[Notary Party 2]
Number of Pages16
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#43626
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Long Term Goods
Supply Agreement

 

 

This Supply Agreement is made this ______ by and between ______, a[n] ______ [entity of supplier], whose principal place of business is located at ______, ______, ______ ______ ("Supplier") and ______, a[n] ______ [entity of customer], whose principal place of business is located at ______, ______, ______ ______ ("Customer").
 
Recitals:
 
A.   The Supplier carries on the business of manufacturing and selling the Products.
 
B.   The Customer carries on the business of manufacturing and selling Finished Products, and wishes to purchase the Products from the Supplier for that business, and the Supplier is willing to supply the Products to the Customer, on the terms of this agreement.
 
1.   Interpretation
 
1.1   Defined Terms
 
In this agreement, unless the context otherwise requires:
 
(a)   "EXPERT" means a person to whom a reference is made under Section 7;
 
(b)   "FINISHED PRODUCTS" means the products set out in the Schedule of Finished Products attached hereto as Exhibit ______ and incorporated herein by this reference;
 
(c)   "FORCE MAJEURE" means, in relation to either party, any circumstances beyond the reasonable control of that party (including, without limitation, any strike, lockout or other industrial action);
 
(d)   "PRODUCTS" means the products set out in the Schedule of Products attached hereto as Exhibit ______ and incorporated herein by this reference;
 
(e)   "QUARTER" means the period of three months commencing on ______, each consecutive period of three months thereafter, and any shorter period commencing on a day following the end of a Quarter and ending on the termination of this agreement; and "Quarterly" has a corresponding meaning;
 
(f)   "SPECIFICATION" means the specification of the Products set out in the Schedule of Specifications attached hereto as Exhibit ______ and incorporated herein by this reference or any other specification of the Products agreed in writing between the Supplier and the Customer from time to time;
 
(g)   "WRITING", and any similar expression, includes facsimile transmission and comparable means of communication, but not electronic mail;
 
(h)   "YEAR" means the period of 12 months from the date of this agreement and each consecutive period of 12 months thereafter during the period of this agreement.
 
1.2   Supplier's Standard Terms and Conditions
 
Any reference to this agreement includes a reference to the provisions of the standard terms of sale of the Supplier from time to time, except to the extent referred to in Section 3.1.
 
1.3   Headings
 
The headings in this agreement are for convenience only and shall not affect its interpretation.
 
2.   Sale of Products
 
2.1   Sale and Purchase of Products
 
During the period of this agreement the Supplier shall sell and the Customer shall purchase quantities of the Products that the Customer orders from time to time under Section 2.3, subject to the terms of this agreement.
 
2.2   Minimum Orders Based on Customer's Requirements
 
In each Year the Customer shall place orders with the Supplier for not less than ______% of the Customer's requirements of the Products (calculated by reference to the total quantities of the Products of which the Customer takes delivery from any person in that Year or which the Customer manufactures in that Year).
 
2.3   Timing of Orders
 
The Customer shall, not less than [spelled number of days] (______) days before the beginning of each Quarter, give the Supplier its order for the Products to be delivered during that Quarter; each order so given shall be final, except that the Supplier may at its discretion accept an amendment to an order which is requested by the Customer in Writing within [spelled number of days] (______) days after the order is given.
 
2.4   Requirement of Written Orders
 
Orders for the Products shall be given by the Customer to the Supplier in Writing or, if given orally, shall be confirmed by the Customer in writing not more than [spelled number of days] (______) days after the order is given by the Customer.
 
2.5   Forecasts
 
The Customer shall notify to the Supplier in Writing:
 
(a)   Its estimated orders of the Products for each Year, within [spelled number of months] (______) months prior to that Year;
 
(b)   Its estimated orders of the Products for each Quarter, within [spelled number of weeks] (______) weeks prior to that Quarter; and
 
(c)   Any revisions to those estimates, as soon as practicable after they are made.
 
2.6   No Obligation to Afford Priority to Customer
 
Whilst the Supplier agrees to take all steps reasonably required to fulfill its obligations under this agreement in the normal course, the Supplier shall not be obliged to give the Customer any priority over any other customer of the Supplier with regard to the supply or delivery of the Products.
 
2.7   Orders in Excess of Supplier's Capacity
 
If the Customer's orders for the Products exceed (or it appears from any of the estimates or revised estimates given pursuant to Section 2.5 that they will exceed) the output capacity or available stocks of the Supplier:
 
(a)   The Supplier shall as soon as practicable notify the Customer; and
 
(b)   Without limiting Section 9.3, the Customer may obtain from any other person the quantity of the Products which the Supplier is unable to supply in accordance with the Customer's orders, and that quantity shall be deemed for the purposes only of Section 2.2 to have been ordered from the Supplier, until the Supplier has given the Customer Written notice (together with supporting evidence reasonably acceptable to the Customer) that it is able and willing to resume the supply of that quantity in accordance with the Customer's orders, and the Customer has had a reasonable time to terminate any alternative arrangements which it may have made with any other person for the supply of that quantity.
 
2.8   Reports
 
The Customer shall ensure that within [spelled number of days] (______) days after the end of each Year its auditors prepare and submit to the Supplier a report showing:
 
(a)   The total quantity of the Products of which the Customer has taken delivery from any person in that Year or which the Customer has manufactured in that Year;
 
(b)   The percentage of that total quantity which the Customer ordered from the Supplier (or which it is deemed to have ordered pursuant to any provision of this agreement); and
 
(c)   The average Quarterly quantity that the Customer ordered from the Supplier in that Year.
 
 
3.   Terms of Sale
 
3.1   Sales Subject to Supplier's Terms and Conditions
 
All sales of the Products pursuant to this agreement shall be subject to the Supplier's standard terms of sale from time to time, except to the extent that:
 
(a)   Any provision of those terms of sale is inconsistent with any provision of this agreement, in which event the latter shall prevail; or
 
(b)   The Supplier and the Customer agree in writing to vary those terms of sale.
 
3.2   Restrictions on Customer's Use of Products
 
The Customer shall only use the Products sold to it by the Supplier in the manufacture of Finished Products and not resale of the Products in bulk.
 
4.   Specifications and Warranties
 
4.1   Specifications
 
(a)   All Products sold by the Supplier to the Customer pursuant to this agreement shall conform to the Specification in all respects; and, subject to Paragraph 5.4, the Customer may reject any quantity of the Products that is not in accordance with the Specification.
 
(b)   Any quantity of the Products supplied by the Supplier pursuant to this agreement shall be deemed not to comply with the Specification to which it is ordered if the Products are not capable of producing, by using normal commercial manufacturing techniques, Finished Products of equivalent specification to Finished Products produced by using those techniques from Products supplied by other suppliers.
 
(c)   The Supplier shall consult with the Customer from time to time during the continuance of this agreement in order to ensure that the Specification of the Products to be sold by the Supplier to the Customer is acceptable to both parties, but the Supplier shall not be obliged to agree to any change to the Specification requested by the Customer.
 
4.2   Warranties
 
Supplier agrees to warrant all Products in accordance with the terms of its standard warranty for each Product, as modified from time to time in Supplier's sole discretion.  Supplier's sole obligation to the Customer or the initial retail purchaser of any Product shall be limited to the repair or replacement, at Supplier's option, of defective Products returned to Supplier at the sole expense of the Customer or initial retail purchaser.
 
THE FOREGOING REMEDIES ARE EXCLUSIVE.  SUPPLIER MAKES NO OTHER EXPRESS WARRANTY OTHER THAN AS SET FORTH IN SECTION 4.1 ABOVE.  SUPPLIER DISCLAIMS, AND THE CUSTOMERS WAIVES, ANY AND ALL IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  SUPPLIER SHALL IN NO CIRCUMSTANCES BE LIABLE IN CONTRACT, IN TORT OR OTHERWISE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT FORESEEABLE.  NO EMPLOYEE OR REPRESENTATIVE OF SUPPLIER IS AUTHORIZED TO MODIFY THIS WARRANTY, OR SUPPLIER'S STANDARD WARRANTY FOR ANY PRODUCT.
 
5.   Manufacture and Delivery of Products
 
5.1   Supplier's Reasonable Efforts to Manufacture Products
 
The Supplier shall use all reasonable efforts to manufacture and maintain sufficient stocks of the Products to fulfill its obligations under this agreement.
 
5.2   Supplier's Reasonable Efforts to Deliver Products
 
The Supplier shall use all reasonable efforts to deliver each of the Customer's orders for the Products on the date specified in the order, but the time of delivery shall not be of the essence and if, despite those efforts, the Supplier is unable for any reason to fulfill any delivery of the Products on the specified date, the Supplier shall not be deemed to be in breach of this agreement or have any liability to the Customer unless and until the Customer has given [spelled number of days] (______) days' written notice to the Supplier requiring the delivery to be made and the Supplier has not fulfilled the delivery within that period.
 
5.3   Delivery
 
Delivery of the Products shall take place at the Supplier's premises at ______ but the Supplier shall at the Customer's request arrange for suitable transport to the Customer's premises at ______ (or such other premises as the Customer may notify to the Supplier from time to time) and arrange insurance for the Products, in which case the Customer shall bear the costs of transport and insurance.
 
5.4   Acceptance and Rejection of Products
 
(a)   The Customer shall, within [spelled number of days] (______) days of the arrival of each delivery of the Products at the Customer's premises, notify the Supplier in Writing of any defect by reason of which the Customer alleges that the Products delivered are not in accordance with the Specification and which should be apparent on reasonable inspection.
 
(b)   If the Customer fails to give such a notice then, subject to Section 4, and except in respect of any defect which would not be apparent on reasonable inspection, the Products shall be conclusively presumed to be in all respects in accordance with the Specification, and accordingly the Customer shall be deemed to have accepted the delivery of the Products in question and the Seller shall have no liability to the Customer with respect to that delivery.
 
(c)   If the Customer rejects any delivery of the Products which are not in accordance with the Specification, the Supplier shall within [spelled number of days] (______) days of being requested to do so by the Customer supply replacement Products which are in accordance with the Specification (in which event the Supplier shall not be deemed to be in breach of this agreement or have any liability to the Customer) or shall notify the Customer that it is unable to do so, in which case (without limiting Section 9.3) the Customer may obtain from any other person the quantity of the Products which the Supplier has been unable to supply, and that quantity shall be deemed for the purposes only of Section 2.2 to have been ordered from the Supplier.
 
(d)   If there is any difference of opinion between the parties as to whether any Products supplied by the Supplier are in accordance with the Specification the matter shall, at the request of either the Supplier or the Customer, be determined by an Expert.
 
5.5   Risk of Loss
 
Risk in and responsibility for the Products shall pass to the Customer once they are loaded on to transport at the Supplier's premises.
 
6.   Pricing and Payment Terms
 
6.1   Standard Base Price
 
Subject to the following provisions of this clause, the price for each type of the Products shall be the Supplier's exfactory price for those Products.
 
6.2   Increases in Standard Base Prices
 
(a)   The Supplier may increase its exfactory prices for the Products at the end of each Year, or more frequently if the Supplier, in its sole discretion, considers the increase to be justified by any material increase in the prices of raw materials used by the Supplier in the manufacture of the Products, and the Supplier shall as soon as practicable notify the Customer of any such increase.
 
(b)   The Supplier may increase the price for the Products to cover extra expense as a result of the Customer's instructions or lack of instructions.
 
6.3   Shipping Costs and Sales Taxes
 
The price for the Products shall be exclusive of costs of packaging, carriage and insurance of the Products and any applicable sales tax or duty, which shall be added to the sum in question.
 
 
6.4   Available Discounts
 
The Customer shall be entitled to:
 
(a)   The Supplier's standard discount for prompt payment pursuant to its standard terms of sale;
 
(b)   Subject to compliance by the Customer with its obligations under Section 2.2 in any Year, a discount in respect of all quantities of the Products purchased by the Customer from the Supplier in that Year of ______% of the aggregate exfactory price (before the discount referred to in (a) above), and exclusive of the items referred to in Section 6.3 of the Products so purchased; and
 
(c)   A further discount in accordance with Section 6.5.
 
6.5   Discount Based on Average Quarterly Purchase Volume
 
If in any Year the average Quarterly quantity of the Products purchased by the Customer from the Supplier falls within any of the bands given in the table below, the Customer shall be entitled to a discount in respect of all the Products so purchased in that Year, calculated by taking the percentage specified opposite the relevant band and applying it to the aggregate exfactory price (before the discounts referred to in Section 6.4(a) and 6.4(b), and exclusive of the items referred to in Section 6.3) of the Products so purchased:
 
Volume
Discount
______
______%
 
 
For the purposes of the table given above, any average Quarterly quantity of the Products shall be taken as falling within a particular band if it is greater than the lower limit for that band and does not exceed the upper limit (if any) for that band.
 
6.6   Price Protection
 
If at any time during the continuance of this agreement the price for the Products (or where there is more than one type of Products, for any type of them), as calculated in accordance with the preceding provisions, exceeds the lowest exfactory price (net of all discounts, allowances and other deductions from the Supplier's exfactory list price) at which the Supplier offers equal or lesser quantities of the Products (or the type of Products in question) to any of its other customers, the price charged to the Customer under this agreement shall, on receipt by the Supplier of a Written request from the Customer together with supporting evidence, be reduced, for all deliveries of the Products after the date of that request, to that lowest net exfactory price for so long as it continues to apply, but on its ceasing to apply the price for the Products under this agreement shall revert to that calculated in accordance with the foregoing provisions (subject to any further application of this provision).
 
6.7   Payment Terms
 
The Supplier shall invoice the Customer by the ______ day of each Quarter for the price (calculated before any discount under Section 6.4) in respect of all deliveries of the Products made under this agreement during the previous Quarter, and the Customer shall pay the sums shown to be due (net of any discount pursuant to Section 6.4(a) to which the Customer is entitled) in cleared funds to the bank nominated by the Supplier within [spelled number of days] (______) days from the date on which each invoice is submitted by the Supplier.
 
6.8   Remittance of Discount
 
Within the period of [spelled number of days] (______) days after the date of receipt by the Supplier of each report submitted under Section 2.8, the Supplier shall pay to the Customer the amount of any discount to which the Customer is entitled under Section 6.4(b) and 6.4(c) in respect of the Year to which that report relates, unless within that period the Supplier notifies the Customer that it does not agree to either or both of those discounts, because the Customer has not complied with its obligations under Section 2.2 in respect of that Year or (as the case may be) the Supplier does not accept the average Quarterly quantity shown in that report; and if the Supplier does so notify the Customer:
 
(a)   The Supplier shall within that period pay to the Customer any such discount which it does agree and, on account of any such discount in respect of that Year which it does not agree, 50% of the discount which would be payable if the Customer had complied with its obligations under Section 2.2 or (as the case may be) the relevant quantity shown in the report was correct;
 
(b)   The amount of the discount which the Supplier does not agree shall, in default of agreement between the parties within [spelled number of days] (______) days, be determined by an Expert; and
 
(c)   Within [spelled number of days] (______) days after the determination of that amount by agreement between the parties or by the Expert, the Supplier shall pay to the Customer any sum by which the amount so determined exceeds the sum paid on account, or the Customer shall repay to the Supplier any sum by which the amount so determined is less than the sum paid on account, as the case may be.
 
6.9   Overdue Payments
 
If either party fails to pay on the due date any amount which is payable to the other under this agreement then, without limiting Section 9.3:
 
(a)   That amount shall bear interest from the due date until payment is made in full, both before and after any judgment, at ______%; and
 
(b)   In the case of an amount due from the Customer, the Supplier may suspend deliveries of the Products until the outstanding amount has been received by the Supplier from the Customer.
 
7.   Expert Determination
 
(a)   Where under any provision of this agreement any matter is to be determined by an Expert, it shall be referred on the Written request of either party to ______ or, if he is unable or unwilling so to act, such person as the parties agree in Writing or, in default of agreement, nominated on the application of either party by ______.
 
(b)   Any person to whom a reference is made under Section 7.1(a) shall act as an expert and not as an arbitrator and may appoint such technical expert or experts as he considers necessary to assist him in determining the matter referred to him.  The decision of the Expert (which shall be given by him in writing stating the reasons for his decision) shall be final and binding on the parties.
 
(c)   Each party shall provide any Expert with such information as he may reasonably require for the purposes of his determination; if either party claims any such information to be confidential to it then, provided that in the opinion of the Expert that party has properly claimed the information as confidential, the Expert shall not disclose the information to the other party or to any third party.
 
(d)   The costs of any Expert (including the costs of any technical expert appointed by him) shall be borne in such proportions as the Expert may determine to be fair and reasonable in all the circumstances or, if no such determination is made by the Expert, by the parties in equal proportions.
 
8.   Force Majeure
 
(a)   If either party is affected by Force Majeure it shall promptly notify the other party of the nature and extent of the circumstances in question.
 
(b)   Neither party shall be deemed to be in breach of this agreement, or otherwise be liable to the other, for any delay in performance or the nonperformance of any of its obligations under this agreement, to the extent that the delay or nonperformance is due to any Force Majeure of which it has notified the other party, and the time for performance of that obligation shall be extended accordingly.
 
(c)   If at any time the Supplier claims Force Majeure in respect of its obligations under this agreement with regard to the supply of the Products, the Customer may obtain from any other person such quantity of the Products as the Supplier is unable to supply, and that quantity shall be deemed for the purposes only of Section 2.2 to have been purchased from the Supplier.
 
9.   Duration and Termination
 
9.1   Term and Extension of Agreement
 
This agreement shall come into force on ______ and, subject to the following provisions of this clause, shall continue in force for an initial period of [spelled number of  years] (______) years and thereafter unless or until terminated by either party giving to the other party at any time not less than [spelled number of  months] (______) months' Written notice to expire on or at any time after the end of the initial period.
 
9.2   Supplier's Right to Terminate Based on Purchase Volume
 
If in any Year the quantity of the Products purchased by the Customer pursuant to this agreement falls short of ______, and the shortfall is not due to the inability of the Supplier to supply the Products, or the inability of the Customer to use the Products, as a result of Force Majeure, the Supplier may terminate this agreement by giving [spelled number of  days] (______) days' written notice to the Customer.
 
9.3   Right to Terminate upon Breach or Financial Difficulties
 
Either party shall be entitled forthwith to terminate this agreement by giving Written notice to the other party at any time in the event of:
 
 (a)   The other party committing a continuing or material breach of this agreement and, if the breach is capable of remedy, failing to remedy it within [spelled number of  days] (______) days after receipt of a Written notice giving full particulars of the breach and requiring it to be remedied;
 
(b)   The liquidation or insolvency of the other party; or
 
(c)   The appointment of a receiver or similar officer for the other party; or
 
(d)   The assignment by the other party for the benefit of all or substantially all of its creditors;
 
(e)   The entry by the other party into an agreement for the composition, extension, or readjustment of all or substantially all of its obligations;
 
(f)   The filing of a petition in bankruptcy by or against the other party under any bankruptcy or debtors' law for its relief or reorganization which is not dismissed within ninety (90) days;
 
(g)   The other party ceasing, or threatening to cease, to carry on business; or
 
(h)   The party delivering the notice reasonably apprehending that any of the events mentioned above is about to occur in relation to the other party and the notifying party notifies the other party accordingly.
 
 
 
9.4   Breaches Capable of Remedy
 
For the purpose of Section 9.3(a), a breach shall be considered capable of remedy if the party in breach can comply with the provision in question in all respects other than as to the time of performance (provided that time of performance is not of the essence).
 
9.5   Effect of Waivers
 
A waiver by either party of a breach of any provision of this agreement shall not be considered as a waiver of a subsequent breach of the same or another provision.
 
9.6   Effect of Termination
 
The rights to terminate this agreement given by this clause shall not prejudice any other right or remedy of either party in respect of the breach concerned (if any) or any other breach.  On the termination of this agreement for any reason, subject as otherwise provided in this agreement and to any rights or obligations that have accrued prior to termination, neither party shall have any further obligation to the other under this agreement.
 
10.   Nature of Agreement
 
10.1   Supplier's Use of Agents and Subcontractors
 
Subject to the Customer's consent (which shall not be unreasonably withheld) the Supplier may carry out its obligations under this agreement through any agents or subcontractors appointed by it in its absolute discretion for that purpose.
 
10.2   Assignment
 
Except as provided in Section 10.1, this agreement is personal to the parties, and neither of them may, without the Written consent of the other, assign, mortgage, charge (otherwise than by floating charge) or dispose of any of its rights hereunder, or subcontract or otherwise delegate any of its obligations under this agreement.
 
10.3   No Partnership
 
Nothing in this agreement shall create, or be deemed to create, a partnership between the parties.
 
10.4   Entire Agreement
 
This agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties, and may not be modified except by an instrument in Writing signed by the duly authorized representatives of the parties.
 
 
10.5   Severability
 
If any provision of this agreement is held by any court or other competent authority to be void or unenforceable in whole or part, the other provisions of this agreement and the remainder of the affected provisions shall continue to be valid.
 
10.6   Governing Law
 
This agreement shall be governed by and construed in all respects in accordance with the laws of ______, and the Customer agrees to submit to the jurisdiction of the ______ courts.
 
10.7   Notices
 
(a)   A notice or other information required or authorized by this agreement to be given by either party to the other may be given by hand or sent (by first class mail, facsimile transmission or comparable means of communication excluding electronic mail) to the other party at the address referred to in Section 10.7(d).
 
(b)   A notice or other information given by mail under Section 10.7(a) which is not returned to the sender as undelivered shall be deemed to have been given on the [spelled number of  days] (______) day after the envelope containing it was so mailed; and proof that the envelope containing any such notice or information was properly addressed, and sent by first class mail, and that it has not been so returned to the sender, shall be sufficient evidence that such notice or information has been duly given.
 
(c)   A notice or other information sent by facsimile transmission or comparable means of communication (excluding electronic mail) shall be deemed to have been duly sent on the date of transmission, provided that a confirming copy is sent by first class mail to the other party at the address referred to in Section 10.7 (d) within 24 hours after transmission.
 
(d)   A notice or other information or any legal proceedings concerning or arising out of this agreement shall be addressed to the company secretary of the party in question at its principal place of business identified above, or to such other officer or at such other address as may be notified by the party concerned in Writing from time to time.
 
SUPPLIER:
 
[Sig Block Party 1]
[Notary Party 1]
 
CUSTOMER:
 
[Sig Block Party 2]
[Notary Party 2]

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