Food Sales ContractsFood Sales Contracts

Canadian Meat Council’s 92nd Annual ConferenceMay 30 – June 1, 2012y ,

Quebec City

Jon SigurdsonAikins, Macaulay & Thorvaldson LLP

Food Sales ContractsGuidance on the Use of Standard Form Food Purchase

Agreements used byAgreements used by Major Canadian Retailers and Distributors

Disclaimer: This presentation is based upon laws that are generally applicable to the common law provinces of Canada. The Civil Code in Quebec has many similarities. Do not treat this material as legal advice – Please contact your own lawyer for advice on

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specific issues that affect your businesses.

OverviewOverview

Contract Law Product What Makes Canada

Why Have a Written Food Contract Law Liability Canada

Special? Sales Contract?

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Basics of Contract LawBasics of Contract Law

Contract DefinedContract Defined

Warranties

Damages

Force Majeure

D li P iDelivery Point

Battle of the Forms

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Contract DefinedContract Defined

• Offer, acceptance, and consideration, p ,• Meeting of the Minds• Contract can be:

– Verbal agreement (handshake deal)– Formed by Buyer’s purchase order or Seller’s sales

fi ti bi ti f th tconfirmation or a combination of the two• Focus on “business to business” contracts

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Verbal ContractsVerbal Contracts

• Verbal contracts are contracts and are enforceable• Verbal contracts carry more risk because of uncertainty

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WarrantiesWarranties

Statement or representation in a contract as to character, quality, performance or title of goods

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WarrantiesWarranties• Express Warranties can arise from:

E li i i d B– Explicit promises made to Buyer– Description of the product– Providing or displaying a sample or model of the productProviding or displaying a sample or model of the product

• Implied Warranties arise from:– Sale of Goods Act – retail consumer protection legislation– United Nations Convention on Contracts for theUnited Nations Convention on Contracts for the

International Sale of Goods (for cross-border sales)

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Implied WarrantiesImplied Warranties

E l f I li d W ti• Examples of Implied Warranties– Merchantability quality– Fitness for a Particular Purpose – Buyer relies on Seller’s p y

expertise that product is reasonably fit for particular purpose

– Various imposed contract terms (for cross-border sales)– Various imposed contract terms (for cross-border sales)

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Express Warranty - ExamplesExpress Warranty Examples

• Ground Beef is not adulterated as defined under the Food and Drugs Act

• The brisket meets the specifications on the attached Schedule “A” ( t i lit d t )“A” (e.g., trim, quality grade, etc.)

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Sources of Express WarrantiesSources of Express Warranties

• Supply Contracts/Continuing Guaranties• Letters to Customers

S l ’ S C• Salesperson’s Statements to a Customer• Television or Print Advertisements• Pictures Labels or Writing on Food Containers• Pictures, Labels or Writing on Food Containers• Point of Sale material

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Implied Warranty“ Q i ”?“Merchantable Quality”?

Applicable where goods are bought by description (I.E. the usual case)usual case)

Not applicable if Buyer examines the goods and examination ht t h l d d f t ( ti )ought to have revealed defect (rare exception)

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“Merchantable Quality”???Merchantable Quality ???

Capable of being used or sold by Buyer, but not necessarily for:p g y y , y

Buyer’s intended purpose;

Buyer’s intended market; or

Buyer’s expected resale price

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“Merchantable Quality”Merchantable Quality

More suited to a retail transaction – uncertainties in industrial or commercial transactions

Often simply means that goods meet the contract descriptionOften simply means that goods meet the contract description –but could mean more?

Would Seller and/or Buyer be better off disclaiming?

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Implied Warranty – “reasonably fit for a i ”?particular purpose”?

Seller warrants that goods are fit for Buyer’s purpose, if:g y p p , Seller at the time of contracting has reason to know the

particular purpose for which the goods are required Buyer is relying on the Seller’s skill or judgment to select or Buyer is relying on the Seller s skill or judgment to select or

furnish suitable goods

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Implied WarrantiesImplied Warranties

A customer can sue Seller for damages based on a breach ofA customer can sue Seller for damages based on a breach of implied warranty

W ld S ll d/ B b b tt ff di l i i i li d Would Seller and/or Buyer be better off disclaiming implied warranties, and replacing with their own warranties in a written contract?

How do you disclaim implied warranties?

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DamagesDamages• Standard rule for damages in breach of contract for sale of

goodsg– Measured by the difference between the contract price and

the market price at the time of the defaultI E difference between what the innocent party should– I.E. difference between what the innocent party should have received from the bargain, and what they actually received

d l h i l l i– Under contract law, the innocent party can also claim losses that arise as a consequence of the direct damages

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DamagesDamages

• Additional issues that could arise:• Additional issues that could arise:– Are damages “reasonably forseeable”?– “Equitable relief”– “Doctrine of mitigation”

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DamagesDamages• Direct Damages

Processor agreed to sell grocer a load of meat for $10 000– Processor agreed to sell grocer a load of meat for $10,000. You defaulted and grocer had to buy it from processor’s competitor for $15,000Direct damages are $5 000– Direct damages are $5,000

• Indirect Damages– Incidental and consequential damages (lost profits, lost q g ( p ,

production, damage to trademarks or goodwill)– Punitive damages

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Force MajeureForce Majeure

• Excuse performance for pActs of God and other causes beyond a party’s reasonable control.

• Acts of God (fire, flood, hurricane, etc.)

• Be wary of economic force• Be wary of economic force majeure which excuses performance if it is uneconomical for a partyuneconomical for a party

• Right to allocate

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Delivery Point – Risk of Loss TransferDelivery Point Risk of Loss Transfer

Delivered “Location” (FOB Buyer)( y )Seller has risk until product reaches “Location”If product is damaged in transit, Seller is liable

Delivered “Place of Shipment” (FOB Seller’s plant)Risk of loss passes when Seller delivers goods to Buyer or Buyer’s carrier at Seller’s dockyIf product is damaged in transit, Buyer is liable

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Battle of the FormsBattle of the Forms

“Q ti f F t” t h t th t t i d h f i“Question of Fact” as to what the contract is, and whose form is binding

Contract formed by exchange of Buyer’s purchase order and Seller’s Sales Confirmation

Battle of the Forms arises when Buyer and Seller send out their terms and conditions – Conflicting terms

Many companies have a policy to use only their own approved forms and not sign or accept customer/vendor’s terms and conditions

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conditions.

When the PurchaserWhen the Purchaser

Negotiating

Warranties Limitation of Liability Indemnification

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Purchaser’s Wish ListPurchaser s Wish List

Have Vendor Warrant:1. Vendor has title to product/free from liens2. Product does not infringe 3rd party intellectual property rights3 Product meets specifications3. Product meets specifications4. Products fit for a particular purpose communicated to vendor

by purchaser5. Product complies with laws

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When PurchaserWhen Purchaser

Limitation of Liabilityy

PURCHASER’S PREFERRED POSITION No limitations of vendor’s liabilityy

FALLBACKCap Vendor’s liability for consequential damages at flat dollar p y q g

amount (e.g. $2 million) or a factor of the contract price (e.g. two-five times the contract price)

Allow vendor to exclude consequential damagesq g

CARVE-OUTSFraud, gross negligence, intentional acts

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, g g g ,

When Purchaser (cont.) ifi iIndemnification

Wish List Extra Special Wish ListPurchaser needs to be

protected for:1. Failure of product to meet

pPurchaser wants to be

indemnified for:1. Supplier’s negligent acts or p

specifications2. Supplier’s breach of the

agreement

pp g gomissions or willful misconduct

2. Consequential damages g3. Infringement of 3rd party

intellectual property4. Direct damages (e.g. cost of

q g(lost profits, lost production, or damage to Purchaser’s business reputation)g ( g

purchasing substitute product)

p )3. Defend/cost of legal defence

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When the SellerWhen the Seller

Negotiating

• Warranties• Limitation of Liability• IndemnificationIndemnification

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When the Seller (cont.)

Seller may Warrant that: Seller should carefullySeller may Warrant that:1. Product meets

specifications2 Product is not adulterated

Seller should carefully consider before warranting:

1 Products are “safe” or2. Product is not adulterated under the Food and Drugs Regulations

1. Products are safe or “wholesome”

2. Product is merchantable or 3. Warranty only applies at

place and time of shipmentfit for particular purpose

3. Product complies with all laws

4. Product is “free from defects”

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When the Seller (cont.)i i i f i i iLimitation of Liability

Seller may exclude liability for customer’s consequential y y qdamages (lost profits), punitive damages, incidental damages, exemplary damages.

Seller may impose a time limitation by which a claim must be made.

Seller would like to make Buyer’s exclusive remedy replacement of product or refund of purchase price.

Address responsibility for product recall, and what costs can be claimed back against Seller.

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When the Seller (cont.) ifi iIndemnification

C id li iti S ll ’ i d ifi ti bli ti t b hConsider limiting Seller’s indemnification obligation to breach of warranties or the continuing guaranty

Indemnity should only apply to third party claims against customer (and not to other parties)

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PricePrice

H i i d t i d?• How is price determined?• Can pricing terms be

changed?g• Holdbacks and special fees• Accruals and Rebates

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Delivery ScheduleDelivery Schedule

Needs to suit both parties’ scheduleNeeds to suit both parties schedule

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Trademark and Other Intellectual O i & iProperty Ownership & Rights

Who owns IPWho owns IPLicensing of IP

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Term/Termination/DefaultTerm/Termination/Default

Standard for performance–based termination

Non-breach terminations

Expiration

Options to Renew

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Governing Law/Venue/ Alternate Dispute Resolution

Courts v. Arbitration Mediation v. Arbitration

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Distribution AgreementsDistribution Agreements

• Principal to Principal/Agencyp p g y• Exclusive/Non-exclusive Territory• Non-Competes• Products/Specifications• Performance Standards• Term/Termination/Default• Liability/Indemnification• TM/Patents Ownership/Rights• TM/Patents Ownership/Rights

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Principal or AgentPrincipal or Agent

• Who is the legal seller?g• Who is the face to the customers?• Who has risk of loss/credit risks?• Who has price risk?• Who sets price?• Who determines customers/marketing plan?

( )(not)

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Performance Standards/Covenants in i i i ADistribution Agreements

Best Efforts

Minimum Sales Target• Early termination• Bonuses

Advertising Approvals

Claims settlementConfidentiality

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Warranties/Disclaimers IndemnificationWarranties/Disclaimers Indemnification

Who defines what can be said about product

Who has liability to customer if product claims are falseWho has liability to customer if product claims are false

Caps/limitations/waivers

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BASICS OFBASICS OFPRODUCT LIABILITY

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Theories of RecoveryTheories of Recovery

Breach of Warranty (Contract)

Tort

(not)

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Contract TheoryContract Theory

• Breach of Warranty• Requirement of contract between the parties• Do you have “privity of contract”?• End user consumer doesn't generally have privity of contract

i hwith processor.

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Tort TheoryTort Theory

• Negligence (What has a snail in a bottle of ginger beer got to g g ( g g gdo with it?)

• No requirement of contract between the parties (No “privity of t t”)contract”)

• Solves the problem of the end consumer not having a contract with the food processor.w t t e ood p ocesso .

• Why look at negligence and product liability in a contractpresentation??? Because there is an opportunity to address the l l i h ilegal exposure in the contacts you negotiate.

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NegligenceNegligence

• Either through neglect or carelessness,g g ,the Defendant failed to exercise“reasonable care” to prevent the product from becoming defective and harming the user (i.e. – “breach of duty”)

• Failure to warn of a product’s hazards or of a potentially dangerous condition can result in negligencedangerous condition can result in negligence

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Breach of Statutory DutyBreach of Statutory Duty

Defendant violates a federal or provincial statute or regulation p gdesigned to prevent the type of injuries that the Plaintiff suffered.

Strong evidence of breach of duty. Incumbent on defendant to “disprove” negligence.d sp ove eg ge ce.

Note overlapping jurisdiction in food law – focus today on federal law

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Statutory Duties in Food i SProcessing and Supply

Food and Drugs Act (regulations) – offence to sell an article of g ( g )food that ... is “adulterated”

Meat Inspection Act (regulations) – “adulterated” means a meat d t t i iproduct containing:

- an ingredient or food additive not permitted by regulations, or- any pathogenic microorganism in excess of levels published in- any pathogenic microorganism in excess of levels published in

the Manual of ProceduresConsumer Packaging and Labelling Act

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Elements of NegligenceElements of Negligence

• Duty – Defendant had a legal duty to exercise “reasonable ” i f i h d d ll f blcare” in manufacturing the product and to warn all foreseeable

users of foreseeable damages• Breach of Duty – Defendant failed to perform this dutyBreach of Duty Defendant failed to perform this duty• Causation/Damages – Defendant’s failure to perform this duty

caused the Plaintiff’s injury• Standard of Proof – Plaintiff has the burden of proving all

elements of the case on a “balance of probabilities”

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Defences in a Product Liability LawsuitDefences in a Product Liability Lawsuit

• Defendant (Processor) took reasonable care in the manufacture f h d (“d dili d f ”)of the product (“due diligence defence”)

• Compliance with regulatory standards does not necessarily establish that there was no negligenceestablish that there was no negligence

• Compliance with prevailing industry standards – similarly, does not necessarily guaranty victory for the Processor– For example, what about the practice of food retailers

grinding their own shop trim and blending with grind from a meat packera meat packer

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Defences in a Product Liability Lawsuit (C t )(Cont.)• No causal link between the illness or injury and the product

Another food source caused the E coli 0157:H7 infection– Another food source caused the E. coli 0157:H7 infection (e.g. sprouts, not hamburger).

– Improper food handling by the consumer (i.e. not cooking p p g y ( gground beef until the juices run clear)

• Assumption of riskl i iff f ll f h h l h i k b ill– Plaintiff was fully aware of the health risks, but still

voluntarily consumed the product (Do you eat steak tartare?))

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Recoverable DamagesRecoverable Damages

• Direct• Incidental or consequential• Special• General• Exclusions and limitations of liability

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InsuranceInsurance

• Is this covered by your insurance?y y• Will you be protected by the other parties’ insurance?• What is the coverage limit of your insurance and the other

parties’ insurance?• What is your deductible?

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What you can do?What you can do?

• Review all promises in written materialsp- contracts- advertisements

i t f l- point of sale- labels/containers

• Ask yourself if you need to say it - and if so, is it supported s you se you eed to say t a d so, s t suppo tedand true?

• Careful what you sayS k l l d i if h ti• Seek legal advice if you have questions

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Examples of Problematic StatementsExamples of Problematic Statements

• Our meat is “pathogen free”• Our meat products are “safe”Our meat products are safe

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Bottom Line for Suppliers

Warrant only that products:

Bottom Line for Suppliers

y p• Meet specifications• Comply with Canadian federal laws and that are specific to

products (for meat - Meat Inspection Act (and Manual of Procedures), Food and Drugs Act and Consumer Packaging and Labelling Act)and abelling ct)

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Reinforce:Reinforce:

• All fresh meat and poultry products p y pmust be properly handled and cooked

• Safe handling instructions• Retailers, distributors, food service establishments and

consumers all have responsibility for food safety

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Case Study #1Case Study #1

“Jackie” caseFive year old girl eats hamburger at company picnic andrequires kidney transplant because of E.coli O157:H7 poisoning. Young girl had been horseback riding thesame day. Nobody else at the picnic got sick.Hamburgers were cooked by company employees.Frozen pre-formed patties were purchased from agrinder The grinder purchased trim from New Zealandgrinder. The grinder purchased trim from New Zealandand Canada.

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Case Study #2Case Study #2

“prime rib grind”p gA retailer trims prime rib, grinds the trim and blends it with grind purchased from a meat packer. Ground beef is

k d d ld i th t il t E li O157 H7 irepackaged and sold in the retail store. E.coli O157:H7 is found in the ground beef, and, through DNA testing, is traced back to a specific feedlot.

(Also consider mechanical tenderizing by Retailer.)

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Unique Characteristics of Food i i i CMerchandising in Canada

“What makes Canada special?”p– Market concentration in certain sectors – Supply Management systems – Canadian Competition Bureau and Investment Canada Act

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Market Concentration in Certain SectorsMarket Concentration in Certain Sectors

• Retail food - Loblaw, Sobeys, Metro-A&P, Safeway (Walmart , y , , y (and Target?)

• Quick Service Restaurants - McDonalds, Tim Horton's, W d ' B Ki A&WWendy's, Burger King, A&W

• Distribution - GFS, Sysco• Beef processors – XL Foods Cargill• Beef processors – XL Foods, Cargill

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Supply Management SystemsSupply Management Systems

• To support orderly marketing of agricultural products, pp y g g p ,restrictions on import and inter-provincial movement of certain products (pork, chicken, turkeys, wheat)I t t i ti i d ti d t l t• Import restrictions give domestic producers extra clout

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Canadian Competition Bureau-Merger A i i i iand Acquisition Review

The Bureau will stop a merger or acquisition that substantially lessons competitionp- includes situation where the merged firm can sustain

materially higher prices than would exist in the absence of the merger

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Conspiracies to fix Pricing or Levels of Production

Notable Exceptions:-Export sales (e.g. Canpotex – Potash, Mosaic and Agrium) Note, still subject to restrictions in some countries, including the US.Supply Management System (legislated)-Supply Management System (legislated)

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Investment Canada ActInvestment Canada Act

• Process under the Act is a deterrent to foreign companies g pwishing to acquire a business in Canada. This has, however stopped only two company in the last couple of decades (BHP Billiton’s attempted acquisition of Potash Corporation andBilliton s attempted acquisition of Potash Corporation, and proposed sale of MacDonald Dettwiler (MDA))

• Canadian parliament and various government have examined effects of market power in various sectors

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Competition Bureau “Abuse of i ” i iDominance” Provisions:

• “Buyer Power” – the Bureau has been asked to consider ywhether the Act should apply to such actions as requirement by retailers for payment towards retailer’s costs, or a payment to secure better shelf spaceto secure better shelf space.

• These types of practices have been prohibited by the UK Competition Commission Code of Practice.

• Should there should be a Canadian Code of Conduct which would include a “fair dealing obligation” on retail grocers –for example requirement that retailers provide notice of andfor example requirement that retailers provide notice of, and reasons for, de-listing suppliers or significantly reducing volumes.

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Does This Make Canadian Food Sales C i ?Contracts Unique?

• Despite continued consolidation in the food industry, and market concentration in some sectors, most parts of the i d i l i iindustry are intensely competitive

• The Competition Bureau has consistently found no evidence of collusion among industry participants in food businesses.collusion among industry participants in food businesses.

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How Does all of This Aff C ?Affect Contract Law?

• Some industry participants have the clout to impose their y p p pcontract on other parties

• Many industry participants use standard form contracts • “Freedom of Contract” Commercial parties to a contract will

be responsible for performing the contract they enter into according to their terms (I.E. the “general rule”)acco d g to t e te s ( . . t e ge e a u e )

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Exceptions to the “General Rule”Exceptions to the General Rule

• Contra Proferentem – applies only when there is ambiguity/uncertainty in the scope or meaning of a word or

iterm in a contract• The agreement will be interpreted against the party who

drafted and imposed itdrafted and imposed it• Most often applied with standard form contracts

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Exceptions (cont.)Exceptions (cont.)

• In a similar vein, a party who imposes an “Exemption Clause”, p y p pwill have the exclusion narrowly interpreted against that party

• Exemption clause might not protect against negligence unless l t t dexpressly stated

• Contra Proferentem is based upon the courts’ perception that the parties have unequal bargaining power, and the contract t e pa t es ave u equa ba ga g powe , a d t e co t actshould be construed against the party imposing the contract.

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How Does Contra Proferentem Affect Legal i f S C ?Interpretation of Food Sales Contracts?

• Exclusion clauses and limitations of liability are typically y yp yfavoured by sellers of goods, to limit the rights of a buyer to claim against the sellerF d t il h ffi i t k t t i th i• Food retailers have sufficient market power to impose their standard form contracts when they are buying food, there is no motivation to insert exemption clauses and limitations of liability in their food purchase agreements

• These types of clauses are found in standard form agreements by some food processors (example on slides below) foodby some food processors (example on slides below) food retailers will try to negotiate them out

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Who Needs a Written Food Sales Contract?Food Sales Contract?

• Not having a written contract is not an unusual situation in f d lfood sales

• Many companies (buyers and sellers) consider that the most important thing is to have a strong relationshipimportant thing is to have a strong relationship

• The seller may have a sales invoice, and/or the buyer may have a purchase order, which would confirm the contract, but:– those will not contain all the terms that you want, and– you may be stuck with statutory implied terms that you

may not wantmay not want

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Even with no Written Contract, There is a “Verbal” Contract

• The terms of the unwritten contract:– include implied terms (discussed in slides above), p ( ),– do not include exclusions of liability and limitations of

damages (discussed in slides above), – Expose the parties to the normal rules of claimable

damages under specific statutes and contract law

Without a written contact, you have passed up an opportunity to control your legal exposure.

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Who Likes Written Contracts?

• Your company auditor does• Your CRA Tax or GST auditor likes written contracts• This would be particularly important if you have allowances,

b t h ldb k if th th t titirebates or holdbacks, or if there are more than two entities involved in a deal.

• Royal Bank v. Kiska (Does Mr. Kiska like written contracts?)y ( )

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Who Else Likes Written Contracts?

Yes, that might be a picture of your lawyer. yLawyers like written contracts.(Because they have your best interest at heart)

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Why Have a Written Contract? (in both parties’ interests)(in both parties’ interests)

• Certainty and security you know where you stand and• Certainty and security – you know where you stand, and greater chance that the contract that the parties believe they have, would be enforced by a court

• Opportunity to replace verbal terms and statutory implied terms (which may be unclear or unfair) with clarity as to what has been agreedhas been agreed

• Less chance of having to go to court to resolve a dispute (less chance of making lawyers rich)

• Buyers tend to be at less risk, because buyers don’t pay until after delivery.

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Why Have a Written Contract (cont.)?

• Opportunity for either party to shift the legal responsibility to a pp y p y g p ydifferent level – upstream or downstream

• Think of how parties can handle legal exposure for product liabilit (and recall and lost prod ct costs)liability (and recall and lost product costs)

• Parties need to be aware of the potential for product liability legal exposure that could quickly wipe out a business.g p q y p

• On the other hand, if you can’t get a better deal with a written contract, consider whether you are better off without a written

t tcontract.

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Biggest Advantages Sellers can gain from a Written Contract?

• You have an opportunity to:• You have an opportunity to:– specify, with precision, what promises you are making – exclude or limit different heads of damagesexclude or limit different heads of damages– contract out of statutory implied terms, that may present

unknown or unwanted legal exposure.

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Biggest Advantages Buyers can gain from a Written Contract?a Written Contract?

f i h dif k ( i h ldb k• If Buyers wish to modify key contract terms (price, holdbacks, allowances), or terminate a contract on short notice, they can negotiate specific clauses that allow them to do so.g p

• This is particularly important for large volume buyers with greater marketing power, that allow long term suppliers to fall i t iti f liinto a position of reliance.

• Buyers who want to be protected by sellers’ insurance can negotiate specific clauses.g p

• Buyers can impose upon sellers their own standards for the conduct of seller’s business (e.g. McDonalds)

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Sample Clauses(with Contra Proferentem in mind)

• NO OTHER WARRANTIES. EXCEPT FOR THE WARRANTIES SPECIFICALLY SET FORTH IN SECTION 2, SELLER DISCLAIMS ALL OTHER EXPRESS AND IMPLIED WARRANTIES INCLUDING WITHOUTIMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NO INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

(source - this and following two slides Cargill, Inc. website)

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Sample Clauses• IN NO EVENT SHALL SELLER BE LIABLE TO BUYER, OR TO ANY

OTHER PERSON OR ENTITY, FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES OF WHATSOEVER NATURE (INCLUDING, BUT NOT LIMITED TO, LOSS OF BUSINESS, LOST PROFITS, DAMAGE TO GOODWILL OR REPUTATION AND/OR DEGRADATION IN VALUE OF BRANDS TRADEMARKSDEGRADATION IN VALUE OF BRANDS, TRADEMARKS, TRADENAMES, SERVICE NAMES OR SERVICE MARKS), WHETHER ARISING OUT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING, WITHOUT LIMITATION, , ( , ,NEGLIGENCE, FAILURE TO WARN OR STRICT LIABILITY), CONTRIBUTION, INDEMNITY, SUBROGATION, OR OTHERWISE.

• BUYER ASSUMES ALL RISKS AND LIABILITIES FOR ANY LOSS, DAMAGE OR INJURY TO PERSONS OR PROPERTY RESULTING FROM THE USE OR SUBSEQUENT SALE OF THE PRODUCTS, EITHER ALONE OR IN COMBINATION WITH OTHER PRODUCTS.

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Sample ClausesSample Clauses

• EXCLUSIVE REMEDIES. Buyer’s exclusive remedy and Seller’s exclusive liability for shipment of nonconforming Product, including for breach of warranty, is expressly limited, at Seller’s option, to (i) replacement, within a reasonable period of time, of the nonconforming product at no additional charge to Buyercharge to Buyer

• CLAIMS. Before or upon tender of delivery of Products, Buyer will provide immediate telephone notification to Seller of any alleged product nonconformity including any off-condition Product shortage or any othernonconformity, including any off-condition Product, shortage, or any other discrepancy or situation which may impair the value of the Products or justify payment of less than the amount billed…If notice is not so made within twenty-four (24) hours of tender of delivery of Products, then Buyer accepts the products as conforming in all ways and will submit to Seller full payment therefore on or before the agreed upon date.

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Questions?Questions?

Jon Sigurdson