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INDEX

PartiesPreambleClauses

1. Agreement to supply2. Duration3. Quality4. Quantities and ordering procedures5. Deliveries risk & ownership6. Prices 7. Payment terms8. Intellectual Property9. Claims10. Termination11. Force Majeure12. Resolution of disagreement13. Applicable law and competent jurisdiction

14. Language

SignaturesAnnexes

The International Supply Agreement is used to establish long-term agreements (i.e. over a year) between a manufacturer (referred as the Supplier) and its client (the Buyer) for the supply of products in international markets. This Agreement template is not intended for use when the products are supplied to a distributor for resale; in these situations the International Distribution Agreement should be used.

In this type of agreement transactions are carried out through regular orders (every week, every month, every two months, etc.) at prearranged prices. The Agreement establishes the minimum and maximum amounts to be supplied, as well as a number of alternatives to adjust the price at the end of each year within the term of the contract.

The agreement template may be used for two different kinds of supply: (a) the regular acquisition of products (components, raw materials, etc.) which the Buyer must incorporate into the manufacturing process of its own products; (b) the regular acquisition of products which the Buyer must sell elsewhere under its own brand, and without any considerable modifications, in order to complete its range of products.

For some specific clauses (amounts and orders, formula for adjusting prices, payment terms, etc.) the Agreement offers a number of options to choose from, according to who drafts the Agreement (Supplier or Buyer).

Nº of pages: 7 + 3 (User Guide)Format: WordLanguage: English

MODEL OFINTERNATIONAL SUPPLY AGREEMENT

INTERNATIONAL SUPPLY AGREEMENT

DATE: ..............................................................................................................................................

BETWEEN:

.............................. [company legal name] whose registered office is at ..................................... [address, city and country] and registration/fiscal number is .............................., represented by ............................................................. [surname and first name, position] (hereinafter referred to as “the Supplier”),

AND:

.............................. [company legal name] whose registered office is at ..................................... [address, city and country] and registration/fiscal number is .............................., represented by ............................................................. [surname and first name, position] (hereinafter referred to as “the Purchaser”).

PREAMBLE [Parties may include a preamble explaining the activities of each and describing the history of their relationship, if for example the Agreement continues a prior relationship].

.........................................................................................................................................................

.........................................................................................................................................................

IT IS AGREED AS FOLLOWS:

1. AGREEMENT TO SUPPLY

1.1 The Supplier will sell and deliver and the Purchaser will buy the products specified in Annex 1.

1.2 The list of products in Annex 1 may be amended by written agreement during the life of this Agreement.

2. DURATION

2.1 This Agreement is for an initial period of .......... [1, 2, 3, 4, 5] years commencing on .............. [date].

2.2 At the end of the initial period the Agreement will continue on a yearly basis unless it is terminated by either Party giving not less than .......... [1, 2, 3] months written notice to the other to expire at the end of the initial period or of any subsequent period.

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3. QUALITY

3.1 Products to be supplied under this Agreement must conform to the description and specifications contained in Annex 2.

3.2 The Purchaser must notify the Supplier promptly in writing if it becomes aware of any Products which do not conform to the requirements set out in this Agreement. The Purchaser will not be obliged to pay for non-conforming Products and the Supplier will be responsible for their removal and replacement with Products that conform to the requirements of the Agreement.

3.3 Where appropriate, independent inspection and testing of Products will be carried out at agreed intervals with an independent third Party appointed by the ..............[Supplier or Purchaser] and approved by the .............. [Purchaser or Supplier]. A copy of every test report will be made available to the ............. [Supplier or Purchaser] .............. by the .............. [Purchaser or Supplier].

3.4 The costs of such inspections and tests:

Alternative A. Will be borne by the Supplier.

Alternative B. Will be borne by the Purchaser.

Alternative C. Will be borne equally by the Supplier and the Purchaser.

4. QUANTITIES AND ORDERING PROCEDURES

4.1 The minimum and maximum quantities of Products which the Purchaser will order in each Agreement Year are set out in Annex 3. A "Agreement Year" is the 12 month period commencing on the date established in Clause 2.1 and on each anniversary of that date.

4.2 The Purchaser will provide a written forecast of its anticipated annual requirements at least 30 days before the commencement of each Agreement Year and will also provide regular written quarterly forecasts of its requirements on ................... [1 January, 1 April, 1 July and 1 October] each year. These forecasts will be updated as circumstances require.

4.3 Products will only be supplied under this Agreement against orders placed by the Purchaser. Each order must be in writing specifying the number and type of Products required and the proposed delivery date(s). Every order must be placed at least ....... [30, 60, 90] days before the delivery date. The Purchaser may vary an order in writing at any time up to ........ [10, 20, 30, 60] calendar days before the first delivery date specified in the order.

4.4 The Supplier will not be obliged to deliver more than the maximum annual or monthly quantity specified in Annex 3. The Purchaser must obtain the Supplier's written acceptance of any order in excess of the maximum monthly or annual quantity.

5. DELIVERIES RISK AND OWNERSHIP

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5.1 The Products will be delivered by the Supplier to the Purchaser at the delivery points specified in Annex 4. This may be changed by agreement.

5.2 When the delivery point is at the premises of the Supplier, the Purchaser will be responsible for collection and loading of Products and will from that point be responsible for insurance of the Products.

5.3 Where the delivery point is at the premises of the Purchaser or some other location which requires the Supplier to arrange transportation of the Products, the Supplier will be responsible for insurance of Products in transit and responsible for unloading Products from the delivery vehicle at the delivery point.

5.4 All deliveries will be made during normal working hours of the Purchaser, unless otherwise agreed in writing.

5.5 Ownership of and risk in the Products will pass to the Purchaser from the Supplier at the delivery point either when Products are loaded onto the vehicle for which the Purchaser is responsible or unloaded from the vehicle for which the Supplier is responsible, whichever is applicable.

5.6 The Supplier will arrange, from time to time, for packaging and labeling of the Products in accordance with procedures agreed in writing with the Purchaser from time to time. The Supplier will also provide such documentation as may be appropriate to enable the Products to be delivered to the delivery point.

5.7 If the Purchaser fails to take delivery of Products on the date fixed for delivery, any costs incurred by the Supplier in storing them will be reimbursable by the Purchaser on demand and risk in Products will pass to the Purchaser.

6. PRICES

6.1 Prices of Products at the date of this Agreement are shown in Annex 1 of the present Agreement. These prices include transportation to the delivery point.

6.2 Prices will be subject to adjustment at the commencement of each new Agreement Year.

Alternative A. A formula to determine new prices is shown in Annex 5 of the present Agreement.

Alternative B. New prices will be adjusted through negotiation and agreement during ....... [1, 2, 3] months before the commencement of the new Agreement Year. In fixing any new prices, the Supplier will provide the Purchaser with details of cost increases and other relevant data. Both Parties will act in good faith in these negotiations.

6.3 Prices applying at the time that negotiations commence will apply until a price change is agreed. If within .................. [30, 60] calendar days from the commencement of a Agreement Year, no agreement on a change in price has been reached, the Supplier will have the right to give ................... [30, 60, 90] days notice to terminate the Agreement.

6.4 When the Purchaser buys Products for resale, it will be free to fix its own resale prices.

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7. PAYMENT TERMS

7.1 Alternative A. The Supplier will invoice the Purchaser at the end of each calendar month for the quantity of Products supplied during the month. Each invoice will show the description, quantity and date of delivery of all Products supplied. Payment will be due ....... [30, 60, 90] calendar days from the invoice date.

Alternative B. The Purchaser will establish a revolving letter of credit in favor of the Supplier prior to the first delivery date for Products under this Agreement. The letter of credit will be on terms acceptable to the Purchaser and will be confirmed by a bank in the Supplier's territory. The letter of credit will be maintained at a value agreed between the Parties as being sufficient to meet the estimated cost of Products due for delivery in each month. At the end of each month the Supplier will submit an invoice to the confirming bank (with a copy to the Purchaser). Each invoice will show the quantities and dates of delivery of all Products supplied during the month. Payment will be due ........ [30, 60, 90] days from the date of the invoice.

7.2 The Supplier will upon request provide the Purchaser with copies of delivery notes and other relevant data to support invoices which are submitted.

7.3 The Supplier will be entitled to suspend delivery of any order for Products if any payment for Products already delivered is outstanding for more than ........ [30, 60, 90] calendar days after the date upon which it became due.

8. INTELLECTUAL PROPERTY

8.1 The Products shall not bear any brand name or logo that identifies the Supplier. The Purchaser may incorporate to the Products or ask the supplier any brand name or logo that is properly registered on behalf of Buyer.

8.2 The supplier warrants that all Products delivered do not violate any law of Intellectual Property (trademarks, patents, utility models, industrial designs) of any third Party. The Supplier shall indemnify the Purchaser and its customers against any claim by imitation or violation, directly or indirectly, of any intellectual property right, which is the result of the sale or use of the Products.

9. CLAIMS

9.1 If the Purchaser becomes aware of any claim or potential claim in respect of defective product liability arising from a delivery of any Products it shall immediately inform the Supplier in writing providing all necessary information and documentation to enable the Supplier to take any appropriate action. The Supplier may require the Purchaser to give all reasonable assistance, at the Supplier’s cost, to enable the Supplier to defend its reputation. The Purchaser shall not, without the prior written authorization of the Supplier settle any such claim.

9.2 The Purchaser undertakes that it will not make any misleading claims or produce any misleading advertising material in respect of the Products.

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10. TERMINATION

10.1 The Supplier may terminate this Agreement by notice to the Purchaser if the Purchaser is overdue in making any payment for more than ........ [60, 90, 120] calendar days, or if the Purchaser commits any material breach of this Agreement and (in the case of a breach capable of remedy) fails to remedy the breach within ....... [10, 20, 30] calendar days of being requested to do so in writing.

10.2 The Purchaser may terminate this Agreement if the Supplier fails to perform its obligations or commits a material breach of this Agreement and (in the case of a breach capable to remedy) fails to remedy the breach within ........ [10, 20, 30] calendar days of being requested to do so in writing.

10.3 Either Party may terminate this Agreement by notice if the other Party becomes insolvent or has a Receiver or Liquidator appointed or enters into an arrangement with its creditors.

10.4 The Supplier may terminate this Agreement in the circumstances contemplated by Clause 6.3.

11. FORCE MAJEURE

11.1 The Supplier shall not be liable to the Purchaser for failure to deliver nor shall the Purchaser be liable to the Supplier to take Products ordered under this Agreement where:

11.1.1 The failure is due to a cause outside that Party's control including, but not limited to, acts of nature, war, terrorism, sabotage, fire, explosion, flood, action of any governmental authority, embargo, failure of raw materials supply, strike or labor dispute (except of the workforce of the Party claiming force majeure), and

11.1.2 It gives notice of the event as soon as practicable to the other Party.

11.2 A Party claiming force majeure must use all reasonable efforts to avoid or mitigate the effect of the force majeure event.

11.3 If a force majeure event continues for more than ......... [90, 120, 180] calendar days either Party may give notice to the other to terminate this Agreement.

12. RESOLUTION OF DISAGREEMENT

Should any disagreement arise as to the present Agreement or during the course of activities of the Supplier, the Parties shall endeavor to reach amicable agreement. Should an amicable solution not be reached, the Parties may request that the matter be referred to persons of higher rank within their own organizations, with whom they shall meet at least once in order to analyze the disagreement and possible means of resolving it.

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13. APPLICABLE LAW AND COMPETENT JURISDICTION

If the dispute is not be resolved by direct negotiation, it will be finally settled by:

Alternative A. legal proceedings in the Courts of .............. [ insert country], and both Parties agree to submit to the jurisdiction of those Courts.

Alternative B. legal proceedings in the Courts of the country of the ……..........……… [Supplier or Purchaser] and, specifically, to those of the town/city where the ................... [Supplier or Purchaser] has its registered offices, except if the ......................... [Supplier or Purchaser], if it were the complainant, were to bring its claim before the Courts of the town/city where the other Party has its registered offices.

Alternative C. The Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with said Rules. The place of arbitration shall be ........... [city and country] and the proceedings shall be carried out in the ………… language.

14. LANGUAGE

The whole text of the present Agreement, as well as the documents derived from it, including those in the Annexes, have been written in:

Alternative A. English, and is therefore considered to be the only authentic text for all legal effects.

Alternative B. …………… and English, both versions being deemed authentic, but for legal purposes the text in .......... is to be given priority of interpretation.

Both Parties declare their conformity to the present agreement, which is signed in ...... copies, each of which shall be considered original.

This Agreement enters into force the date written above.

Signed by a duly authorized representative of the Supplier and of the Purchaser.

Alternative A. At …………......, on …… of .................., .........

Alternative B. The Supplier, at ……....………, the ……...………, and the Purchaser at ……........……., the…………....……..

For and on behalf of the Supplier For and on behalf of the Purchaser

________________________________ __________________________________Mr./Mrs. ................................................ Mr./Mrs. ......................................................................................................... [Title] ........................................................... [Title]

© Copyright Global Marketing Strategies (ISBN 978-84-92570-77-5)

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ANNEX 1. PRODUCTS AND PRICES(CLAUSES 1 AND 6.1)

.........................................................................................................................................................

.........................................................................................................................................................

ANNEX 2. DESCRIPTION AND SPECIFICATIONS OF PRODUCTS(CLAUSE 3.1)

.........................................................................................................................................................

.........................................................................................................................................................

ANNEX 3. MINIMUM AND MAXIMUN QUANTITIES PER CONTRACT YEAR(CLAUSE 4.4)

.........................................................................................................................................................

.........................................................................................................................................................

ANNEX 4. DELIVERY POINTS(CLAUSE 5.1)

.........................................................................................................................................................

.........................................................................................................................................................

ANNEX 5. FORMULA TO DETERMINE PRICE CHANGES(CLAUSE 6.2)

.........................................................................................................................................................

.........................................................................................................................................................

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Agreements drafted by the legal experts of Global Negotiator cover all relevant aspects that are negotiated and agreed in the different types of business between companies. However, when these agreements are used you should take into account some recommendations common to all of them that are described in this User Guide. DATE

The date when the agreement comes into force is the one that appears in its header, as mentioned in the final paragraphs of the agreement, before signatures (This Agreement comes into force on the date written above).

In some agreements -for example in the Supply Agreement- the date of coming into force is also mentioned in one of the clauses. In these cases you have to verify that the two dates inserted in the agreement (in the heading and in the corresponding clause) are the same, in order to avoid discrepancies.

PARTIES

Be sure to insert in the first page of the agreement the full details of the Parties:

When a Party is a company you must insert the following information: legal name, legal form (limited, incorporated, etc.), full address, registration data and fiscal identification number.

When a Party is an individual that works as independent professional (for example a commercial agent) you must insert the following information: full name, profession, full address and fiscal identification number.

CLAUSES

Clauses with different alternatives: choose the most favorable

In the most important clauses of each agreement (exclusivity, payment terms, applicable law and competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the most appropriate to each situation. Therefore, the user before submitting the agreement to the other Party must choose the alternatives that seem best suited to their interests, and eliminate the rest. Clauses with blank spaces to be completed

In several clauses of the agreement blank spaces appear with dots (.......................) that the user has to complete inserting text. Following the dots, between brackets, you will see the data and explanations to insert the text.

When the text between brackets is in normal letters (the same as the agreement) and separated by "," or the word "o", the user must insert one of the options suggested.

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USER GUIDE

Example of blank space (........) with options to select between brackets:

Orders handled before completion of the present Agreement which produce sales transactions within .......... [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission. In this case the user must choose between options 1, 2, 3 or 6 months and insert one in the blank space (........).

When the text between brackets is in italics the user has to insert the data and information requested and eliminate the bracketed text.

Example of blank space - (.........) to insert text:

Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with said Rules. The place of arbitration shall be ........... [city and country]. In this case the user must insert in the blank space (...........) the city and country chosen to conduct the arbitration and afterwards eliminate the bracketed text [city and country].

Notices Clause

Sometimes it may happen that the official address of the Parties which appear at the beginning of the agreement is different from which is to be used for communications between the Parties during the terms of the agreement. In this case the user should include at the end of the agreement a Notices Clause.

Example of Notices Clause:

Notices. - In order to comply with their contractual obligations, the Parties establish the following address for the provision of notices related to this agreement:- Party 1 ............................................................. [insert full address].- Party 2 .............................................................. [insert full address].

ANNEXES

The agreements incorporate some Annexes, each of them, referenced to the corresponding Clause. Annexes are drafted in commonly used formats, although the user must adapt these formats and the text inserted in them to each particular situation.

SIGNATURES

People who sign

Persons signing the agreement on behalf of the company must have the authority to do so and preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to the full name of the person that signs his/her position must be inserted. When one of the Parties who signs is a natural person (for example a commercial agent in a Agency Agreement) obviously he or she is the person that has to sign the agreement.

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The laws of some countries require that agreements, to be valid, shall be signed in front of witnesses or a public notary. Therefore, before signing a agreement you should be informed about the requirements that may exist in each country.

Place and date of signature

Usually agreements are signed by both Parties on the same date and place. Nevertheless, in international agreements, due to physical distance, it is common that each of the Parties sign in different dates and places. This agreement provides for both alternatives so it comes to choosing the most appropriate to each situation.

Number of copies

Usually, the Parties sign two copies of the agreement, each Party retaining one of them, but cal also arise the need to sign more copies. In this case all you have to do is mention explicitly the number of copies to be signed in the paragraph that is included at the end of the agreement (Both Parties declare their conformity to the present agreement, which is signed in ...... copies, each of which shall be considered an original).

GENERAL RECOMMENDATIONS

The Parties must sign all pages of the agreement, including Annexes, so they are also valid. It is better to use ball point or pen (not pencil) in a color other than black (e.g.: blue); this makes it easier to distinguish an original document from a photocopy.

It is preferable (although no mandatory) to express sums of money and percentages in words and figures. Of course, the words and figures for a given amount must match exactly. You also must insert the currency in which the amounts are expressed. It is advisable to use the rules establish by ISO that name each currency by three capital letters (EUR for euro, USD for dollar, GBP for sterling pound, JPY for Japanese yen, etc. - you can get the acronyms of every currency in the website www.oanda.com).

Once you have chosen the best alternatives of each clause and have completed the blank spaces you should revise the whole agreement to remove remaining paragraphs and correct any errors.

LEGAL WARNING

Depending upon your particular situation this agreement might not meet your needs and requirements. In case of doubt, you should consult a legal advisor. Global Marketing Strategies, S.L. as publisher and copyright holder of this agreement disclaims all warranties, whether express or implied, respecting the legal content of this agreement. For any claims arising out or in connection with the use of this agreement, Global Marketing Strategies shall be limited to a refund of the purchase price.

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