- Best efforts
- Reasonable Efforts
- Commercially reasonable efforts
- Agree to agree
All, Only, Sole
Arising out of / related to
At its sole option,
Consistent with prior practice
Exclusions to avoid doubt
Finally or finally
Floors or ceilings
Form, fit and function
In accordance with our standard proceedure
Including without limitation
May, but shall not be obligated to
Not less than
Ordinary course of business
Out of pocket
Point in time language
Reasonable / Unreasonable
Trumping / precedence provisions
Let's review all of these.
- “This Agreement replaces all prior oral or written agreements or other communication between the parties with respect to the subject matter of this Agreement”. This excludes any prior communications.
- “Due to the sole negligence of the Supplier”. This would limit the Supplier’s liability for negligence to only situations where they a solely negligent
- “This shall be Buyer’s sole remedy”. This would preclude any other remedies than the one specified
- Supplier’s liability arising out of this agreement shall not exceed $____. This would preclude recovery under tort law.
- For all defective Products Supplier shall, at its sole option, repair or replace the Product or provide Buyer with a refund or credit.. This would allow the Supplier to determine which option to take and all options may not be of the same value to the Buyer. For example if you need the product you wouldn’t want a refund or credit.
- Except for samples and prototypes, Supplier warrants the product against defects in material and workmanship for three (3) years. This carve out excluded samples and prototypes from the warranty against defects leaving them with no warranty.
- If Buyer purchases 10,000 units by January 1, 2011, Supplier shall provide a rebate of 10% of the purchase price. The commitment to provide the Ten Percent rebate is conditioned in this situation by two actions. The Buyer must purchase at least 10,000 units and those purchases must occur before the cut off date of January 1, 2011.
- Upon successful completion of the development, Buyer will purchase a minimum pf 10,000 units. This means that the commitment to purchase exists only if the development is successfully completed.
- Supplier shall reimburse Buyer’s direct costs associated with the removal or the defective Product from the Customer site. This would eliminate the Buyer’s ability to recover any indirect costs associated with the activity.
- For the avoidance of any doubt, all Prototype Products are excluded from this warranty. The impact of this exclusion would be to eliminate the coverage under the warranty for Prototypes which leaves it open as to what the commitment is for those. Is it nothing? Is there a commitment to re-work them if they are repairable?
- Supplier shall pay all costs finally awarded. The impact of this is Supplier would not be obligated to make the payment until the costs are finally awarded which means after the Supplier has exhausted all appeals which could be many years away.
- Epidemic Defects shall mean 1% of failures for the same root cause in a 30 day period based on a minimum purchase amount of 500 Units. In this case the floor may have been to try to avoid having a small number trigger the epidemic defect. The problem with it is what if you bought 499 and all were defective? If 1% or 5 units worked when there were 500, why wouldn’t you want a different floor such as “For purchase of Less than 500 units, the rate must exceed 1% and 5 units.
- Supplier may make changes to the Product as long as they do not affect the form, fit or function of the Product. This type of qualifying language would allow the supplier unlimited rights to make changes to their product as long as the changes meet those three criteria. If the Product no longer worked in your application it would be your problem. If the changes impacted the value (such as substituting much cheaper materials), quality or reliability of the product they could still make them.
- Supplier’s goal for warranty repair is five (5) days. For things that they cannot commit to 100% of the time, a goal may be acceptable as long as its linked to a firm commitment for example” Supplier’s goal for warranty repair is five (5) days. All warranty repairs shall be completed in no greater than ten (10) days.
- Buyer and Supplier agree to meet in One Hundred and Twenty Days to negotiate the final price in good faith. This is no commitment as it doesn’t require the parties to come to agreement or establish parameters in which the agreement must fall. If you are dependent upon coming to agreement, always manage your potential risk by agreeing in advance the formula that will be used or establish a maximum so it isn’t totally open ended.
- Supplier shall indemnify Buyer against personal injury resulting from the gross negligence of Supplier and Supplier Personnel” This would limit the Supplier’s liability to only those situations where they were grossly negligent and would exclude ordinary negligence.
- Buyer may return defective product in accordance with Supplier’s standard RMA Process. Any time you are asked to follow an process, you need to do several things. First, you need to review the process they are referring to to make sure that you agree with all the requirements it may contain. Second, if you agree you don’t want it to be able to be changed in the future so you would want to document what the date or revision number was for the process you agreed upon.
- In the event of a termination without cause, Buyer shall reimburse Supplier for all costs associated with the termination which includes but is not limited to ….. Any time you include a list you need to identify whether the intent is for the list to be just examples or an inclusive list. If the goal is to provide examples, you would want the broadening statement. If you want it to be the all inclusive list, you would use limiting language such as “this includes and is limited to”
- Supplier warrants that, to the best of Supplier’s knowledge, the Products do not infringe the Intellectual Property rights of any 3rd party. This means that if they didn’t have knowledge of the infringement they wouldn’t be responsible under the warranty. Ignorance should be no excuse.
- Supppier shall not make any material changes to the Product. The insertion of material would allow the supplier to make changes as long as they aren’t “material”. What is a material change can only be determined by the Buyer. For example a minor change in a product could cause it to not work in the Buyer’s application/
- Supplier may _____ unless there is a materially adverse impact on Buyer. The standard this is creating is the Supplier may do something that impacts the Buyer. They would only need to stop if the action created a materially adverse impact to the Buyer.
- Buyer may, but shall not be obligated to, exercise an option to purchase and additional 10,000 units at $ _____” This describes an option the Buyer may exercise but is not obligated to exercise.
- Supplier shall provide a replacement in not less than five (5) days. All this does is tell you that it won’t be less than, but it doesn’t address when.
- Suppliers shall reimburse Buyer for its out of pocket costs associated with the repair. Out of pocket means that the Buyer had to pay for the costs and would exclude the cost of any internal resources that were used.
- “At the time of execution of this Agreement Supplier warrants that …… This is limiting the warranty commitment to only that specific point in time, not during the duration of the agreement or the duration of all obligations under the agreement.
- Supplier shall promptly provide repair under the warranty
- Changes to Suppliers shall be subject to Buyer’s approval, such approval not to be unreasonably delayed or withheld.
- If the product fails to substantially conform to the specification.…… The concept of substantial conformance leaves it open to argument as to whether something is meeting the Specification.
- A defect of the same root cause in excess of 1% of the Product shipped shall be considered and Epidemic Defect and for Epidemic Defects Supplier shall reimburse Buyer for …..” In this case the 1% is the Triggering event. Below it, Buyer has no rights to the reimbursement, above it Buyer’s right for reimbursement is triggered.
- If Supplier’s shipment of Product is more than ___ days late, Buyer may exercise its rights to have the escrow materials released and commence production under the license to make or have made the Product. In this the triggering event is the late shipment of more than ___ days. In negotiating triggers you need to make sure that they provided you what you need when its needed as a rate or number that is too high increases the impact of the problem.
- Supplier will indemnify Buyer against willful negligent acts of Supplier and Supplier Personnel. This would mean that if the act was inadvertent, and not deliberate, the indemnity would not apply.