Pro-Seller Supply Agreement (Annotated)

Editor's Note: An agreement for the sale of goods is one of the most frequently
encountered commercial documents. The terms of this agreement generally favor
the seller. It is structured as a master contract whose terms govern and are
incorporated in multiple sale/purchase transactions over a period of time. This results
in efficiencies and significantly reduces repetitive administrative and legal review of
transactional documentation.

Access our Transactional Precedent Database for publicly filed Supply

Agreements.

SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (this “Agreement”) dated as of [Day] [Month],

[Year] (“Effective Date”) is made by and between [Full Name of Party], a
[Corporation, Limited Liability Company or other form of business organization]
existing under the laws of [State], with a principal place of business at [Address]
(“Seller”), and [Full Name of Party], a [Corporation, Limited Liability Company or
other form of business organization] existing under the laws of [State], with a
principal place of business at [Address] (“Buyer”), together Buyer and Seller are
herein referred to as the “Parties.”

WHEREAS, Seller [Manufactures, Produces, Distributes, etc.] [Describe Products]

for sale to [Original Equipment Manufacturers, Component Manufacturers or other
businesses or for resale, etc.]; and

WHEREAS, Buyer desires to purchase [Describe Products] from Seller, and Seller
is willing to sell the same to Buyer, subject to and in accordance with the terms and
conditions of this Agreement;

Comment: Recitals give an overview of what the agreement is about and provide a
context for the parties’ transaction. Recitals operate to introduce the parties and
provide background information about their relationship history (if any), the
transaction, or the parties’ objectives in entering into the agreement.
 NOW THEREFORE, in consideration of the mutual promises set forth herein, and
intending to be legally bound hereby, the Parties agree as follows:

1. DEFINITIONS

In addition to the terms defined elsewhere in this Agreement, the following terms
used in this Agreement have the following meanings:

1.1 “Affiliate” means, with respect to a person, any other person directly or
indirectly controlling, controlled by, or under common control with the first person.

1.2 “Annual Commitment” means the minimum [Dollar Amount] [Volume or

Number of Units] of Products set forth in Exhibit A hereto that Buyer and/or its
Affiliates are required to purchase during each calendar year of this Agreement in
order for Buyer to receive discounts in connection with its purchase of Products as
provided in Exhibit C below.

1.3 “Confidential Information” means (i) this Agreement and any discussions,
negotiations and proposals related to this Agreement and (ii) any information
exchanged concerning the other party's business including, tangible, intangible,
visual, electronic, written, or oral information, such as: (a) trade secrets, (b) financial
information and pricing, (c) technical information, such as research, development,
procedures, processes, designs, and know-how, and (d) business information, such as
operations, planning, marketing programs, and products, regardless of whether such
information was received directly or indirectly from the other party..

1.4 “Product” means any product, equipment, component part or other good
delivered or to be delivered by Seller under this Agreement and any applicable
Purchase Order.

1.5 “Purchase Order” means any written purchase order for Products issued by
Buyer under this Agreement.

Comment: Practice varies, but in many cases, terms used in more than one section
of the agreement are listed in a definitions section. If a term is used only within the
text of a clause or section, its definition may be found in that clause or section.

2. SCOPE
 2.1 Construction. This Agreement sets forth the terms that apply to Purchase
Orders Buyer issues to Seller for Products.

Comment: The following clause may be added to a master sales agreement that
contemplates multiple, separate transactions. “Each Purchase Order is subject to and
incorporates the provisions of this Agreement. Each accepted Purchase Order is an
independent obligation of the Parties. Multiple Purchase Orders are permitted under
this Agreement.”

3. AFFILIATE TRANSACTIONS AND ANNUAL COMMITMENT

3.1 Affiliate Right to Purchase. Any Buyer Affiliate named in Exhibit B to this
Agreement (as such exhibit may be amended and modified from time to time) has
the right to issue a Purchase Order under the terms of this Agreement. Seller is
obligated to provide the Products to the Buyer Affiliate in accordance with this
Agreement and the applicable Purchase Order. Products purchased by a Buyer
Affiliate and paid for shall be counted in the calculation of the Annual Commitment.

Comment: Sellers often allow a buyer's affiliated companies to purchase products

under the terms of the sales agreement. In that case, the seller may determine to
include additional or different terms or clauses applicable to sales in the jurisdiction
where the buyer affiliate is located. For example, there are substantial environmental
regulations in the EU that apply to the disposal of certain products that a seller may
want to include in this agreement. For greater certainty, the parties may include a list
of the buyer affiliates having purchasing rights under the agreement and their
respective principal places of business in a schedule or exhibit to the agreement that
includes terms and conditions unique to the jurisdiction where the affiliate is located.

3.2 Annual Commitment. So long as Buyer meets its Annual Commitment and
complies with the terms of this Agreement and any Purchase Order, the Buyer will be
entitled to receive the discounts provided on Exhibit C attached hereto. With respect
to any shortfall in the Annual Commitment, Buyer shall reimburse Seller
proportionally for pricing discounts received during the affected period in accordance
with the provisions of Exhibit C.

Comment: Sellers agree to a discount program or to give favorable pricing based on

volume or dollar amount to encourage the consumption and use of their products by
the buyer. Disagreements between the parties can occur when calculating
commitments. For example, does the calculation include net price, value of returned
product, added costs in shipping, handling and taxes? In case of doubt, specificity
and detail are key when drafting purchase commitment clauses.

3.3 Forecast. On the first business day of each month, Buyer will provide Seller
with a written, rolling [Number] month forecast of Buyer's expected purchase
demand.

Comment: Forecasts are commonly found in sales agreements. Forecasts help the
seller to determine inventory and manufacturing needs. This is particularly important
when components or parts are manufactured elsewhere. Buyers that agree to
provide forecasts are careful to state the forecasted amounts are not commitments
but are made for planning purposes only.

4. PRICES, INVOICING AND PAYMENT

4.1 Prices. Product Prices are Seller's published list prices in effect at the time a
Purchase Order is received by Seller. All prices are in U.S. dollars. Seller may change
its published list prices at its discretion at any time upon not less that [Number] days
prior written notice to Buyer. Any written price quotes made by Seller are binding on
Seller for [ninety (90)] days from the date delivered to Buyer. However, if at any
time, there are shortages in materials, increases in the cost of manufacturing
materials or components, Seller may revise the quotes or increase the price(s) of the
Products. Any discounts available to Buyer are applied contingent to Buyer's Annual
Commitment as calculated on a prorated quarterly basis.

Comment: Pricing is a highly negotiated topic in most transactions. For annual

budgetary and planning purposes, buyers need to know what the prices will be for
the products they intend to purchase. It is not uncommon to have fixed pricing for
the initial term of the supply agreement. In some long-term transactions, parties
agree to a percentage cap year over year applied to the product price. The above
section affords certain pricing flexibility to the seller, permitting price changes at any
time with advance notice and immediate price increases based on the cost or
availability of raw materials.

4.2 Taxes and Related Costs. Buyer agrees to pay all sales, value added and other
transaction taxes applicable to the Buyer with respect to the purchase of the
Products as well as any packaging, labeling, custom duties, tariffs, storage, shipping,
insurance and similar fees.
Comment: The purchase order includes specific delivery and shipping terms in
addition to those provided in the agreement. In the event of any conflict between the
purchase order and the agreement terms, the Purchase Order Acceptance clause
below (Section 5.2) establishes the precedence of the terms and conditions of the
agreement over those of the purchase order.

4.3 Invoicing, Itemization and Payment Procedures. Seller shall invoice Buyer for
Products promptly after Products are shipped. Buyer shall pay Seller's invoice within
thirty (30) days after receipt. Payments will be made via [Specify Payment Method].
Seller shall notify Buyer of any unpaid invoice and allow Buyer ten (10) days to
submit payment. If an invoice balance is not paid within ten (10) days of notification
from Seller, Seller may (a) refuse to accept any additional orders, (b) refuse to ship
ordered Products, (c) charge a late fee on overdue amounts which will in no event
exceed the rate allowed by applicable laws, (d) seek collection from the Buyer,
including all collection costs; (e) sue for damages; or (f) seek any other remedy
available to a seller of goods under applicable law.

Comment: UCC § 2-703 lists the various remedies available to a seller for any
breach by the buyer. Comment 1 to that UCC section states that the remedies are
cumulative in nature. “Whether the pursuit of one remedy bars another depends
entirely on the facts of the individual case.” Note that there is no provision for buyer
to dispute charges or withhold payment for seller performance shortfalls. Many
buyers will attempt to introduce these protections in their negotiations.

5. Purchase Orders and Shipping

5.1 Purchase Orders. Buyer may purchase Products by issuing Purchase Orders
transmitted electronically to Seller. Each Purchase Order will reference this
Agreement and specify, at a minimum, the following information with respect to
Products: quantity, price, ship date, shipping method and carrier, and delivery
location.

5.2 Purchase Order Acceptance. Seller shall acknowledge receipt of each

Purchase Order complying with the provisions of this Agreement promptly after
receipt. Such acknowledgement shall constitute acceptance of the Purchase Order
unless Seller indicates otherwise. Once a Purchase Order is issued and accepted, it is
binding between the Parties. If Seller has begun fulfilling the Purchase Order and
Buyer changes or cancels it, Buyer agrees to pay a cancellation charge equal to the
cost of materials and labor incurred by Seller in initiating performance of work under
the Purchase Order, plus up to [Number] percent of the full price of any cancelled
Purchase Order. Neither Buyer nor Seller is bound by any terms and conditions
delivered with or pre-preprinted on any Purchase Orders, Purchase Order
acknowledgments or other communications between the Parties relating to Purchase
Orders. Seller objects to any additional or different terms or conditions contained in
any Purchase Order submitted by Buyer. Seller shall not be deemed to have waived
these provisions if Seller fails to object to conditions appearing in, incorporated by
reference, or attached to any Purchase Order. To the extent there is a conflict
between this Agreement and the terms of a Purchase Order, this Agreement shall
always prevail and control.

5.3 Shipping, Title and Delivery Charges. For all accepted Purchase Orders, Seller
will provide an estimated shipping date; however, such estimate is not a commitment
or guarantee. Title and risk of loss to Products pass from Seller to Buyer when the
Products are made available to Buyer at Seller's location, whether the Products are
destined for shipment to Buyer or for shipment to a non-Buyer location designated by
Buyer on the Purchase Order. All loading, shipping and handling charges are borne by
Buyer.

Comment. Parties to commercial sale of goods transactions frequently

use Incoterms 2010 designations as an accepted and well-understood method to
allocate risk, costs and liability between the parties relating to delivery and title
transfer. The Incoterms designation “Ex Works” or “EXW” would provide essentially
the same meaning as the words used in the second sentence of section 5.3 above:
“’Ex Works’ means that the seller delivers when it places the goods at the disposal of
the buyer at the seller's premises or at another named place (i.e., works, factory,
warehouse, etc.). The seller does not need to load the goods on any collecting
vehicle, nor does it need to clear the goods for export, where such clearance is
applicable.” See Incoterms Rules 2010. The latest version of Incoterms
is Incoterms 2020, although Incoterms 2010 is still used in many current
transactions.

6. WARRANTIES

6.1 Limited Warranty. Seller warrants that at the time of delivery, the Products
will be of good commercial quality and free from defects in materials or
workmanship. The duration of this limited warranty is [Number - e.g., 180] days and
begins on the shipment date from Seller's location. Seller will repair or replace, at its
option, any defective Product that Buyer returns to Seller during the warranty period,
provided such returned Product includes information in sufficient detail regarding the
nature of the defect and its original shipment date. The remedy set forth herein is the
sole and exclusive remedy of Buyer. Seller may, in its sole discretion, revise its
warranty at any time. Notwithstanding the foregoing, no warranty change will affect
orders already placed by Buyer.

6.2 WARRANTY DISCLAIMER. SELLER MAKES NO EXPRESS WARRANTIES

EXCEPT THE LIMITED WARRANTY SET FORTH ABOVE IN SECTION 6.1. SELLER
HEREBY DISCLAIMS ANY OTHER EXPRESS WARRANTY AND ALL IMPLIED
WARRANTIES FOR THE PRODUCTS, INCLUDING, WITHOUT LIMITATION,
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. SELLER'S LIMITED WARRANTY DOES NOT COVER
DAMAGE DUE TO EXTERNAL CAUSES, INCLUDING ACCIDENT, ABUSE,
MISUSE, NEGLECT, PROBLEMS WITH ELECTRICAL POWER, SERVICE
(INCLUDING INSTALLATION OR DE-INSTALLATION) NOT PERFORMED OR
AUTHORIZED BY SELLER, USAGE NOT IN ACCORDANCE WITH PRODUCT
INSTRUCTIONS, NORMAL WEAR AND TEAR, AND PROBLEMS CAUSED BY
INCORPORATING OR USING PARTS AND COMPONENTS NOT FURNISHED BY
SELLER. THE WARRANTY DOES NOT COVER ANY PRODUCT ADDED OR
MODIFIED AFTER SHIPMENT BY SELLER.

Comment: Transactions for the sale of goods are governed by Article 2 of the
Uniform Commercial Code (UCC). The Code permits modification and exclusion of
warranties in certain circumstances as described in UCC § 2-316. A written
disclaimer of the implied warranty of merchantability or the implied warranty of
fitness for a particular purpose must be conspicuous. This is usually satisfied by
bolding and capitalizing the heading of the disclaimer and/or the words of the
disclaimer. See the definition of “conspicuous” in UCC § 1-201(10). Note that
section 6.2 above contains additional warranty exclusions related to the potential use
of the products or modifications thereof. The warranties provided by seller in this
form agreement weigh heavily in favor of the seller in terms of scope, warranty
period, and remedy.

7. TERM AND TERMINATION

7.1 General. The initial term of this Agreement begins on the Effective Date and
ends [Number Years Thereafter] [on End Date] (the “Initial Term”). Following
expiration of the Initial Term, this Agreement renews automatically for additional
successive [One (1)] year periods unless one party informs the other in writing at
least [Number] days before the end date of the current term period that the
Agreement will expire on such end date and will not renew. The terms of this
Agreement remain in effect for any accepted Purchase Order outstanding at the time
of the termination or expiration of this Agreement.

7.2 Termination for Convenience. After the Initial Term, Seller may terminate this
Agreement at any time without liability by providing a termination notice to Buyer.
Unless a longer period is provided in the notice, the termination is effective [Number
- e.g., 90] days after the date of the notice.

Comment: The termination for convenience clause may be drafted so as to permit

either party to terminate for convenience.

7.3 Termination for Default. Either party may immediately terminate this
Agreement upon written notice to the other if: (a) a material violation or breach of
this Agreement by the other party is not remedied within [Number] days after the
breaching party's receipt of written notice of the violation or breach; (ii) the other
party admits in writing its inability to pay its debts generally as they become due,
files a petition for bankruptcy or executes an assignment for the benefit of creditors
or similar document; (iii) a receiver, trustee in bankruptcy or similar officer is
appointed for the other party's property; (iv) a majority interest of the equity or
assets of the other party is transferred to an unrelated third party; or (v) this
Agreement is assigned by the Buyer without Seller's prior written consent.

7.4 Effect of Termination. Termination of this Agreement shall not relieve Buyer
of any obligation to make payments that are owed to Seller hereunder. Termination
shall not exclude other remedies for failure of a party to perform its obligations. The
rights and obligations of the Parties that are executory shall survive any termination
or expiration of this Agreement.

Comment: An executory right or obligation is one that is owing but has not been
fully completed or performed. Examples include payment of fees due, repair of
defective products or shipping products ordered prior to the termination of the
agreement.

8. EXPORT/IMPORT COMPLIANCE
Neither party shall, directly or indirectly, export, or re-export Products in violation of
any applicable export control laws and regulations of any country having jurisdiction
over the Products or Parties to this Agreement (“Export Laws”), including without
limitation, the Export Administration Regulations (EAR), the International
Traffic in Arms Regulations (ITAR), regulations issued by the Office of Foreign
Assets Control (OFAC) and any economic sanctions imposed by the United States
Government upon any foreign country. Buyer represents that the Products will not be
destined for a prohibited chemical, biological or nuclear weapon or missile use. Both
Parties agree, at their own expense, to comply with all applicable Export Laws.

Comment: Products shipped outside the U.S. may be subject to one or more
governing export regulations. The seller is responsible for correctly identifying an
export control classification number for products it sells. This information is used by
the buyer to determine if an export license is needed. Modifications of the product or
the end destination of the product may impact what export regulations are
applicable. See Export Reference Guide, Federal Regulations, U.S. Export
Regulations and Controls, Introduction to U.S. Export Controls.

9. CONFIDENTIAL INFORMATION

9.1 General. Each party acknowledges that while performing its obligations under
this Agreement it may have access to Confidential Information of the other party. A
party receiving Confidential Information has a duty to protect and not disclose it for
[Five (5)] years from the first date that the Confidential Information was received and
indefinitely for information identified by the disclosing party as a trade secret.

Comment: Alternatively, the parties may agree to protect and not disclose
confidential information for a period of time measured from the termination or
expiration of the agreement rather than from the date of first disclosure. In any
event, the duration of the confidentiality commitment reflects the perceived
importance (commercial or strategic) of the information to the disclosing party. Five
years is a relatively long period; two to three years is more common for commercially
sensitive information that does not involve a trade secret.

9.2 Confidentiality. Each party will keep the Confidential Information of the other
confidential, will not disclose it to any third party without the disclosing party's prior
written consent, and will only use such Confidential Information to perform its
obligations under this Agreement. Each party must protect the Confidential
Information of the other from both unauthorized use and unauthorized disclosure by
exercising the same degree of care that is uses with respect to information of its own
of a similar nature, except that the receiving party must at least use reasonable care.
Seller reserves the right to require upon [Number] days’ notice that Buyer's
employees with access to Confidential Information execute a non-disclosure
agreement in form acceptable to Seller.

Comment: A more typical alternative to the final sentence of section 9.2 above is
that upon seller's request, buyer will provide evidence or confirm in writing that
buyer employees with access to seller's confidential information are subject to
confidentiality and non-disclosure obligations relating to such information, with buyer
acknowledging and accepting liability for any breach of seller confidential information
by its employees.

9.3 Exceptions. Confidential Information does not include information that: (a) is
rightfully known to the receiving party, prior to disclosure; (b) is independently
developed by the receiving party, without any reliance on Confidential Information of
the disclosing party; (c) is or later becomes part of the public domain or is lawfully
obtained by the recipient from a third party not under an obligation of confidentiality;
or (d) is required to be disclosed by law or legal process, so long as the recipient uses
reasonable efforts to cooperate with the disclosing party in limiting disclosure.

Comment: Some agreements provide more expansive terms and conditions

regarding disclosures that are compelled by regulatory or judicial order. For instance,
parties that are compelled to disclose confidential information may be contractually
required to cooperate reasonably with the other party to obtain a protective order to
narrow the scope or use of any information revealed, to restrict disclosure only to
information that is compelled to be disclosed and to obtain assurance that the
information will be maintained in confidence by the party to whom the compelled
disclosure is made. “Reasonable efforts” is an ill-defined standard, generally
interpreted as the least rigorous in comparison to “best efforts,” “reasonable best
efforts” and “commercially reasonable efforts.”

9.4 Third Party Confidential Information. Neither party will disclose to the other
any Confidential Information of a third party without the consent of the third party.

9.5 Return of Confidential Information. Upon termination of this Agreement the

party receiving any Confidential Information or other tangible property pursuant to
this Agreement, shall, if requested in writing by the disclosing party and at the
disclosing party's sole option, either return to the disclosing party all such
Confidential Information and all writing derived therefrom, in addition to all copies of
such Confidential Information, and/or provide to the disclosing party written
assurances that all such Confidential Information has been destroyed.

9.6 Injunctive Relief. Each party agrees that the wrongful disclosure of
Confidential Information may cause irreparable injury that is inadequately
compensable in monetary damages. Notwithstanding anything in this Agreement to
the contrary, either party may seek injunctive relief for the breach or threatened
breach of this Section 9 in any court of competent jurisdiction, in addition to any
other remedies in law or equity.

10. INDEMNITY

10.1 Seller's Intellectual Property Indemnification. Seller will indemnify and hold
harmless Buyer from any third party claim, demand, cause of action, debt or liability
(including attorneys’ fees and expenses) that Products infringe, misappropriate, or
violate an intellectual property right of a third party located in the United States
(the “Indemnified Claim”). Seller shall not indemnify Buyer or bear any
responsibility for any claim, demand, cause of action, debt or liability to the extent of
Buyer's unauthorized modification of the Products or from any combination,
operation, or use of the Products with other products or services without Seller's prior
written consent or authorization. Buyer's sole remedy for an Indemnified Claim is as
follows: Seller will, at its expense and at its option, (a) resolve the Indemnified Claim
in a way that permits continued ownership and use of the affected Product; (b)
provide a comparable non-infringing replacement Product at no cost to Buyer; or (c)
accept return of the Product freight collect and provide a depreciated refund for the
Product. The foregoing is the sole and exclusive remedy and Seller's total liability for
Indemnified Claims.

Comment: In a commercial sales agreement, a seller may limit any indemnity

obligation it is willing to undertake to third party intellectual property infringement
claims or liabilities. Some sales agreements may provide for a general, mutual
indemnity for third party personal injury or property damages (product liability
claims) caused by a party or the product. Sellers are wary to extend indemnity
coverage for products that buyer uses in combination with other goods or services
unless such combination is usual and consistent with the intended use of the product
or is a risk that is otherwise disclosed and accepted by seller. Under the UCC § 2-
312(3), “[u]nless otherwise agreed a seller who is a merchant regularly dealing in
goods of the kind warrants that the goods shall be delivered free of the rightful claim
of any third person by way of infringement or the like. . .” Limiting indemnified claims
to those of third parties located in the United States is highly favorable to the seller
and may be objected to by buyer.

10.2 Conditions to Indemnity Obligation. Seller's obligation to indemnify, defend,

and hold harmless under this section is contingent upon Seller's receipt of prompt
notice of any claim (including Indemnified Claims), demand, cause of action, debt or
liability for which Seller must indemnify Buyer and Seller's right to solely control the
defense of all matters for which Seller is or may be liable under this Section 10.

Comment: The indemnifying party usually has control of defending the indemnified
claim and decisional authority regarding settlement or other remedy.

10.3 Indemnity from Buyer to Seller. Buyer will indemnify, defend, and hold Seller
harmless from any third party claim, demand, cause of action, debt, or liability: (a)
that Buyer's modifications of and/or additions to the Products infringe on,
misappropriate or otherwise violate the intellectual property of the third party; or (b)
that the Products sold to Buyer under this Agreement damage a third party to the
extent such claim is based on (i) failure of Buyer to abide by all applicable laws, rules,
regulations and orders that affect the Products; (ii) Buyer's misuse or abuse of the
Products; or (iii) Buyer's gross negligence or intentional or reckless misconduct.

11. LIMITATIONS OF LIABILITY

11.1 Liability Limitation. Except for Buyer's payment obligations and claims
arising from the breach of the confidentiality provisions of this Agreement, neither
party is liable to the other party for (a) more than the amounts paid and payable by
Buyer for Products in the [Number] months preceding the event giving rise to a claim
or (b) for any special, indirect, incidental, or consequential damages, or loss of
revenue, profits or business, or costs of any kind, no matter how such damages are
caused and whether or not the possibility of such damages, losses, or costs was
foreseeable or made known to a party hereto. This limitation shall apply to any claim
or cause of action, whether in contract, strict liability, tort, or otherwise.

Comment: Contractual modification or limitation of remedies is expressly permitted

by UCC § 2-719, including elimination or limitation of consequential damages unless
unconscionable. Limiting or eliminating consequential damages for commercial
losses (in contrast to consumer claims for personal injury damages) is generally not
unconscionable.

11.2 Excluded Uses. Notwithstanding anything to the contrary in this Agreement or

law, Seller does not have any liability for any damages arising from the failure of or
use of the products by Buyer or any customer of Buyer in any high-risk activity,
including but not limited to, the operation of nuclear facilities, aircraft navigation or
air traffic control systems, high-risk communications systems such as emergency or
911 communications systems, medical systems, life support, or weapons systems.

Comment: In some jurisdictions, the activities listed above could fall into the strict
liability for abnormally dangerous activities. As such, the seller wants to expressly
limit any liability associated with the use of products in these activities engaged in by
buyer or its customers.

12. DISPUTE RESOLUTION

12.1 Governing Law. This Agreement and any disputes arising under or relating
to this Agreement, irrespective of the place of performance, shall be governed by the
laws of the State of [State], excluding its choice of law rules requiring the application
of any other law. The Parties specifically disclaim the application of the United
Nations Convention on Contracts for the International Sale of Goods to the
contractual relationship created under this Agreement and to the validity,
enforcement and interpretation of this Agreement.

Comment: Customary party choices for governing law include the state of party
formation or principal office or the location of contract performance (in this instance,
the seller's operating location). Frequently, a neutral location where neither party has
a significant presence is chosen to underscore party equality and impartiality. For
more information related to the UN Convention on Contracts for the International
Sale of Goods, see Jonathan S. Hawkins and Jennifer L. Maffett-Nickelman, “The Rise
of International Standards in the Sale of Goods,” Am. Bankr. Inst. J., Apr. 2017, at
44 (2017).

12.2 Forum. The State and Federal Courts of [State], located in [County/City,
State], shall have exclusive jurisdiction over any claim arising under this Agreement.
Notwithstanding the foregoing, either party may seek interim or temporary injunctive
relief in any court of appropriate jurisdiction with respect to any alleged breach of
such party's intellectual property or confidentiality rights. Each party waives, to the
fullest extent permitted by law, (a) any objection which it may now or later have to
the laying of venue of any legal action or proceeding arising out of or relating to this
Agreement brought in any court of the [State], and (b) any claim that any such action
or proceeding brought in any such court has been brought in an inconvenient forum.

12.3 Waiver of Jury Trial. The Parties mutually and intentionally agree, to the
extent permitted by law, to waive all rights to a trial by jury of any action relating to
any dispute or to the interpretation of this Agreement. The Parties specifically
acknowledge that this mutual waiver is made knowingly and voluntarily after an
adequate opportunity to negotiate its terms.

Comment: Some states bar or severally limit the enforceability of jury waiver
clauses. If such a waiver is desired by the parties, it is important to confirm that the
state law chosen to govern the agreement permits jury waivers and that any required
waiver procedures are followed. See, for example, Cal. Code Civ. Proc. § 631.
Parties generally prefer bench trials over jury trials for commercial disputes because
there is a heightened perception of comprehension, fairness, and objectivity. An
agreement to resolve disputes in a non-judicial forum, such as binding mediation or
arbitration, is an alternate route to avoid a jury trial.

13. GENERAL PROVISIONS

13.1 Compliance with Laws and Regulations. Each party, at its own expense, shall
comply with all applicable federal, state, and local laws, rules, and regulations in its
performance of this Agreement.

13.2 Headings. The article and paragraph headings contained in this Agreement
are for convenience only and are not intended to affect the meaning or interpretation
of this Agreement.

13.3 Notices. Any notice or other communication required or permitted to be

given by any provision of this Agreement shall be in writing and shall, unless
otherwise provided, be deemed to have been effectively given (i) upon personal
delivery, (ii) when sent by registered or certified first class mail, postage pre-paid,
(iii) when sent by an overnight courier service with all fees prepaid, or (iv) when sent
by confirmed facsimile transmission or by electronic mail, in each case to the
applicable party at its address or electronic contact coordinates set forth below or
such other address or number as the applicable party may otherwise designate by
providing notice hereunder.

Seller:

Address

Facsimile number and E-mail information

Buyer:

Address

Facsimile number and E-mail information

13.4 Assignment. Buyer may not assign, voluntarily or involuntarily, any of its
rights under this Agreement or delegate any of its obligations without the prior
written consent of Seller. This Agreement is binding upon and enforceable by each
party's permitted successors and assignees. Any assignment in violation of this
section is null and void.

Comment: If the parties do not provide that prohibited assignments are void, then
the only remedy that may be available for breach of the assignment provision (i.e.,
an assignment made without counterparty consent) will be damages; equitable relief
enjoining or voiding the assignment may not be awarded since the parties did not
expressly agree on this outcome. See, American Law Institute
Publishers, Restatement (Second) of Contracts § 322(2)(b) – “A contract term
prohibiting assignment of rights under the contract, unless a different intention is
manifested, . . . (b) gives the obligor a right to damages for breach of the terms
forbidding assignment but does not render the assignment ineffective.”

13.5 Waiver. Any waiver granted by a party must be in writing. No failure or

delay by a party in exercising any right or remedy or in requiring the satisfaction of
this Agreement and no act or omission of a party or course of dealing between the
parties shall operate as a waiver or estoppel of any right, remedy, or condition. A
waiver made in writing on one occasion is effective only on that occasion and only for
the stated purpose. A waiver once given shall not constitute a waiver on any other or
future occasion or for any other purpose.
 13.6 Reliance on Counsel. Each party has consulted such legal, financial,
technical, or other experts it deems necessary or desirable before entering into this
Agreement. Each party represents and warrants that it has read, knows,
understands, and agrees with all terms of this Agreement. Neither this Agreement
nor any document issued in connection with this Agreement shall be construed
against either party as the drafter.

Comment: The purpose of the last sentence of the above section is to avoid
application of a principle of contract interpretation (contra proferentem) that
ambiguities or uncertainties in an agreement should be interpreted against the party
that caused the ambiguity or uncertainty to exist, namely the drafter of the contract.
See Cal. Civ. Code § 1654. Since a supply agreement that is generally more
favorable to a seller is usually drafted by the seller, this clause, although neutral on
its face, is of greater benefit to a seller than a buyer.

13.7 Severability. If any provision of this Agreement is determined to be invalid,

illegal, or unenforceable in whole or in part, then the invalid, illegal, or unenforceable
provisions shall be deemed severed and the remaining provisions of this Agreement
shall remain in full force and effect unless the provisions so severed were provisions
critical to providing either party its essential benefits under this Agreement.

Comment: See, generally, American Law Institute Publishing, Restatement

(Second) of Contracts, § 184(1) – a court may enforce the remainder of the
agreement “if the performance as to which the agreement is unenforceable is not an
essential part of the agreed exchange.”

13.8 Survival. In addition to any other provision that by its content is intended to
survive the expiration or termination of this Agreement, all sections concerning
warranties, confidentiality, and non-disclosure obligations, and indemnity provisions
of this Agreement shall survive the expiration or termination of this Agreement.

13.9 Party Marks. Nothing in this Agreement grants Buyer the right to use any
trademarks, trade dress, trade names, or logos proprietary of Seller. If Buyer is
granted a right to use such marks, Buyer will do so only in strict compliance with
Seller's guidelines and license agreement, if any.

13.10 Remedies. Unless otherwise provided in this Agreement, all rights and
remedies of the Parties under this Agreement, in law or at equity, are cumulative and
may be exercised concurrently or separately.
 13.11 Entire Agreement; Modifications. This Agreement, the Schedules, and
Purchase Orders together constitute the entire agreement of the Parties as to the
Products. This Agreement supersedes all agreements, proposals, inquiries,
commitments, discussions, and correspondence, whether written or oral, prior to or
contemporaneous with the Effective Date relating to the Products. This Agreement
may not be amended or modified except in writing signed by a duly authorized
representative of each party.

Comment: UCC 2-209 recognizes the enforceability of a clause in a signed

agreement that excludes modification or rescission of the agreement except by a
signed writing. Nonetheless, an attempt at modification or rescission by a party may
operate as a waiver. Id.

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
shown at the beginning of this Agreement.

Signed:

SELLER

By:

BUYER

By: