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International manufacturing and purchasing contract

Template of international contract for the manufacture and purchase of products.

Template of international contract for the manufacture and purchase of products.


By Franck BEAUDOIN, avocat (attorney-at-law registered in France)

Published on droit.co on 30 November 2021


INTERNATIONAL CONTRACT FOR THE MANUFACTURE AND PURCHASE OF PRODUCTS

ENTERED INTO BY AND BETWEEN:

ON THE FIRST PART,

XXX [COMPANY NAME OF PARTY A], a XXX [CORPORATE FORM] company existing under the laws of XXX [COUNTRY], registered with the Trade and Companies Register of XXX [CITY] under number XXX [REGISTRATION NUMBER], having its registered office XXX [ADDRESS OF THE REGISTERED OFFICE], represented by XXX [AUTHORIZED REPRESENTATIVE], duly entitled to enter into this contract in [his / her / its] capacity as XXX [QUALITY],

hereinafter referred to as the « Buyer« ,

ON THE SECOND PART,

XXX [COMPANY NAME OF PARTY A], a XXX [CORPORATE FORM] company existing under the laws of XXX [COUNTRY], registered with the Trade and Companies Register of XXX [CITY] under number XXX [REGISTRATION NUMBER], having its registered office XXX [ADDRESS OF THE REGISTERED OFFICE], represented by XXX [AUTHORIZED REPRESENTATIVE], duly entitled to enter into this contract in [his / her / its] capacity as XXX [QUALITY],

hereinafter referred to as the « Manufacturer« ,

The Buyer and the Manufacturer may be referred to individually as a « Party » and collectively as the « Parties« .

WHEREAS:

The Buyer is specialized in the creation and marketing of XXX [DEFINITION OF THE PRODUCTS] under the brand XXX [TRADEMARK] (hereinafter referred to as the « Trademark »). The Buyer holds the exclusive worldwide rights to operate this Trademark.

The Manufacturer specializes in manufacturing XXX [DEFINITION OF THE PRODUCTS]. In particular, he has at his disposal, on the one hand, the required skills, knowledge and know-how and technical facilities and, on the other hand, secure and competitive sources of raw materials used in the manufacture of these products.

The Parties have decided to negotiate and conclude this contract. The latter, including this preamble and its annexes which are incorporated therein and form with it an indivisible whole, is hereinafter referred to as the « Contract« .

NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS.

1 – PURPOSE OF THE CONTRACT

The Buyer hereby entrusts, under the conditions defined below, to the Manufacturer, who accepts, the manufacture of the products defined below.

XXX [OPTION 1: LIST OF PRODUCTS]

XXX [OPTION 2: Goods in Classes XXX of the International Classification of Goods and Services for the Purposes of Trademark Registration, sold by the Buyer under the Trademark on the date of the Contract or which would be created and marketed in the same classes by the Buyer during the term of the Contract (hereinafter referred to as « Products A« ).]

In addition, the Buyer may select and acquire products offered by the Manufacturer, original creations developed by the latter for which he regularly has all the intellectual property rights (hereinafter the « Products B« ).

The Buyer may obtain supplies from any other manufacturer of his choice. He therefore does not grant any exclusivity to the Manufacturer.

The Manufacturer will provide exclusively the Buyer with Products A and Products B (hereinafter collectively referred to as the « Products« ). This exclusivity commitment is valid for an unlimited period of time and will therefore continue to apply after the end of the Contract. The Manufacturer may supply any other products to any other buyer.

2 – MANUFACTURER’S REPRESENTATIONS AND WARRANTIES

The Manufacturer declares and guarantees that he will strictly comply, throughout the term of the Contract, with all the rules applicable to him, in particular with regard to employment law and the regulation of his activities, and that he will not infringe any rights of third parties, in particular with regard to intellectual property.

The Manufacturer expressly warrants:

  • the conformity of the Products with the Buyer’s specifications and the regulations applicable to these Products;
  • the repair or replacement at his expense of Products with any lack of conformity;
  • compensation for any loss or damage that may be caused to the Buyer or to third parties, as a result of the manufacture and delivery of Products that do not comply with the Buyer’s specifications or the regulations applicable to these Products;
  • that he regularly has all the intellectual property rights relating to Products B and that he does not infringe any rights of third parties.

The Manufacturer declares and guarantees that he does not commit any offence constituting illegal work within the meaning of Article L. 8211-1 of the French Labour Code and that he complies with the formalities mentioned in Articles L. 8221-3 and L. 8221-5 of this Code, and/or that he complies with the obligations resulting from the regulations of equivalent effect of his country of origin and those applicable to him in respect of his activities in France, on the date of conclusion of the Contract and throughout the duration of its performance. The Manufacturer undertakes to justify the completion of these formalities and compliance with these obligations on first request.

3 – MANUFACTURE OF THE PRODUCTS

3.1 – Intellectual property

Products A incorporate the intellectual property of the Buyer and/or, where applicable, third parties, in accordance with the terms of contracts that may be concluded between the Buyer and such third parties (hereinafter referred to as the « Intellectual Property« ).

The Buyer guarantees that he is duly authorized to use the Intellectual Property.

All Intellectual Property rights relating to Products A will remain the exclusive property of the Buyer and/or, where applicable, third parties who have granted the exploitation of their rights to the Buyer, without exception or limitation of time or place.

The Manufacturer expressly acknowledges that he is not likely to acquire any intellectual property rights in the Products A under this Contract. The Manufacturer will therefore not proceed, in particular, to any deposit or registration whatsoever in his name in connection with Products A.

The Buyer shall have the right to use all intellectual property rights relating to Products B without limitation of duration and without paying any sum other than the price of such Products B.

The Manufacturer is not authorized to subcontract the manufacture of the Products to a third party or to sell them to anyone other than the Buyer.

The Manufacturer undertakes not to communicate about the Products in any way without the prior written permission of the Buyer.

3.2 – Manufacturing quality

The Manufacturer undertakes to scrupulously comply with the specifications and instructions of the Buyer for the manufacture of the Products. The Buyer will communicate to the Manufacturer his advice and good manufacturing practices.

The Manufacturer supports the following steps:

  • the storage of raw materials and packaging items and the control of these raw materials;
  • the manufacture and control of the Products;
  • the packaging and labelling of the Products, in order to obtain a finished packaged product;
  • the delivery to the Buyer, under the conditions defined herein, of the finished and packaged Products.

The Manufacturer undertakes to provide any documentation relating to the Products and to carry out any marking on the Products, if necessary, in order to comply with any provisions applicable to the Products.

The Manufacturer undertakes to manufacture the Products at its premises located XXX [LOCATION], which the Buyer has been able to visit and control prior to the signing of this Contract, unless prior written authorization of the Buyer.

In order to ensure compliance with quality standards and to control manufacturing practices of the Products, the Buyer may carry out acceptance tests, under conditions to be defined by mutual agreement between the Parties.

3.3 – Cessation of manufacture of the Products

The Manufacturer will immediately cease the manufacture of the Products upon receipt of a request to this effect from the Buyer.

The Manufacturer will immediately destroy the molds used in the manufacture of the Products, at his exclusive expense.

3.4 – Confidentiality

All information relating to the Products is strictly confidential and therefore may not be disclosed to any third party by the Manufacturer without the prior written consent of the Buyer.

By way of exception, the Manufacturer may comply with any binding request from a judicial or administrative authority, in which case he must immediately inform the Buyer.

4 – TERMS OF SUPPLY

4.1 – Lead times

The Manufacturer undertakes to deliver the Products to the Buyer within a maximum period of XXX [DEADLINE, FOR EXAMPLE: thirty (30) days] from each order, ex works. [OPTION: This period is only for XXX collections on the basis of a provisional annual load plan, annexed hereto.] This period will apply for orders placed from XXX [DATE].

4.2 – Management of stock and production outstandings

The Manufacturer will manufacture the Products exclusively to order from the Buyer, it being understood that he may, however, produce a buffer stock at his own risk, making it his business to destroy the Products at his expense in case of overproduction.

The Manufacturer will communicate to the Buyer, at the latest within ten calendar days of the request made to him, a statement indicating the number and description of the Products i) shipped, ii) in stock and iii) in production.

5 – AUDIT

During the period of manufacture of the Products and for the three years following the end of manufacture, the Manufacturer shall maintain and keep, at its principal place of business, truthful, detailed and accurate books and records, together with invoices for the supplier customer account and supporting receipts, for each transaction relating to the Products.

The Buyer or any person he may designate may at any time make a physical inventory of the stock of Products held by the Manufacturer.

The Manufacturer shall authorize, upon request, the Buyer or any person designated by the Manufacturer to enter his premises in order to inspect the Products, moulds and the manufacturing process.

6 – FINANCIAL CONDITIONS

6.1 – Reciprocal benefits

The Buyer undertakes that his purchases of Products made from the Manufacturer will reach at least a total annual amount of XXX [AMOUNT] during the term of the Contract.

In return, the Manufacturer grants the Buyer a general discount applied to his price list:

  • XXX [PERCENTAGE] on deliveries made between XXX [DATE] and XXX [DATE],
  • XXX [PERCENTAGE] on deliveries made from XXX [DATE].

The discount will be applied immediately, in advance, to each order.

In the event of a significant deterioration in the economic situation, and in particular in the event of a significant drop in the Buyer’s sales, the Parties undertake to renegotiate in good faith the reciprocal advantages stipulated above. In this case, the Buyer will notify the Manufacturer, by any sufficiently convincing written means, of its willingness to renegotiate the said reciprocal advantages in view of the significant deterioration of the economic situation.

If the Parties do not reach an amicable agreement within six (6) months of such notification, the Buyer shall reimburse the Manufacturer for the amount of the discounts awarded in advance, within sixty days, without the sums concerned incurring interest.

6.2 – Prices of the Products

The Manufacturer will sell the Products to the Buyer at the prices set out in ANNEXES 2, 3 and 4 herein.

These prices are stipulated « ex works » for XXX [PLACES OF PRODUCTION, FOR EXAMPLE: China and Hong Kong], the additional costs of transport being in this case the responsibility of the Buyer, and returned for XXX [PLACE OF DELIVERY, FOR EXAMPLE: France], all additional costs being in this case the responsibility of the Manufacturer.

For prices stipulated in XXX [CURRENCY, FOR EXAMPLE: Hong Kong Dollars and Yuan], the exchange rate with the Euro may fluctuate by more or less XXX [PERCENTAGE, FOR EXAMPLE: 10% (ten percent)] relative to the following exchange rates:

1 Euro = [EXCHANGE RATE, FOR EXAMPLE: XXX Hong-Kong Dollar];
1 Euro = [EXCHANGE RATE, FOR EXAMPLE: XXX Yuan].

In the event of an exchange rate variation greater than XXX [VARIATION, FOR EXAMPLE: 10%], more or less, the prices set out in ANNEXES 3 and 4 hereof shall be renegotiated in good faith and diligently between the Parties to take the variation into account.

The Manufacturer shall bear the risk of fluctuations in the price of raw materials up to more or less [RATE OF VARIATION, FOR EXAMPLE: 40% (forty percent)] of such fluctuations in relation to the prices of the day of signature of this Contract.

6.3 – Invoicing and payment

The Manufacturer will issue each invoice on the day of shipment of the corresponding order.

The Manufacturer’s invoices will be payable within XXX [TIME LIMIT, FOR EXAMPLE: sixty days], from the date of issue.

6.4 – Transfer of ownership of the Products and transfer of risk

XXX [OPTION 1: The transfer, from the Manufacturer to the Buyer, of the ownership of the Products and the risks relating thereto, will occur when the Products are made available to the Buyer XXX [TO BE COMPLETED, FOR EXAMPLE: at the Manufacturer’s factory].]

XXX [OPTION 2: The transfer, from the Manufacturer to the Buyer, of the risks relating to the Products, will occur when the Products are made available to the Buyer XXX [TO BE COMPLETED, FOR EXAMPLE: at the Manufacturer’s factory]

The Manufacturer shall retain the ownership of the Products until they are fully paid-up. His rights shall apply equally, if applicable, either to the price of the Products sold, or to any amount paid by an insurer for the Products in case of damage. The Buyer shall duly inform his creditors or any interested party of this retention of ownership.]

7 – DURATION OF THE CONTRACT

7.1 – Initial duration

This Contract is concluded for a fixed period beginning from the day of its signature by all parties and ending on XXX [DATE].

7.2 – Tacit renewal

It may be tacitly renewed for one or more successive periods of a duration XXX [DURATION, FOR EXAMPLE: of a calendar year], unless one Party notifies the other Party, by registered letter with request for acknowledgment of receipt, or by any other sufficiently convincing written means, of its wish not to renew the Contract, at least XXX [DURATION, FOR EXAMPLE: 6 (six) months] before the initial or renewed contract term.

7.3 – Expiry

The Contract shall expire at its term, whether the original or renewed term, without any formality whatsoever apart from the notice referred to in the preceding paragraph, without any reason being required and without the expiry of the Contract providing any right to any compensation of any kind whatsoever for the benefit of either Party.

7.4 – Early termination of the Contract

Each Party may terminate the Contract in advance in case of non-performance by the other Party of any of the obligations stipulated therein.

Early termination will occur automatically if the breach persists XXX [DEADLINE, FOR EXAMPLE: one month] after a formal notice served on the defaulting Party by registered letter with acknowledgment of receipt or any other convincing written means, specifying the intention to apply this clause, except in the case of a breach which cannot be remedied, in which case the early termination may take place with immediate effect.

8 – RULES GOVERNING THE CONTRACT

8.1 – Governing law

XXX [OPTION 1 – STATE LAW: This Contract is governed by XXX [STATE LAW, FOR EXAMPLE: French law] and must therefore be performed and interpreted exclusively in accordance with that law.]

XXX [OPTION 2 – AUTONOMOUS INTERNATIONAL CONTRACT / CONTRACT WITHOUT LAW:

The Parties expressly state that the Contract, which governs international relationships and operations, shall be construed and interpreted as an independent international contract, governed exclusively by the rules expressly defined by the Parties, as far as possible.

Thus the Parties intend the Contract to be performed, enforced, interpreted and judged exclusively pursuant to its provisions, excluding as far as possible any provisions whatsoever, notably State or regional or international provisions, not explicitly mentioned by this Contract [OPTION: , except in case of obvious gap in the Contract, in which case the Parties expressly acknowledge that exclusively XXX [STATE LAW, FOR EXAMPLE: French law] shall apply to fill in the gap only to the extent that is needed, this notwithstanding the place where the Contract may have effects, with the sole exception of the imperative rules of the State where the Contract may have effects.]

8.2 – [OPTION 1: Jurisdiction // OPTION 2: Arbitration]

[OPTION 1: Any dispute that may arise in relation with the Contract will be subject to the exclusive jurisdiction of the courts of the city of XXX [CITY], XXX [COUNTRY] [OPTION: , even in the event of urgent proceedings or precautionary measures or in case of multiple defendants].]

[OPTION 2: All disputes arising out of or in connection with the present Contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by XXX [OPTION 2.1: one or more // OPTION 2.2: three] arbitrators appointed in accordance with the said Rules.

The place of the arbitration shall be XXX [TO BE SPECIFIED].

The language of the arbitration shall be XXX [TO BE SPECIFIED].

The law applicable to the merits shall be the governing law specified above.

No award or procedural order made in the arbitration shall be published.]

8.3 – Definition of the Contract

The Contract is an agreement of wills between the Parties intended to create, modify, transmit or extinguish obligations.

8.4 – Entire agreements

The Contract constitutes the entire agreement of the Parties with respect to its subject matter, and its signature entails the cancellation of all previous projects, documents, negotiations, commitments, representations or promises of the Parties in relation to the subject matter of the said Contract.

8.5 – Good faith

The Contract must be negotiated, formed and executed in good faith.

8.6 – Binding force of the Contract

The Contract is the law of the Parties. The Contract is binding on the Parties who undertake to execute it in good faith and with diligence. [OPTION: The Contract binds not only to what is expressed in it, but also to all the consequences given to it by equity, usage or XXX [the law // mandatory law].]

8.7 – Modification of the Contract

The Contract may only be modified or revoked with the mutual consent of the Parties and in writing, or for reasons permitted by this Contract [OPTION: or mandatory law].

8.8 – Non-performance of the Contract

The Party to whom the commitment has not been performed, or has been imperfectly executed, may:

– refuse to perform or suspend the performance of its own obligation;

– continue the enforcement in kind of the obligation;

– obtain a price reduction;

– cause the Contract to be terminated;

– obtain compensation for the consequences of non-performance.

Sanctions that are not incompatible may be cumulated; damages may always be added.

8.9 – Exception of non-performance

A Party may refuse to perform its obligation, even though it is due, if the other Party does not perform its obligation and if such non-performance is sufficiently serious.

A Party may suspend performance of its obligation if it is clear that its co-contractor will not perform by the due date and the consequences of such non-performance are sufficiently serious for the said Party. Such suspension must be notified as soon as possible.

8.10 – Unforeseeable change

If a change in circumstances unforeseeable at the time of the conclusion of the Contract renders performance excessively onerous for a Party that had not agreed to assume the risk, that Party may request a renegotiation of the Contract from its counterpart. That Party shall continue to fulfil its obligations during the renegotiation.

In the event of refusal or failure of the renegotiation, the Parties may agree on the termination of the Contract, on the date and on the conditions they determine, or request by mutual agreement the competent judges or arbitrators to proceed with its adaptation. In the absence of agreement within a reasonable time, the judges or the arbitrators may, at the request of a Party, revise the Contract or terminate it, on the date and on the conditions they determine.

8.11 – Force majeure

A Party will not incur liability in the event of a contractual breach resulting from a case of force majeure.

Force majeure means an event beyond the control of the debtor of the contractual obligation, which could not have been reasonably foreseen when the Contract was concluded and whose effects cannot be avoided by appropriate measures, preventing execution of its obligation by the debtor.

If the impediment is temporary, the performance of the obligation is suspended unless the resulting delay justifies termination of the Contract. If the impediment is final, the Contract is automatically terminated and the Parties are released from their obligations under the following conditions.

The impossibility of performing the obligation releases the debtor to the same extent when it proceeds from a case of force majeure and it is final, unless he has agreed to do it or he has been previously given notice.

When the impossibility to execute results from the loss of the thing due, the debtor put on notice is nevertheless released if he proves that the loss would have similarly occurred if the obligation had been fulfilled. He is however bound to assign to his creditor the rights and actions attached to the thing.

8.12 – Transfer of the Contract

A Party may not transfer its rights under the Contract to a third party without the prior written consent of the other Party.

8.13 – Third parties

The Contract only creates obligations between the Parties. Third parties may neither request the performance of the Contract nor be obliged to perform it. Third parties must respect the legal situation created by the Contract.

8.14 – Original copies

The Contract is drawn up in English in as many original copies as there are Parties, an original copy being given to each Party.

THE BUYER

For XXX [PARTY A]

Date and place:

Signatory:

Quality:

The signatory must initial any page other than this page (including annexes).

Signature:

THE MANUFACTURER

For XXX [PARTY B]

Date and place:

Signatory:

Quality:

The signatory must initial any page other than this page (including annexes).

Signature:

LIST OF ANNEXES

Annex 1: Provisional Load Plan.

Annex 2: List of prices in Euros in rendering.

Annex 3: Price list for XXX [COMPLETE FOR EXAMPLE: mainland China in Yuan, ex works].

Appendix 4: Price list for XXX [COMPLETE FOR EXAMPLE: Hong Kong in Hong Kong Dollars, ex works].

© FB Juris / droit.co

Par Franck BEAUDOIN, Avocat

Avocat, président et fondateur de la société d’avocats FB JURIS, directeur de la publication des sites juridiques droit.co et idroit.co.

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