International Long-Term Supply of Goods

This Model Contract is for the long-term supply of manufactured Goods, between a Supplier and a Customer. 1. The contract is intended for use in connection with manufactured Goods, rather than commodities, which have their own special features, and are often sold on the standard forms of producers’ or dealers’ associations. 2. The Supplier may or may not be the manufacturer of the Goods. 3. The contract is not intended for use where the Goods are supplied for resale by a distributor (see the Model Contract for the International Distribution of Goods). 4. The contract can also be compared to the Model Contract for the International Commercial Sale of Goods, intended for a single sales transaction, or where there is no ongoing commitment between the Parties. 5. One main contract aim is to establish the level of each party’s obligation to the other − whether this involves Goods ordered from time to time, or fixed or minimum quantities. Options are included for these possibilities (Article 1). In addition, there may be a provision for minimum or maximum order quantities. 6. Another aim is to establish the procedure for ordering and delivering the Goods, so as to maximize the level of certainty for each party (Article 2). 7. A third aim is to provide a mechanism to establish prices at which the Goods are to be supplied over the period of the contract. Again, various options are included for pricing, as well as payment (Articles 3 and 4). 8. A contract of this type may also deal with issues of liability, subject to (or possibly overriding) the default position under applicable law (Articles 5 and 7). 9. This contract also examines duration. In view of the different considerations one can take into account, it is not possible to provide for all possibilities. Commonly such a contract will be for several years, sometimes with the right of one party or both parties to terminate early for convenience, for breach of contract or for insolvency of the other party. A maximum period may be imposed by applicable law, depending on the circumstances (Article 8). 10. Standard provisions have been included, including change of circumstances (hardship) (Article 9), and force majeure (Article 10). 11. In some cases, long-term supply agreement is used in connection with the standard Terms of sale of the Supplier or even the standard Terms of purchase of the Customer. For cases where these do not exist or are not intended to apply, a set of simple additional Terms of supply has been included (schedule 4).