Product Supply Agreement, The*supply of products between the two parties.
1. [Purpose] 1.1 The company B shall continuously supply products to the company A, and the company A shall buy them. 1.2 Both parties of the contract shall sincerely fulfil the rights and obligations of this agreement.
2. [Individual Contract] 2.1 This agreement aims to make a contract of basic particulars concerning continuous supply of products, and when the content of individual contract that is concluded for each individual transaction differs from this agreement, the individual contract shall take the priority. 2.2 In case either company A or B desires to make changes on this agreement by changing the clauses, adding, deleting, or stopping before the contracted period of the clause 3 expires, the other party can accept the negotiation and consult.
3. [Period of Contract] 3.1 The period of this contract shall be from April 25, 20** to April 25, 20**. 3.2 The period of the contract shall automatically be extended year by year unless one party notifies its intention to refuse the renewal of a contract through written document to the other party by 30 days prior to the expiration date of the contract.
4. [Transaction Method] 4.1 The company B shall deliver goods in accordance with product name, color, quantity, and deadline of delivery stated on the product purchase order issued by the company A. 4.2 The company A shall place an order 2 months prior to the deadline of delivery unless it requires urgency, and the company B shall deliver the products to the company A within 45 days from the day contents are decided. The above delivery date is only for the first time, and for the repeating orders, it can be adjusted by consultation between two parties.
5. [Terms and Conditions of Business] 5.1 The unit price of sales shall be decided in accordance with the accompanying estimates by products, and the unit cost shall be the company B’s factory price. 5.2 In case the unit cost needs to be changed due to unavoidable circumstances such as financial fluctuation, it shall be decided through consultation between both parties.
6. [Observance of Related Act and Subordinate Statute] Both the company A and B shall obey the medicine legislation such as pharmaceutical law, fair-trade law, tax law, Acts concerning saving resources and recycling, and related Act and subordinate statute of industrial property right, and shall not forcibly commit the offense for the reasons of business.
7. [Guarantee of Quality] 7.1 The company B shall take a responsibility for the damage caused by manufacturing fault of products. However, the cases in which it is not the company B’s responsibility such as a case of the causes occurring after the company A has stored the products shall not be included in the scope. 7.2 The warranty period for the products shall be 24 months after payment for the products. For the products stored at well maintained condition, it shall decide on the basis of quality standard of general market custom in cosmetic industry about inevitably derived problems due to changes according to time such as changes in colors, fading in colors, and changes of fragrance.
8. [Supply of Raw and Subsidiary Materials] 8.1 The company B shall obtain the raw materials needed for the company A’s production, and for the subsidiary materials (all materials other than the raw material), it shall be supplied at the will of the company A, complying with the relevant regulations, but at the request of the company A, the company B can cooperate on it. 8.2 In case the company A supplies the subsidiary materials, the company A shall store in the company B 15 days prior to the beginning of manufacturing, and the schedule of warehousing shall be decided after consultation with the company B. 8.3 In case the company A supplies the subsidiary materials, the company A shall present the company B with the standard sample and limit sample so the company B can use them as the standard for the quality test when storing. 8.4 In case the raw and subsidiary materials, products, and finished goods logically obtained by the company B, according to the long-term plan or purchase order number of the company A, become the stock due to the following conditions, the company A shall compensate the company B as soon as possible. 1) In case of the end of products 2) In case of suspension of product sales 3) In case of changes in specifications 4) In case of the stock not being turned over for a long period (more than 6 months) 8.5 With reference to the number 4 of the clause 8.4, in case the company A supplies the raw and the subsidiary materials to the company B for manufacturing of products for the company A, the company A can request for the storage at free of charge up to 6 months from the day of stock. In case the company B obtains raw and subsidiary materials, the company A shall order products on the basis of MOQ (the minimum order quantity) of materials, but if the company A orders less than the MOQ for the reasons of supply and demand of the products, the company B shall supply on the basis of MOQ demanded by raw and subsidiary material business for materials of BOM of products. 8.6 In case the company A requests for a storage even after free storage period of the previous clause 8.5 has expired, the company B can store at a charge for 3 months from the expiration day of the above free storage period of 6 months, and in particular case, the storage charge shall be estimated on the basis of the relevant year’s market price of general cargo storage trade (bulk standard). If it ever goes beyond the charged storage period, the company A’s stored products shall be at the company B’s disposal, and in case of discarding the stored products, the company A shall be responsible for all expenses needed in the process.
9. [Liability for the Use of Industrial Property Right] 9.1 For those produced by using ingredient of a patent among products produced to comply with the agreement between the company A and B, the party that prescribed the ingredient shall take the full responsibility for liability related to the ingredients. 9.2 In case a problem occurs in regards to utility model right and design right for the subsidiary material other than raw material, the party that offered the design of the relevant subsidiary material shall take the full legal responsibility. 9.3 The company B shall put and use trademark following instruction of the company A, and rights related to this trademark shall belong to the company A no matter its registration. In case there is a dispute about trademark, it shall be resolved on the company A’s responsibility and the company B shall become immune from obligation. 9.4 The party with the liability on the basis of the clause 9.1, 9.2, and 9.3 shall immediately pay for the damaged party.
10. [Details Related to the Environment such as Packing Materials, Packing Method, and Liability Amount] For object items under the law for resource saving and promoting recycling, it shall be the company A’s responsibility to report and manage, and in case the company B experiences damage caused by the company A’s action, the company A shall compensate the company A for the damage.
11. [Claims of Consumer] 11.1 When there is a claim made by consumers or distribution dealers about products of the company A, the company A shall be the window of negotiation and the company B shall cooperate to resolve the matter. Enough time must be taken to test the safety of products, and for the shipment of products with incomplete of the test due to the company A’s request, the company A shall take all responsibilities. 11.2 In case of manufacturing defect in products supplied to the company A by the company B, the company B shall accept to have them exchanged or returned at the demand of the company A.
12. [Secrecy Obligation] 12.1 Both parties must not talk about prescription, process, and other information gained from this agreement to any third person without each other’s consent through documents unless it’s government office or absolutely unavoidable circumstance. 12.2 The secrecy obligation of previous clause will still remain to be obeyed for both parties even after the termination of agreement.
13. [Product Liability] 13.1 The company B must try its best to not have fault occurrence in products ordered by the company A and fulfill all duties regarding the responsibility of products. 13.2 In case the products to be delivered to the company A are expected to cause a financial or physical damage to a third person, the company B must contact the company A and then resolve the matter after consultation with the company A. 13.3 The case in which the company A has confirmed the damage, the company B shall cooperate in the process of dealing and resolving of the matter according to the instructions given by the company A, and the burden of expenses for the whole process of dealing and resolving of the matter shall be dealt in cooperation of both parties. 13.4 The company B shall follow the standard and quality of the products to satisfy specifications written by the company A. However, in the case products delivered without any offered specification cause a financial or physical damage to a third person, the company B shall take no responsibility. Moreover, if the cause of the matter is confirmed to come from the defects in the offered specifications, the company A shall take all responsibilities. 13.5 In case the company A carries on stated matters (an exaggerative advertisement) and the content of promotion without any agreement from the company B and cause damages, the company A shall be responsible for all. Also when the company A supplies subsidiary materials to the company B and the delivered products cause a financial or physical damage to a third person because of the subsidiary material, the company A shall take the full responsibility. 13.6 The company A and B shall cooperate with each other in the matters of prevention, defense, and establishment of countermeasure of claims and lawsuits related to the damages of product liability.
14. [Preservation of Documents] 14.1 Both company A and B shall each preserve the important documents of development, manufacturing method, and specification of contracted products for 10 years from the date of preparation. 14.2 Both company A and B shall each preserve the important records of production, test, and inspection for 10 years from the date of preparation.
15. [Publicity] The company A must have prior consultation about stated matters of advertisement copy on the product containers (tubes, boxes, and instructions) only, and comply with related regulations.
16. [Joint Surety, Security] 16.1 Deleted due to the changes in payment details of payment of purchase price of products in the clause 17.
17. [Payment of Price of Goods] 17.1 The company A shall pay 70% of amount ordered in cash for the supplied products from the company B, and for the rest 30%, the date of payment shall be set before the delivery, and it shall be the rule to deliver the products after confirming the payment has been made. 17.2 In case the company A requests data considered to be needed for the payment of price, the company B shall immediately submit it. 17.3 The means of payment in the clause 17.1 can be altered through individual contract in agreement between two parties.
18. [Rights, Obligations Transfer Prohibition] The company A cannot transfer this contract or rights of individual contract, and all or partial obligation to a third person without prior written agreement of the company B.
19. [Obligation of Cooperation] Both parties can request for provision of general data related to products and other necessary support to each other in the rational range understood to be needed in order to improve sales record of products.
20. [Cancellation of Contract] 20.1 In case of breach of this contract, if violator side does not correct the matter within 7 days of notice letter from the other side, the other side can notify the contract violator and cancel this contract. The above period, however, can be extended in agreement of both parties. 20.2 In case there is the occurrence of default, suspension of payment, bankruptcy, reorganization proceedings, liquidation, or other similar situations in one side of two parties, the other side can cancel this contract without sending the notice letter.
21. [Compensation] In case the company A or B causes a damage to the other side by not performing its obligations of this contract or other individual contracts, it must compensate the other side for the damage.
22. [Subordinate Agreement] In case of having an objection toward details that are not mentioned on this contract, the company A and B can have an additional contract or subordinate agreement in regard to that.
23. [Competent Court] The company A and B shall sincerely perform the responsibilities and obligations to promote profit for both parties, and they shall resolve objections and disputes through consultation with each other as soon as possible. Despite that, if unavoidable disputes occur, Seoul Central District Court shall be the competent court.
Both company A and B shall write 2 copies of this contract and each party shall keep one copy as the evidence of the contract.
The Company A CEO The Company B .CEO
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