This is a simple pricing agreement for purposes of memorializing pricing and other terms of sale for the purchase of goods between a supplier and a customer where the parties do not wish to negotiate a long form supply agreement or terms of sale are covered by separate purchase order terms (although in such case, a provision specifying the order of precedence would ordinarily be added). The parties may add whatever terms of sale they wish to address to its Schedule A.
The form contemplates that the supplier may have a third party distribution partner through which it sells the goods and that the buyer may have a designated third party co-manufacturer or other entity that will be making purchases of the goods on behalf of or to manufacture and supply other goods to the customer.
Minimal confidentiality obligations are included. The parties could also incorporate a separate non-disclosure agreement between them and/or specify that disclosures in relation to this agreement will be governed by such a separate NDA.
It has an optional provision in section 4 intended to protect the supplier against having to absorb losses associated with inventories of obsolete goods and raw materials that are unique to the customer. The customer is obligated to purchase the goods and reimburse supplier for raw materials where they are unique to customer.
Schedule A can also provide for minimum purchase obligations that trigger termination rights if not met and/or permit termination for convenience.
