Consignment Stock Agreement

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					                                    CONSIGNMENT STOCK AGREEMENT


..........................
ID No.: ............
with registered address at .............
registered in the Commercial Registry maintained by the ....... Court in ............, section ....., file ......
represented by ......

         hereinafter the "Supplier"



and



KOSTAL CR, spol. s r.o.
IČ: 496 87 131
with registered address in Černín čp. 89, PSČ 267 51
registered in the Commercial Registry maintained by the Municipal Court in Prague, in section C, file
23697
represented by Joachim Grabowski

         hereinafter the "Buyer"

concluded the following contract on delivery of goods to consignment stock:

Where ever in the Agreement the Supplier and the Buyer are meant to be understood together they are
referred to as the "Contractual Parties".



                                                     Art. I
                                                   Preamble

1. The Buyer and Supplier concluded a Framework Agreement which establishes a legal relationship
   between them related to goods supplies; an integral and mutually binding part of the terms of the
   said Framework Agreement are the KOSTAL Terms and Conditions of Purchase (KTCP).

2. The Buyer and Supplier are interested in realization of supplies of certain goods (Goods) in
   mutually convenient way via Consignment Stock to be managed by the Buyer and facilitated by
   the contractually hired Logistics Services Provider (LSP). The use of the Consignment Stock
   facility presents the following advantages to the Buyer:
   - optimisation of production in compliance with its own internal planning
   - freedom of arrangement related to the management of stock
   - elimination of supply delays while complying with management of stock levels by the
       Min/Max method
   - transfer of ownership of the goods at the moment of shipping
   - non-existence of temporary stock at the production plant
   - transparency and clarity of costs associated with stock operations
   - savings achieved by elimination of own stock-keeping
   - preference of suppliers to make deliveries to consignment stock.

      The Consignment Stock facility presents the following advantages to the Supplier:


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   -   100%-ensured supply flow
   -   transparency and clarity of cost associated with stock operations
   -   savings achieved by elimination of own stock-keeping and administration costs
   -   close co-operation with the sub-contractor suppliers.

3. This agreement is being concluded for the purposes of arrangement of certain conditions for
   supply of goods through the Consignment Stock (CS). Unless agreed upon in this agreement
   otherwise this legal relationship between the Buyer and the Supplier shall be governed by the
   Framework Agreement, Supply Schedule, KTCP as well as other terms, conditions and standards
   set forth by the Framework Agreement.


                                              Art. II
                                            Definitions

"Guaranteed Volume" shall be understood as volume of specific goods required by the Buyer, to be
maintained in the CS, defined by the minimum quantity (minimum threshold) and maximum quantity
(maximum threshold); Guaranteed Volume shall be defined by the Buyer in the Supply Schedule.

„Consignment Stock“ shall be understood as Buyer’s stock of Goods at the facility provided by the
Logistic Services Provider (LSP), which shall be managed in compliance with the terms and
conditions defined herein and in the Contract for Provision of Warehousing and Logistics Services.

"Logistics Discrepancy" shall be understood as any discrepancy from standard situation related to
the supply of Goods to Consignment Stock.

"Supply Schedule" shall be understood as a document executed between the Supplier and the Buyer
within the terms and conditions of the Framework Agreement (FA) upon which the individual supply
of Goods shall be realized.

„Logistics Services Provider” shall be understood as a subject which is a specialized provider of
warehousing and logistics services who has relevant professional knowledge and equipment to fulfil
required tasks and who executed with the Buyer a Contract for Provision of Warehousing and
Logistics Services. For the purposes of this agreement the Buyer appoints the role of LSP to Loguran
a. s. (detailed information on the LSP are provided in Annex 1 hereto).

"Framework Agreement" shall be understood as contract executed between the Supplier and the
Buyer which establishes the legal relationship related to the supply of Goods.

„Contract for Provision of Warehousing and Logistics Services“ shall be understood as the
contract executed between the Buyer and the LSP.

"KTCP" shall be understood as the KOSTAL Terms and Conditions of Purchase, i.e. terms of the
Buyer which regulate the legal relationship between the Supplier and the Buyer, unless expressly
agreed herein otherwise.

„Shipping“ shall be understood as the moment defined here in Art. XI paragraph 1 hereof.

„Goods“ shall be understood as goods supplied by the Supplier to the Buyer under the terms and
conditions of Framework Agreement are the KTCP which the Buyer allocated for supply via the
Consignment Stock; the term Goods shall not include goods defined in Art. IV hereof.




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                                              Art. III
                                     Subject of the Agreement

1. The subject of this agreement is the regulation of the rights and obligations of the Buyer and the
   Supplier during supply of goods realized via the CS, namely the obligation of the Supplier to
   supply the required goods to the LSP, and to maintain the volume of such goods at CS at levels
   determined by the Buyer, the obligation to transfer the ownership rights at the moment of
   Shipping, the obligation of the Buyer, under the terms and conditions hereof, to deliver and pay
   for the goods to the Supplier the agreed upon purchase price.


                                              Art. IV
                                          Excluded Goods

1.   Goods excluded from the supplies through the CS shall be defined as:
      a) goods expressly excluded by the Buyer from deliveries via CS,
      b) goods expressly determined by the Buyer to be delivered directly to the Buyer,
      c) supply of samples,
      d) goods which, at the start-up of serial production, were ordered without benchmarking of the
         samples, where such benchmarking is required,
      e) other goods expressly determined by agreement between the Buyer and the Supplier.


                                             Art. V
                                   Guaranteed Volume of Goods

1. The Supplier agrees to deliver the Goods to CS and to maintain the stock of Goods in CS in the
   Guaranteed Volume; the volume of Goods kept in CS shall not drop below the minimum threshold
   of the Guaranteed Volume without consent of the Buyer. Failure to maintain the minimum
   threshold of the Guaranteed Volume of the Goods in CS shall be considered as a failure to supply
   the agreed upon volume under the KTCP. The Supplier may exceed the maximum threshold of
   the Guaranteed Volume of the Goods in CS at his own cost and risk.

2. During the maintenance of the Guaranteed Volume of the Goods in CS the Supplier shall be
   obliged to take into account the information supplied to him by the Buyer regarding the actual
   stock of Goods in CS as well as all other information provided to him by the Buyer related to the
   anticipated or planned stock withdrawal from the CS as implied by the FA or the Supply Schedule
   or other documentation.

3. In the event the Supplier learns of any facts which could in any way influence the fulfilment of his
   obligation to maintain the Guaranteed Volume of Goods in CS or his ability to ensure
   uninterrupted supply of Goods he shall be obliged to inform the Buyer without delay of such facts
   as well as to adopt any and all measures to prevent a negative impact on the Buyer; similarly the
   Supplier shall be obliged to proceed in the same manner if he learns of bankruptcy proceedings
   being initiated against him or when circumstances which would justify such initiation of
   bankruptcy proceedings arise.

4. In the event of a failure to maintain the Guaranteed Volume of the Goods in CS the Supplier shall
   be obliged to pay to the Buyer a contractual penalty of 1 (in words: one) million Czech crowns
   payable within 30 days of the claim being made. Besides the contractual penalty the Buyer shall
   be entitled to claim damages caused to him by such failure.




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                                               Art. VI
                                          Stocking of Goods

1. The Supplier, by signature of this agreement, expressly agrees that the LSP will undertake the
   following activities on behalf of the Buyer, under the terms and conditions of the Contract for
   Provision of Warehousing and Logistics Services, at the point of acceptance of the goods and
   during its storage in CS:
     a) unload the Goods, inspect the volume, type and visible defects of the packaging,
     b) registers the accepted Goods and checks and compares the volume and the packaging
         against the delivery notices,
     c) takes samples of the Goods (control batches) for quality testing,
     d) undertakes additional marking of incorrectly marked Goods,
     e) sorts the Goods as per the instructions issued by the Buyer,
     f) undertakes logistics services related to returns of defective Goods,
     g) maintains registers of actual stock in CS in electronic form,
     h) stores the Goods and keeps the stock of Goods in the storage,
     i) communicates the information of the state of CS to the Buyer,
     j) carries out inventory checks in CS,
     k) undertakes other agreed upon activities.

2. The Supplier, by signature of this agreement, agrees that the LSP carries out the activities defined
   above in paragraph 1 of this Article on his behalf and at his cost. Such costs shall be billed by the
   LSP to the Supplier through the Buyer in compliance with the LSP’s pricelist agreed upon by the
   Buyer which is attached hereto as Annex 2.
   The link between the activity performed and the pricelist items are as follows:
   Activities under a), b) and f) are defined as pricelist items „Reception / Release of GLT,
   respectively KLT“.
   Activities under d) correspond to pricelist item „additional marking of incorrectly marked Goods“.
   Activities under e) correspond to pricelist item „warehouse manipulation“, unless the sorting is
   ensured by the Buyer otherwise. The method of sorting and its provision shall comply with
   defective goods claim administration determined by the quality dept.
   Activities under g), h), i) correspond to pricelist items „Storage of GLT, respectively of KLT“.
   Activities under j) are included, within the period of 1x a year, under the item „ Storage of GLT,
   respectively of KLT “. Should the Buyer require inventory checks more often the corresponding
   item on the pricelist shall be „work of administrative employees“ and „warehouse manipulation“.
   Other activities under sub-section k) agreed upon by the Supplier shall be billed according to the
   relevant items on the pricelist.

    Any invoice will always contain an annex specifying the number of receipts and releases and other
    billable activities which shall serve for the purposes of control of the services being billed.

3. The Supplier also acknowledges that the LSP will carry out, under the terms and conditions of the
   Contract for Provision of Warehousing and Logistics Services certain other activities on behalf of
   and at a cost of the Buyer. The Supplier further acknowledges that the goods in storage are not in
   any way insured by the LSP with the exception of the professional insurance policy of the LSP.

4. The LSP shall be obliged, under the terms and conditions of the Contract for Provision of
   Warehousing and Logistics Services, to carry out all activities defined above in section 1 and 2 of
   this Article with due professional care and to take any action to prevent any damage to the Goods.




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                                             Art. VII
                                    Sorting and Goods Returns

1.   In the event Goods quality discrepancies or packing variances are discovered the Buyer shall
     inform the Supplier without delay of any such occurrences. Should the Buyer decide that sorting
     of the Goods will be necessary the Buyer shall be obliged to facilitate such sorting of the Goods
     by the Supplier to determine the perfect Goods from the defective Goods or to require 100%
     substitute by supply of perfect Goods within reasonable deadlines set forth by the Buyer. Should
     the Supplier not ensure the supply of perfect Goods within the given deadline the Buyer, or a
     third person appointed by the Buyer, shall be entitled to carry out the sorting or repair of the
     defective Goods at the cost of the Supplier.

2.   The Supplier shall be obliged to accept the returned Goods marked by the Buyer upon the request
     of the Buyer when:
      a) Logistic Discrepancy is discovered in relation to the Goods supplied,
      b) discrepancies in required quality of the Goods is discovered.

3.   In the event of termination of this Agreement the Supplier shall be obliged to remove without
     undue delay all Goods from CS which exceed the minimum threshold of Guaranteed Volume,
     unless agreed upon otherwise with the Buyer.


                                            Art. VIII
                      Transportation of the Goods to the Consignment Stock

1. The Supplier shall be obliged to transport the Goods into CS by its own means or to provide for
   such service by concluding a contract for the transportation of the Goods with other entity.

2. The Supplier shall advise the Buyer of each individual delivery through the EDI/WEB-EDI at the
   moment when transportation of the Goods to CS is initiated. Detailed terms of the advice notices
   are defined by directives available at www.kostal.com/Partners/Download/: EDI Terms and
   Conditions, EDI-Guideline EDI-EDIFACT-DELFOR-92, EDI-EDIFACT-VMI-DELFOR-97A,
   EDI-EDIFACT-DESADV01 97A and EDI-EDIFACT-INVRPT 97A. The Supplier shall be liable
   for any damage arising from the failure to issue the delivery advice.

3. The Supplier shall be obliged to mark the goods in a manner determined by the directive available
   at www.kostal.com/Partners/Download/Logistics_Guideline, as amended. The Supplier shall be
   liable for any damage arising from the failure to mark the goods as required by the above
   directive.


                                           Art. IX
                 Management of the Goods, Rights of Access and Sample-Taking

1. Should the Buyer not appoint the LSP to carry out activities defined above in Art. VII hereof the
   Buyer shall be entitled to carry out such activities using his own resources or to appoint a third
   person. The Buyer or such third person authorized by him shall be entitled to access CS for such
   purposes and to carry out any and all necessary actions required to perform such activity.




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                                           Art. X
           Shipping, Transfer of Ownership Rights and Liability, Payment of Invoices

1. Shipping shall be understood as the moment the manipulation with the Goods is initiated, under
   the instruction issued by the Buyer, which is directed toward the release of the Goods from CS to
   the Buyer or the moment of release of the Goods from CS to another facility of the Buyer at the
   LSP upon the Buyer’s instruction.

2. The Supplier remains the owner of the Goods until the moment it is shipped. Once the Goods is
   shipped the ownership right to the Goods passes to the Buyer. The Buyer does not assume
   ownership rights to the Goods which he did not expressly instruct to by shipped unless the
   shipping was approved after the fact.

3. The damage liability for the Goods during its presence in CS shall be governed by the relevant
   provisions of the Commercial Code and the contract on storage. The damage liability for the
   Goods before its delivery to CS and after it is shipped shall be governed by the relevant provisions
   of KTCP.

4. The Buyer shall be obliged to accept shipping of the Goods delivered to CS by the Supplier only
   within the volumes which correspond to the minimum threshold of the Guaranteed Volume. The
   Buyer shall be entitled to ship at any time all Goods present in CS at the time.

5. The shipping of the Goods under this agreement shall have the effect of acceptance of the Goods
   under the KTCP.

6. In the event of the decrease of the stock under the Minimum Order of Guaranteed Volume caused
   by the extraordinary requirements of the Buyer the Contractual Parties shall agree on the manner
   and deadline for the supply of the Guaranteed Volume. The event described here shall not be
   subject to sanction set forth by Art. V. 4.

7. Invoices issued under Art. VI of this agreement shall be payable within 30 days of the issue of the
   invoice by the Buyer.


                                            Art. XI
                               Term of Agreement and Termination

1. This agreement is concluded for an indefinite period of time. This agreement shall terminate upon
   the termination of contractual relationship between the Buyer and the Supplier established by the
   Framework Agreement(s).

2. The validity of the agreement shall also end by mutual agreement or unilateral termination notice
   for reasons set forth in subsection 3 of this Article.

3. Reasons for Termination:
   - one of the Contractual Parties repeatedly breaches its obligations hereunder even after being
      duly notified of breach,
   - a Contractual Party is under threat of bankruptcy, a petition initiating bankruptcy proceedings
      against its assets is filed or a similar circumstances arise.

4. The termination notice shall be one month and shall commence running on the first day of the
   month following the month in which it was served upon the other party.




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                                              Art. XII
                                          Final Provisions

1. This agreement is made out in two originals of the same validity, each Contractual Party shall
   receive one original hereof.

2. Any changes hereto shall be made in writing based on the mutual agreement of both Contractual
   Parties.

3. The Contractual Parties acknowledge that this agreement is concluded in connection with the
   Framework Agreement and the Contract for Provision of Warehousing and Logistics Services
   executed between the Buyer and the LSP. This agreement shall be interpreted namely in
   connection with the Framework Agreement.

4. The Contractual Parties shall attempt to resolve any disputes arising herefrom amicably. All
   disputes arising from the present agreement and in connection with it shall be finally decided with
   the Arbitration Court attached to the Economic Chamber of the Czech Republic and Agricultural
   Chamber of the Czech Republic by one arbitrator appointed in accordance with the Rules of that
   Arbitration Court by the chairman of the Arbitration Court.

5. This agreement and relationships established hereby are governed by the Czech Law. In the event
   any of the provisions hereof become invalid all remaining provisions hereof shall remain valid and
   effective; any such invalid provision shall be supplemented by the closest valid legislative
   provision maintaining the purpose and substance of the agreement.

6. The Contractual Parties declare that they have read the present agreement, that they understand its
   contents and that the present agreement corresponds to their real and true will which they confirm
   by attaching their signatures hereto below.



Annex 1 „Information on the LSP“
Annex 2 „LSP Pricelist“



In ........... on ………………..                                       In ....... on ................




                                                                       KOSTAL CR, spol. s r.o.
         (The Supplier)                                              Joachim Grabowski, Executive




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Description: Consignment Stock Agreement document sample