General terms for supply of goods (without erection) to the public sector ALOS 05

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1 General terms for supply of goods (without erection) to the public sector ALOS 05 These terms have been drafted by the Swedish Municipalities and County Councils (Sveriges Kommuner och Landsting) in consultation with the Swedish Armed Forces (Försvarsmakten), the Swedish Agency for Public Management (Statskontoret), the Swedish Federation of Trade (Svensk Handel), the Swedish Trade Association for Suppliers of Mobile Machines (Maskinleverantörerna), the Association of Swedish Engineering Industries (Teknikföretagen), the Swedish Medical Suppliers Association (Sjukvårdens leverantörsförening) and the Swedish Public Procurement Association (Sveriges Offentliga Inköpare). Scope of contract 1. It is intended that the terms of ALOS 05 will be used in connection with the supply to the public sector of both standard goods and specially manufactured goods. They can be used both for individual purchases and in connection with framework contracts. ALOS 05 is not intended to be used when the client will provide a substantial part of the material. Examination and testing prior to delivery 2. If the Purchaser so requests, the Seller shall provide a time schedule for design, acquisition of materials, manufacture and testing. The Purchaser is entitled to monitor how the time schedule is being followed. The Purchaser is also entitled to the information necessary to assess the quality of the goods, provided business secrets are not thereby disclosed. 3. If the goods are to be manufactured for the Purchaser, the Purchaser is entitled to inspect the quality of the goods at the Seller s premises in the course of manufacture, to a reasonable extent and subject to three days advance notice. Delivery Clause 4. The supply shall be delivered duty paid (DDP, according to Incoterms 2000). The Seller shall also arrange the transport and unload the goods from the incoming means of transport at the place nominated by the Purchaser. If a delivery point cannot be specified in the contract, the goods shall be supplied from the Seller s factory or warehouse (Ex Works, according to Incoterms 2000). Delivery time 5. Delivery shall be made at the time or within the period of time stipulated in the contract. If the delivery time is not agreed, the goods shall be delivered within reasonable time from the sale or call. 6. A delivery may not, without the approval of the Purchaser, be made earlier than agreed in the contract. Delay in delivery and liquidated damages 7. If the Seller considers that it is likely that he will not keep to the agreed delivery date, he shall without delay notify the Purchaser in writing of this and also state the reasons for the delay and the time at which it is estimated that the delivery can be made. 8. If a delay in delivery results from an event as referred to in Clause 25 or from the Purchaser or any circumstance on his part, the agreed date for delivery shall be extended by such time as may be deemed reasonable. 9. If the goods are not delivered in the agreed time, the Purchaser is entitled to liquidated damages. Liquidated damages shall be payable for each seven-day period that commences during the period that the delay lasts at a rate of % of the value of that part of the goods that, as a consequence of the delay, could not be put to its intended use. However, the liquidated damages shall in total not exceed.% of the said value. If the parties have not agreed on any liquidated damages in accordance with the above, then liquidated damages shall be payable for each seven-day period commenced for which the delay lasts at a rate of 1% of the value of that part of the goods that as a consequence of the delay could not be put to its intended use. However, the liquidated damages shall in total not exceed 10% of the said value. 10. The Purchaser may revoke the purchase if the delay in delivery is of fundamental importance for the Purchaser and the Seller realised or ought to have realised this. The Purchaser may also revoke the purchase if the Purchaser is entitled to maximum liquidated damages according to Clause 9 and thereafter in writing demands delivery within a final reasonable time limit, which may not be less than one week, and the Seller does not deliver within the time limit, unless this omission is the result of some circumstance for which the Purchaser bears the responsibility. Revocation according to the first and second paragraphs may refer to that part of the supply that the Purchaser owing to the delay cannot use. If delivery is to comprise several batches, the Purchaser may revoke the contract in its entirety provided the breach of contract is of fundamental importance for the Purchaser as regards the entire contract and the Seller realised or ought to have realised this. 11. If the contract is completely or partially revoked, the Purchaser is entitled, in addition to liquidated damages in accordance with Clause 10, to compensation for damage (damages). The damages shall be reduced by the amount of the accrued liquidated damages for the period up to the revocation. The damages do not cover compensation for indirect losses unless the Seller has committed gross negligence. Unless otherwise agreed, the damages for a delay in delivery may amount to a maximum of 20% of the price for that part to which the revocation refers. Delay by Purchaser 12. If the Purchaser considers it likely that he will not be able to receive the goods at the agreed time, he shall give written notice of this without delay to the Seller and also state the reasons for the delay and the time at which it is estimated that receipt can be effected. 13. If the Purchaser does not accept receipt of the goods at the agreed time and this is not due to events as referred to in Clause 25 or due to the Seller, the Purchaser is liable to make payment in accordance with the agreement as if the goods in question had been delivered. The Seller shall then, at the risk and cost of the Purchaser, ensure that the goods are stored. If the Purchaser requests so, the Seller shall also insure the goods at the expense of the Purchaser.

2 Price 14. Unless otherwise agreed in writing, the agreed prices shall be fixed and not index-adjusted and shall also include packaging of goods. The agreed price does not include value added tax. Payment 15. Payment shall be made in accordance with the conditions agreed between the parties. 16. The Seller shall issue and send invoices in the manner agreed. The invoice shall state value added tax and any discounts separately. Furthermore, the invoice shall contain the details that the Purchaser needs to be able to identify the goods supplied and also the details that are otherwise required according to law. 17. If the invoice is issued in paper form, the Purchaser shall pay the invoice no later than thirty days from when it was received. In the case of electronic invoicing, the Purchaser shall pay the invoice no later than thirty days from when it was issued. If the parties have agreed that the Purchaser should issue invoices, so-called self-invoicing, the Purchaser shall pay the invoice no later than thirty days from when the transaction note or a similar receipt was sent to the Seller. 18. Invoicing charges or corresponding charges may not be debited. Charges for reminders may be debited. In the event of delay in payment, interest for delay is payable according to the Swedish Interest Act. Payment does not imply approval of the goods. Faulty goods 19. The Seller is responsible, according to the following rules, for faults in goods that result from inadequacies of design, material, manufacture or whereby the goods do not otherwise satisfy the agreed characteristics. The Seller has the same responsibility for sub-contractors material and work as for his own. The Seller s responsibility does not cover faults that result from material that the Purchaser has provided or the design that he has specified, unless the Seller discovered or ought to have discovered the fault. The Seller s responsibility does not cover faults caused by circumstances that arose after the risk for the goods has passed to the Purchaser. This responsibility consequently does not cover faults that are caused by, among other things, inadequate maintenance, improper storage or incorrect assembly on the part of the Purchaser, amendments without the written consent of the Seller, normal wear and tear or deterioration or repairs conducted through the agency of the Purchaser. However, the Seller is responsible for faults that arose as a consequence of the Seller s instructions being inadequate. The Seller shall be responsible for damage that redelivered or repaired parts caused to other parts of the goods. 20. A fault that transpires within one year of delivery of the goods shall be deemed to have existed at the time of delivery unless the Seller can prove otherwise or this is incompatible with the nature of the goods or fault. Correspondlingly, a fault that appears within one year of the goods or a part of the goods being exchanged or repaired shall be deemed to have existed when the repair or exchange was completed. If the goods as a consequence of a fault in accordance with Clause 19 are unusable for more than one month, the above-mentioned times shall be extended by the time during which the goods were unusable. Notwithstanding the above provisions, the Purchaser s right to invoke a fault lapses unless he complained about the defect within two years from the original date of delivery. 21. The Purchaser shall within a reasonable period from when he discovered or ought to have discovered the fault notify the Seller that the goods are faulty. If he fails to do this, his right to invoke the fault lapses. After the Seller has received a notification from the Purchaser about the fault referred to in Clause 19, the Seller shall rectify the fault or implement a redelivery expedited as called for in the circumstances. The Purchaser is entitled to have a redelivery if the fault is fundamental for him and the Seller realised or ought to have realised this and redelivery can be made without inconvenience to the Seller. If the fault is to be rectified and if the fault is of such a nature that it is not appropriate that the rectification be carried out at the place where the goods are kept, the Purchaser shall at the request and cost of the Seller facilitate the performance of the work by returning faulty goods or parts of goods to the Seller for exchange or repair. 22. If the Seller does not fulfil his obligations according to Clause 21, the Purchaser may give him a written final reasonable notice to do so. If the Seller has not satisfied his obligations within this time limit, the Purchaser may at his own option: a. allow the necessary repairs to be conducted and/or produce new parts at the risk and expense of the Seller, provided the Purchaser proceeds prudently in this respect, or b. demand and receive such a price reduction as corresponds to the fault. If the fault or measure according to item a. above remains but is not fundamental, the Purchaser is entitled to demand and receive a price reduction corresponding to the fault. If the defect is fundamental, the Purchaser may instead revoke the contract by written notice to the Seller. The Purchaser may also revoke the purchase if the fault after a measure referred to under item a. is still fundamental. Upon revocation the Purchaser is entitled to compensation for the damage he has suffered. However, the compensation shall not amount to more than 20% of the agreed price, and does not include compensation for indirect loss. 23. The Seller does not have any liability for faults beyond that prescribed under Clauses 19 to 22, unless the Seller has committed gross negligence. 24. The provisions of Clauses 19 to 23 in regard to faulty goods shall in appropriate respects apply where the goods do not amount to the agreed quantity, but the Seller, according to what the Purchaser must assume, considers he has performed his obligation. Grounds for release (force majeure) 25. A party shall be released from his obligations if he proves that an impediment outside his control occurred, which he could not reasonably have foreseen or anticipated at the time of the purchase and whose consequences he could neither have reasonably avoided nor overcome. If the delay is due to someone engaged by a party to completely or partially perform the purchase, such party shall only be released from a liability to pay damages if the person whom he engaged would have been released from liability according to the first paragraph. The same applies if the delay results from a supplier engaged by the Seller or anyone at an earlier stage in the chain of sale. For a party to be entitled to claim a ground for release in accordance with the above, he shall without delay notify the other party of the occurrence thereof, and similarly of its cessation. A party shall notify the other party of when it is estimated that performance can be effected. In the event of force majeure on the part of the Purchaser, the Purchaser shall compensate the Seller for the additional costs that

3 the Seller may be caused in order to safeguard and protect the goods. 26. Regardless of what otherwise applies according to ALOS 05, either party may withdraw from the contract by written notice to the other party if performance of the contract is delayed for more than three months from the occurrence of grounds for release according to Clause 25. Disputes 27. Disputes between the Purchaser and the Seller shall be settled by a Swedish court applying Swedish law.

4 These comments are intended to facilitate the use of ALOS 05. They explain certain issues associated with the provisions but are not part of the contract itself. In the event of the contract not governing a situation that arises, the rules of the Sale of Goods Act apply. 1. The contract is not intended to be used when the client provides a substantial part of the physical material. 3. Three days advance notice means three working days. This Clause does not govern trial runs, which must be agreed separately. 4. Delivery Clauses should be interpreted in accordance with Incoterms 2000 (International Chamber of Commerce Rules on Interpretation of Trade Terms). DDP (delivery duty paid) is an Incoterms concept and means that the delivery shall, if agreed, be made to the place requested by the Purchaser. The risk in the goods passes when the Seller has supplied the goods to the place specified in the contract. It is appropriate for the Purchaser to ensure that the goods are receipted on, for example, a consignment note. The term free seller s factory or Ex works, means that the risk and the costs for the transport are borne by the Purchaser. The Seller s obligations are limited to making the goods available at the Seller s factory or warehouse. Risk passes when the goods have been separated for the Purchaser. 7. Delay in delivery on the part of the Seller exists when the date of delivery does not correspond to the agreed date for delivery. The term in writing also refers to messages in electronic form. 9. Liquidated damages means damages determined in advance. It is consequently sufficient that the Seller is responsible for a delay for the agreed liquidated damages to be paid. The Purchaser consequently does not need to prove what damage he has actually suffered. Liquidated damages are computed on the price excluding VAT. If the parties do not wish liquidated damages for delay to be payable, the contract must be completed with 0%. 10. In order to assess whether the delay is of fundamental importance for the Purchaser, an individual assessment must be conducted. This review is objective. It means that the Purchaser in the individual case has both a clear and justified interest in revocation. When making this assessment, the kind of purchase (staple goods or special goods), the nature of the goods and the scope of the deviation in relation to a fault-free supply are taken into account, among other things. The Purchaser is also entitled to revoke the contract when the maximum liquidated damages have been paid. Implicit and therefore not necessary to conduct any assessment of significance. If the goods have not been received by the Purchaser within the agreed time and the maximum liquidated damages have accrued, the Purchaser shall notify the Seller in writing that he intends to revoke the purchase. However, the Purchaser is not entitled to revoke the contract before he has given the Seller written notice of a final time limit, which may not be less than one week. Before the Purchaser notifies the Seller of this, the maximum liquidated damages must have accrued. The reason for this is that the parties should not remain passive in relation to each other. The Seller shall in accordance with Clause 7 notify the Purchaser that he can keep to the agreed delivery time. If the delay in delivery is of fundamental importance for the Purchaser, the Seller shall be informed of this. The contract can then be revoked on this ground, even if the maximum liquidated damages have not accrued. 11. Indirect loss means 1. a loss as a consequence of reduction or loss of production or turnover, 2. other loss as a consequence of it not being possible to use the goods in the intended way, 3. loss of profit as a consequence of a contract with a third party having lapsed or being impossible to perform properly, and 4. other similar loss, provided it was difficult to anticipate. There is no clear interpretation of the concept gross negligence. According to legal cases, gross negligence is deemed to exist in the case of criminal conduct or when the Seller has knowledge of a serious risk of damage. Increased production costs may as a rule be deemed to be a direct loss and consequently form a basis for damages. It is possible to contract for a greater limit on damages than 20% as referred to in the contract. If, for example, a covering purchase may come into question and such a purchase may be expected to involve greater costs, it may be appropriate to increase the damages limit. If the parties agree that the Seller, in the event of delay in delivery as referred to in Clause 11, may obtain payment of more than 20% of the price as liquidated damages, the limitation of the amount for damages should also be increased. ALOS 05 has for the normal case set a limit on damages of 20%, as the high exposure to damages generates costs. 16. Invoices may be issued in paper form or in electronic form. The public sector has designated its set of standards for electronic trade (order, invoice, etc., electronic messages) as SFTI (Single Face to Industry). The Purchaser and Seller can agree on electronic invoicing. No requirements on form are imposed. For very extensive electronic trade it is recommended that an EDI contract is concluded (contract for exchange of electronic messages). There is a Swedish standard contract, AB EDI The SFTI standard for electronic trade states that the due date is computed on the basis of the date on which the invoice is issued. The date on which an invoice arrives is unknown for the supplier s system; if the due date is based on this date, the Seller s system provides an insecure base for monitoring payments. If for any reason contract conditions that create uncertainty in the system are used, this would prevent efficient automated control, and thereby also limit the rationalisation sought with electronic trade. Bear in mind in this connection that the date of issue and the date of receipt are often the same. Self-invoicing means that the Purchaser creates the invoice instead of the Seller doing so. Self-invoicing is used, if the parties have so agreed, in connection with well-defined products where prices are agreed and up-dated in the Purchaser s system. 18. Charges for reminders may be debited in accordance with the Compensation for Debt Recovery Costs, etc. Act (1981:739) and the Compensation for Debt Recovery Costs, etc. Ordinance (1981:1057).

5 19. A fault exists when the supply deviates from the agreed specification, namely, the nature, quantity, quality or other properties and packaging should comply with the provisions of the contract. 20 to 22. According to ALOS 05 a presumption applies whereby inadequate compliance with the contract appearing within one year of delivery or rectification of goods is deemed to have existed at the time of delivery. The presumption shall not apply when it is incompatible with the nature of the goods or fault. It should also be possible to overturn the presumption by proving the opposite. Moreover, the right to present a complaint shall expire after two years, unless a longer period for the presentation of complaints or warranty period or similar undertakings have been agreed between the parties. If the parties have agreed on a longer period of presumption/warranty period, it is important that the parties also stipulate an extended time limit for presenting complaints. If this is not the case, the Purchaser s opportunities to utilise the extended presumption times/warranty periods will lapse. The parties can consider shorter complaint and time limits in order to affect the price and other conditions. The Seller is under an obligation to supply fault-free goods. If a fault is pointed out, the Seller shall expeditiously implement the measure called for by the circumstances. In this case, the stipulation of a time limit is not possible, as the circumstances vary. If it is very important that any faults are rectified immediately, this should be agreed separately. However, the main rule is that the Seller shall determine how the fault shall be rectified. The Purchaser s right to request redelivery is limited to the situation where the fault is of fundamental importance for the Purchaser and the Seller realised or ought to have realised this and a redelivery can be made without inconvenience to the Seller. In the case of purchase of specially manufactured goods, the appropriate measure will be the repair or exchange of parts. 24. In those cases where the goods do not amount to the agreed quantity but, according to what the Purchaser must assume, the Seller is in good faith, that is to say that the Seller believed that the goods were delivered in full, this shall be assessed as a fault in the goods and not as a delay in delivery. 25. Examples for grounds of release are labour market conflicts and every other circumstance that a party cannot control, such as fire, war, mobilisation and unforeseen military call-up of corresponding extent, requisition, seizure, currency and trade restrictions, civil commotion or riot, energy crisis and natural disasters.

GENERAL CONDITIONS. Preamble. Product Information. Drawings and other Documents. Delivery Test. Delivery

GENERAL CONDITIONS. Preamble. Product Information. Drawings and other Documents. Delivery Test. Delivery GENERAL CONDITIONS NL 92 E for the supply of machinery and other mechanical, electrical and electronic equipment. Issued in 1992 by the organisations for the engineering industries in Denmark, Finland,