ACLA-Lovells Contract Template Sales Contract

中华全国律师协会路伟国际律师事务所 ACLA Lovells

Prepared by Lovells for instructional and reference purposes only, and should not be construed as legal advice. All rights reserved. See Caveats and Drafting Notes at end of document for further guidance on use of this template. Last updated in July 2004. All content involving interpretation of the laws of the People's Republic of China reflects the results of consultation with EastBright Law Firm. 此范本文书由路伟律师事务所起草，仅供教学与参考之用，不得解释为法律意见。所有权利保留。进一步使用说明，请见文书最

后部分的提示与注释。最后一次更新时间 2004 年 7 月。本文中所有涉及中国法律解释的内容均由东易律师事务所提供咨询。

ACLA-Lovells Contract Template Sales Contract

(Prepared by Lovells for instructional and reference purposes only, and should not be construed as legal advice. All rights reserved. See Caveats and Drafting Notes at end of document for further guidance on use of this template. Last updated in July 2004. All content involving interpretation of the laws of the People's Republic of China reflects the results of consultation with EastBright Law Firm.) This contract template has been prepared as part of the All China Lawyers Association ("ACLA") - Lovells Legal Skills Training Series ("Training Series"), which have covered skills ranging from contract/memo drafting, commercial negotiation, law firm management and corporate law department management. Since the first ACLA-Lovells Legal Skills Training Seminar in January 2003, more than 2,500 lawyers from law firms and corporate law departments all over China have attended over 250 hours of live training programmes prepared and presented by senior lawyers from Lovells International Law Firm and Chinese legal practitioners. If you have any comments or suggestions regarding this contract template, please contact the two chief instructors of the Training Series: Robert Lewis (Foreign Expert, ACLA Education Committee/Managing Partner, Lovells Beijing) at [email protected]; or John Jiang (Director, ACLA-Lovells Legal Skills Training Series/Partner, EastBright) at [email protected]. For information on DVDs, audio PowerPoint presentations and transcripts of prior ACLA-Lovells training seminars as well as information on future ACLA-Lovells training seminars and similar training products (including additional bilingual standard contract templates), please contact the ACLA Training Department by email at [email protected], or [email protected]. A Microsoft Word version of this template is available together with the audio PowerPoint presentation of "Seminar on Contract and Legal Memo Drafting" on a CD-ROM, published by the All China Lawyer's Association. Please contact the ACLA Training Department by email at [email protected], or [email protected] for details.

mailto:[email protected]







2


律协-路伟合同范本系列简介销售合同(英文版本)

(此范本文书由路伟律师事务所起草，仅供教学与参考之用，不得解释为法律意见。所有权利保留。进一步使用说明，请见文书最

后部分的提示与注释。最后一次更新时间 2004 年 7 月。本文中所有涉及中国法律解释的内容均由东易律师事务所提供咨询。)

本合同范本系列是中华全国律师协会-路伟国际律师事务所法律技能培训项目(“培训项目”)的专题之

一。从2003年1月律协和路伟合作举办第一次法律技能培训班以来，来自全国各地的2500多名律师

和企业法律顾问参加了由路伟资深国际律师和中国律师事务所资深律师主讲的250多个课时的培训

课程。培训项目的内容涉及合同/法律咨询文书制作、商业谈判、律师事务所管理以及企业法律部

门管理等等。如果您对本合同范本有任何看法或建议，请通过电子邮件与培训项目的两位主讲律师联系：吕立山(全国律协教育委员会外国专家/路伟律师事务所北京办事处主任) [email protected]江宪胜(律协-路伟法律技能培训项目专员/东易律师事务所合伙人) [email protected] 本合同范本的Microsoft Word版本载于中华全国律师协会推出的“合同及法律咨询文书制作培训”录音-幻灯片VCD光盘。有兴趣订购者可通过电子邮件与中华全国律师协会培训部联系： [email protected]; [email protected] 如果您想了解有关律协-路伟培训项目的其他DVD录像光盘、VCD录音-幻灯片光盘、授课讲稿，或

者即将推出的其他培训专题和培训资料(包括双语合同范本系列的第二期)，可通过上述电子邮件地

址与中华全国律师协会培训部联系。









DATED 200[●]

[SALES CONTRACT NAME]

- by and between -

[BUYER NAME]

BUYER

- and -

[SELLER NAME]

SELLER




TABLE OF CONTENTS

PRELIMINARY STATEMENT 1

1. DEFINITIONS AND INTERPRETATION 1

2. SCOPE OF CONTRACT 1

3. CONTRACT PRICE 2

4. PAYMENT 2

5. DELIVERY 4

6. PACKING AND SHIPPING MARKS 5

7. INSPECTION AND CLAIM 6

8. INSTALLATION, COMMISSIONING AND ACCEPTANCE OF THE EQUIPMENT 7

9. WARRANTY 9

10. SOFTWARE LICENSE 10

11. INTELLECTUAL PROPERTY INDEMNITY 12

12. TAXES 13

13. REPRESENTATIONS AND WARRANTIES 13

14. TERM 14

15. TERMINATION 14

16. CONFIDENTIALITY 15

17. BREACH OF CONTRACT 16

18. FORCE MAJEURE 16

19. SETTLEMENT OF DISPUTES 17

20. MISCELLANEOUS PROVISIONS 20

SCHEDULE A – DEFINITIONS AND INTERPRETATION 25

SCHEDULE B - SPECIAL TERMS 29

ANNEX 1 - EQUIPMENT, SERVICES & DOCUMENTATION LIST AND PRICES 31

ANNEX 2 - SPECIFICATIONS 32

ANNEX 3 - PROJECT SCHEDULE 33

ANNEX 4 - ENGINEERING NOTES AND INSTALLATION RESPONSIBILITIES 34

ANNEX 5 - EQUIPMENT ACCEPTANCE TEST PLAN 35

ANNEX 6 - SPECIMEN OF ACCEPTANCE CERTIFICATE 36

CAVEATS AND DRAFTING NOTES 37




[SALES CONTRACT NAME]

THIS CONTRACT ("Contract") is made in [the Contract Location] and, China on the Contract Date set out in Schedule B (Special Terms) by and between the Buyer and Seller specified in Schedule B (Special Terms). Buyer and Seller shall hereinafter be referred to individually as a "Party" and collectively as the "Parties".

PRELIMINARY STATEMENT

After friendly consultations conducted in accordance with the principles of equality and mutual benefit, the Parties have agreed to enter into a sales contract in accordance with Applicable Laws and the provisions of this Contract.

Now the Parties Hereby Agree as Follows:

1. DEFINITIONS AND INTERPRETATION

Unless the terms or context of this Contract otherwise provide, this Contract shall be interpreted in accordance with Schedule A, and each of the terms used herein shall have the meaning ascribed to it in Schedule A (Definitions and Interpretation) or Schedule B (Special Terms) as the case may be.

2. SCOPE OF CONTRACT

2.1 Supply of Equipment and Services

Seller shall supply to Buyer the Equipment and Services (as more specifically set out in Annex 1 hereto) [for the Project] in accordance with the terms of this Contract. Buyer shall pay Seller the Contract Price set out in Schedule B (Special Terms) hereto and shall perform its other responsibilities in accordance with the terms of this Contract.

2.2 Project Supervisors

Seller and Buyer shall each nominate a representative as its project supervisor for the Project (each, a “Project Supervisor” and jointly, the “Project Supervisors”). Each Project Supervisor shall be authorized to deal with all technical matters in connection with the Equipment and the Services during the period from the Effective Date up to the expiration of the applicable Warranty Periods. Detailed arrangements for both regularly scheduled and emergency communications between the Project Supervisors shall be made through friendly consultation by Seller and Buyer. The Project Supervisors shall fully cooperate to resolve all technical issues which may arise in respect of the Equipment and the Services. If there is any dispute between the Project Supervisors, they shall analyze the problem, clarify the responsibilities and, to the fullest extent possible, settle it at the Installation Sites through friendly consultation. During the period of Installation and Commissioning, the progress of work, the main work done every week, all problems arising and the suggested solution(s) shall be reported weekly by the Project Supervisors to Seller and Buyer.

2.3 No Transfer of Equipment

Buyer acknowledges and agrees that the Equipment constitutes and embodies the Confidential Information and Intellectual Property of Seller. Without the prior written

中华全国律师协会 2 路伟国际律师事务所 ACLA Lovells


consent of Seller, Buyer may not directly or indirectly transfer the Equipment to any third party for consideration or without consideration.

3. CONTRACT PRICE

3.1 Price

The Contract Price is set out in Schedule B (Special Terms).

3.2 Consideration for Price

This Contract Price covers:

(a) the Equipment (including Hardware and Software License) and Services,

(b) if Seller is the Party Responsible for Shipment, the cost of shipment of the Hardware and Documentation to the Place of Delivery.

3.3 Costs and Expenses

The Contract Price does not cover costs and expenses that are for Buyer’s account under this Contract, or any taxes (including but not limited to customs duty and value added tax) payable by Buyer in respect of this Contract.

4. PAYMENT

Buyer shall pay Seller the Contract Price on the following terms:

4.1 Advance Payment

The Advance Payment shall be paid by Buyer to Seller by wire transfer to Seller’s Designated Bank Account within ten (10) days after Buyer has received the following documents provided by Seller:

(a) Pro forma invoice covering one hundred percent (100%) of the Contract Price in six copies;

(b) Commercial invoice covering the Advance Payment in six copies; and

(c) Sight draft covering the Advance Payment in two copies.

4.2 Delivery Payment

The Delivery Payment shall be paid by Buyer to Seller under an irrevocable letter of credit (“Letter of Credit”).

Buyer shall fifteen (15) days prior to the scheduled Delivery Date for first Shipment, open the Letter of Credit in favor of Seller for the Delivery Payment with a bank and in form and content acceptable to both parties. The Letter of Credit shall be available against Seller's draft(s) at sight drawn on the opening bank for the Relevant Percentage of the invoice price of each Shipment accompanied by the shipping documents as follows:




(a) One original and two copies of [Airway Bill] [or other document of title] to be marked “Freight [Collect] [Prepaid]”, indicating shipping mark and consigned to Buyer.

(b) Commercial Invoice covering the Relevant Percentage in three (3) originals and three (3) copies, indicating the Contract number, L/C number and shipping mark;

(c) Packing list in three (3) originals and three (3) copies issued by Seller;

(d) One (1) original and one (1) copy of a Certificate of Quality issued by Seller;

(e) One (1) copy of fax/email to Buyer advising particulars of delivery immediately after delivery to the carrier at the Port of Delivery has been made;

(f) One (1) original and one (1) copy of certificate of origin;

(g) Two (2) copies of export licenses issued by the relevant export authority or two (2) copies of the confirmation from Seller that no export license is required.

(h) If Seller is the Party Responsible for Shipment, one (1) copy of insurance certificate specifying the risk type as all risk covering one hundred and ten percent (110%) of the invoice amount for such Shipment.

The Letter of Credit shall be valid until the twenty-first (21st) day after the date of last scheduled Shipment.

4.3 Payment on Acceptance

The Acceptance Payment for the Equipment shall be paid by Buyer by T/T within fifteen (15) days after Buyer has received the following documents from Seller:

(a) Commercial invoice covering the Acceptance Payment in three (3) originals and three (3) copies;

(b) One (1) original and one (1) copy of the Acceptance Certificate in respect of the Project.

4.4 Shipment by Seller

Seller shall commence Shipment once Buyer has paid the Advance Payment and opened the Letter of Credit as prescribed in Articles 4.1 and 4.2.

4.5 Bank Charges

Each party shall be responsible for its own bank charges.

4.6 Title to Hardware

Full title to all Hardware shall transfer from Seller to Buyer upon Buyer’s payment in full of the Contract Price.




4.7 Late Payments

If Buyer fails to make any payment within the time stipulated in this Article 4, then Buyer shall be liable to pay to Seller interest on such unpaid amounts from the due date through the date such delayed payment is made in full. The applicable rate of interest shall be the LIBOR rate for six-month U.S. dollar loans plus 2%.

5. DELIVERY

5.1 Delivery Schedule

Seller shall deliver each Shipment to the applicable Place of Delivery on or before the applicable Delivery Date set forth in the Project Schedule. The number of Shipments shall not exceed the Maximum No. of Shipments set forth in Schedule B (Special Terms). If the Place of Delivery is different from the Installation Site, then Buyer shall be responsible for transportation and insurance of each shipment from the Place of Delivery to Installation Site.

5.2 Notification before Shipment

At least two (2) weeks before making each Shipment, Seller shall send Buyer written notice of all relevant shipping details, including description, quantity and approximate weight and size of the Equipment in each Shipment, and other information consistent with industry practice.

5.3 Equipment Delivery

All the Equipment shall be shipped in complete sets, except as otherwise agreed, i.e., any special tools for installation, materials and easily worn-out parts shall be dispatched along with the relevant Equipment.

5.4 Notification After Shipment

Seller shall notify Buyer by fax or email of all shipping details within two (2) working days after each Shipment has been dispatched. For each large item, if any, over two (2) metric tons, the gross weight, measurement (L x W x H), name and price of such item shall be separately indicated.

5.5 Customs Clearance Documents

Within a reasonable time after each Shipment has been dispatched, Seller shall mail the Customs Clearance Documents specified in Schedule B (Special Terms).

5.6 Insurance

The Party Responsible for Shipment shall be responsible for obtaining insurance during shipment for the Equipment and Documentation in accordance with industry practice at its sole cost. If damage to the Equipment occurs during shipment, Seller and Buyer shall work together to submit an insurance claim.




5.7 Seller's Late Delivery

If solely due to Seller’s fault, Seller fails to complete delivery of all Shipments to the Place of Delivery on or before the Delivery Date for the final Shipment set forth in the Project Schedule, then Seller shall be liable to pay to Buyer liquidated damages in respect of such delivery delay at the Late Delivery Penalty Rate until such delayed Equipment is delivered in accordance with the terms of this Contract or the end of the Maximum Late Delivery Period, whichever occurs earlier. The total liquidated damages for late delivery shall not exceed the Maximum Late Delivery Penalty. The payment of liquidated damages for late delivery of any Shipment shall not release Seller from its responsibility to complete delivery of such Shipment.

5.8 Buyer's Termination Right

If such delivery delay extends beyond the expiration of the Maximum Late Delivery Period, then Buyer shall have the right to terminate this Contract. If Buyer terminates this Contract in part or in whole, it shall return at Seller's expense all cancelled Equipment received from Seller, and Seller shall thereafter refund to Buyer, within fifteen (15) days of the date of return of all such Equipment, all amounts paid by Buyer to Seller for the terminated Equipment.

5.9 Buyer's Claims

All of Buyer’s claims in respect of late delivery of Equipment shall be handled solely and exclusively in accordance with the provisions of Articles 5.7 and 5.8 above.

6. PACKING AND SHIPPING MARKS

6.1 Equipment Packing

All of the Equipment to be delivered by Seller shall be packed in a manner suitable to protect it against repeated handlings and numerous loadings and unloadings. Protective measures consistent with the characteristics and requirements of the various items of Equipment shall be taken to prevent the Equipment from damage by moisture, rain, shock and corrosion.

6.2 Labelling of Accessories

Each of the accessories in a package or bundle shall be labelled by Seller to indicate contract number, package number, name of the Equipment to which it is an accessory, name of accessories and their position numbers on assembly drawings. Spare parts and tools shall be marked with the words “Parts” or “Tools” besides the above particulars.

6.3 Specific Markings

Seller shall mark the following on the four adjacent sides of each package of the goods with indelible paint in conspicuous printed English words:

(1) Contract Number

(2) Shipping Mark




(3) Consignee

(4) Place of Destination

(5) Name of Equipment

(6) Case Number

(7) Gross Weight (Kg)

(8) Measurement (L x W x H in cm)

(9) Sites Code Number（if applicable）

Should any goods weigh two (2) or more than two (2) metric tons, the center of gravity and hoisting position shall be marked in English and with the appropriate markings on two sides of each case so as to facilitate loading and handling. In addition, in accordance with the characteristics and different requirements of the goods for loading, unloading and transportation, the package shall be conspicuously marked with “Keep-dry”, “Handle with care”, “Right side up”, etc. in English with the appropriate markings.

7. INSPECTION AND CLAIM

7.1 Open Box Inspection

The open-box inspection of the Equipment included in each Shipment shall be performed at the location designated by Buyer. Buyer shall give Seller ten (10) working days prior written notice of the location and date of inspection and shall be responsible for making all arrangements. Buyer shall check the Equipment against the packing list supplied by Seller. Seller is entitled to have its representative present at the inspection at its own cost. If necessary, the local [China Commodity Inspection Bureau] will be invited to the open-box inspection with both parties sharing the inspection expense equally. If any shortage, damage or discrepancy in respect of the Equipment ("Damage") is found during the inspection, a detailed record shall be made and signed by representatives of both parties.




7.2 Damage Caused by Seller

If any Damage caused solely by Seller is found during the inspection, then Seller shall supplement or replace such damaged Equipment at its own expense.

7.3 Damage Not Caused by Seller

If any Damage is not due to Seller’s fault, Seller shall, within an agreed time period, supplement, repair or replace that Equipment at Buyer’s expense.

7.4 Related Costs and Expenses

The party responsible for the Damage shall also be responsible for all expenses related to shipping and insurance of supplemental, replaced or repaired Equipment.

7.5 Claims by Buyer

If Seller disagrees with Buyer’s claims under Article 7.2, Seller shall within two (2) weeks after the receipt of the claim notice give the reasons for its disagreement. Both parties shall use their best efforts to resolve the disagreement. Buyer's claim shall be considered accepted by Seller if Seller fails to make any disagreement known to Buyer within the said two (2)-week period.

8. INSTALLATION, COMMISSIONING AND ACCEPTANCE OF THE EQUIPMENT

8.1 Installation Sites

Installation Sites for the Equipment shall be identified in writing by the Buyer to Seller within two (2) weeks following the Effective Date. Should Buyer subsequently change any of the Installation Sites and Seller incurs additional costs as a result of such change, Buyer shall reimburse Seller for such additional costs.




8.2 Notification of Installation Requirements

Before Installation of any Equipment begins, Seller's technical personnel shall give Buyer detailed descriptions of the Installation requirements. Buyer shall be responsible for the preparation and provision of the relevant Installation Sites in accordance with such requirements prior to commencement of Installation.

8.3 Installation of Equipment

The Installing Party shall be responsible for Installation and Commissioning of the Equipment pursuant to the terms of this Contract. Each party shall give full assistance to the Installing Party during such Installation and Commissioning.

8.4 Commissioning Tests

Upon Commissioning of the relevant Equipment, the Installing Party shall give written notice thereof and submit the record of the relevant Commissioning tests to the Project Supervisors.

8.5 Acceptance Test

The Acceptance Test for the Equipment shall commence on the first working day after completion of the relevant Commissioning tests and be conducted in accordance with the Acceptance Test Plan. The Acceptance Test shall be carried out by Buyer's designated technical personnel. Seller’s technical personnel shall give assistance in connection with each Acceptance Test. The result of each Acceptance Test shall be recorded and such written record shall be confirmed and signed by the Project Supervisors within seven (7) days after completion of the relevant Acceptance Test.

8.6 Performance of Tests

[The Installation, Commissioning and Acceptance Tests for the Equipment will be performed separately for each Shipment in accordance with the relevant provisions of Annex [●] hereto and in accordance with the times stipulated in the Project Schedule.]

8.7 Acceptance Thresholds

If the Acceptance Tests demonstrate that the Equipment meets the Specifications except for minor non-service affecting deficiencies, then such Equipment shall be deemed to have achieved Acceptance and be ready to be placed into commercial service. Whether a deficiency is a minor non-service affecting deficiency shall be determined [by the Project Supervisors jointly]. When Buyer places any Equipment into commercial service or uses such Equipment for any purpose other than testing, such Equipment shall conclusively be deemed to have achieved Acceptance. If Buyer fails to provide Installation Sites which meet the installation requirements specified by the relevant Documentation or Seller in accordance with the Project Schedule, or if Buyer is the Party Responsible for Installation and fails to complete such Installation in accordance with the Project Schedule, thereby causing delay in the Installation and Commissioning of the relevant Equipment, then the affected Equipment shall be deemed to be granted Acceptance by Buyer as of the scheduled Acceptance date set out in the Project




Schedule. Once the Equipment has achieved or is deemed to be granted Acceptance, Seller shall issue to Buyer a notice stating that Acceptance has occurred on such date, and the Project Supervisors shall sign the Acceptance Certificate within seven (7) days after such Acceptance.

9. WARRANTY

9.1 Equipment Warranty

Seller warrants that upon Delivery the Equipment to be supplied by Seller shall be completely new and shall comply in all material respects with the Specifications.

9.2 Hardware Warranty

Seller warrants that during the Warranty Period the Hardware shall be free from Hardware Defects caused by Seller's fault. If due to the fault of Seller any Hardware Defect occurs during the Warranty Period, Seller shall be responsible to replace or repair such defective Hardware at Seller’s own cost. Replacement Hardware may be new or reconditioned to perform as new. Seller shall bear the risk of loss and damage during shipment and all transportation costs for replacement Hardware under this Article. For the purpose of importation of repaired or replacement Equipment during the Warranty Period, Buyer undertakes to provide to Seller's service center all relevant documentation required for importation (import permit, tax certificate, etc.) and any documentation in its possession required to establish the commencement date of the Warranty Period, failing which Buyer shall bear any and all applicable duties or taxes.

9.3 Software Warranty

Seller warrants that during the Warranty Period the Software shall be free of Software Defects caused by Seller's fault. If due to the fault of Seller any Software Defect occurs during the Warranty Period, Seller shall be responsible to correct such Software Defect at Seller’s own cost.

9.4 Defects Due to Buyer

If during the Warranty Period any Hardware Defect or Software Defect occurs due to the failure of Buyer to comply with the terms of the Contract or the relevant Documentation or due to an event of force majeure or any other reason not due to Seller’s fault, then upon Buyer’s request, Seller shall repair or replace such Hardware or correct such Software Defect at Buyer's expense. Seller shall provide such services at its standard rate.

9.5 Exceptions to Hardware Warranty

The Hardware warranty shall not cover Equipment components such as fuses and bulbs that are normally consumed in operation, or have a normal life inherently shorter than the Warranty Period.

9.6 OEM Equipment

Seller's warranty does not cover OEM Equipment. Seller assigns to Buyer all of its rights under warranties from its third-party vendors in respect of such OEM Equipment.




9.7 Buyer's Warranty Claims

Buyer must notify Seller of any warranty claim within thirty (30) days of the event giving rise to the claim. Seller shall not be obliged to provide any Warranty service in respect of claims made more than thirty (30) days after the event giving rise to the claim, or made after the relevant Warranty Period expires.

9.8 Exclusion of Other Warranties

All of Buyer’s claims in respect of Hardware Defects or Software Defects shall be handled solely in accordance with the provisions of this Article 9. All other warranties are hereby expressly excluded.

9.9 Seller's Limits of Liability

Seller is not responsible for warranties given by Buyer to Buyer’s customers.

9.10 Provision of Spare Parts

For a period of five (5) years after the expiry of the Warranty Period, Seller shall provide to Buyer at its request, at a favorable price taking prevailing market prices for reference, spare parts (as described in Annex 1) which are compatible with and are required for normal operation of the Equipment. If Seller, its parent or any of its Affiliates intends to discontinue production of any spare parts required for the Equipment, Seller shall give written notice to Buyer six (6) months prior to such discontinuance and Buyer shall be entitled to place orders within eight (8) weeks of receipt of such notice for any such spare parts required.

10. SOFTWARE LICENSE

10.1 Scope of Software License

Seller hereby grants Buyer a personal, non-exclusive, non-transferable right to use the Software only in connection with designated Hardware on the terms set out in this Article 10 (such right being the “Software License”). Title to the Software shall at all times remain vested in Seller or its relevant third party supplier. Buyer obtains no other rights in or to the Software except for the Software License set forth in this Article.

10.2 Buyer's License Obligations

Buyer shall:

(a) maintain the confidentiality of the Software using the same degree of care that Buyer uses to protect its own most confidential and valuable information, but no less than reasonable care;

(b) keep a current record of the location of each copy of Software;




(c) require each of its authorized employees, agents, and/or representatives to whom Software is disclosed, to maintain the confidential nature of such Software;

(d) if Buyer chooses to permanently cease using the Software, it will use the same degree of care that Buyer uses to protect its own most confidential and valuable information to erase or otherwise destroy all copies of the Software and will notify Seller after such destruction; and

(e) be entitled to make copies of any documentation included in the Software as reasonably required for its normal business purposes.

10.3 Buyer's License Restrictions

Buyer shall not:

(a) use the Software (i) for any purpose other than Buyer’s own internal business purposes and (ii) other than as expressly provided by the terms of this Software License;

(b) allow anyone other than Buyer’s employees, agents and/or representatives with a “need to know” to have access to the Software;

(c) make any copies of the Software except such limited number of object code copies as may be reasonably necessary for execution or archival purposes only;

(d) make any changes to the Software, other than those arising from Buyer’s normal use of the Software as explained in the associated documentation; or

(e) reverse engineer or in any other manner decode Software, in order to derive the source code form or for any other reason.




10.4 Termination of License

This Software License shall terminate automatically when Buyer or its permitted assignee discontinues use of the Equipment.

11. INTELLECTUAL PROPERTY INDEMNITY

11.1 Seller's Indemnification

Seller agrees to indemnify Buyer with respect to any suit, claim, or proceeding brought against Buyer alleging that Buyer's use of the Equipment constitutes an infringement of any patent or copyright registered in China (“Infringement Claim”) on the terms set out in this Article 11.

11.2 Scope of Indemnification

Seller agrees to defend Buyer against any such Infringement Claims and to pay all litigation costs, reasonable attorney's fees, settlement payments and any damages awarded in any final judgment arising from such Infringement Claim.

11.3 Conditions of Indemnification

Seller’s indemnity obligations under this Article 11 are subject to the following conditions:

(a) Buyer shall promptly advise Seller of any Infringement Claim;

(b) Buyer shall provide full cooperation to Seller in connection with the Infringement Claim; and

(c) Buyer shall permit Seller to have sole control of the defense or settlement of any Infringement Claim.

11.4 Limitations of Indemnification

Seller's indemnity obligations under this Article 11 shall not apply to Infringement Claims if Seller's Equipment is:

(a) manufactured, designed or supplied by Seller in accordance with any design or special instructions provided by Buyer;

(b) used by Buyer in a manner or for a purpose not contemplated by Seller and/or by this Contract;

(c) modified by Buyer where such modification is not authorised by Seller;

(d) used by Buyer in combination with other products not provided by Seller where the infringement arises from such combination.




11.5 Injunction Against Buyer

If an injunction is obtained against Buyer's use of any portion of the Equipment arising from an Infringement Claim, in whole or in part, Seller shall, at its option, either:

(a) procure for Buyer the right to continue using that Equipment; or

(b) replace or modify the same so that Buyer's use is not subject to such injunction.

11.6 Return of Equipment

If Seller cannot perform under Article 11.5, Buyer shall have the right to return the affected portion of such Equipment to Seller upon written notice to Seller. In the event of such return, Seller shall refund to Buyer the net book value of such returned Equipment.

11.7 Scope of Buyer's Rights

All of Buyer’s claims in respect of Infringement Claims shall be handled solely in accordance with the provisions of this Article 11.

12. TAXES

12.1 Buyer's Liability

All taxes and import or customs duties and other taxes and duties, including without limitation VAT, in connection with the Contract levied on Buyer by the relevant authority in China in accordance with the Chinese tax laws then in effect shall be paid by Buyer, including as contemplated in Article 3.3.

12.2 Seller's Liability

All the taxes, excluding VAT, in connection with, and in the performance of, the Contract to be levied on Seller by the relevant tax authority in China, in accordance with the tax laws of China then in effect governing foreign enterprises and their employees, shall be paid by Seller.

12.3 Taxes Outside China

All taxes in connection with the execution of the Contract to be levied outside China shall be paid by Seller.

13. REPRESENTATIONS AND WARRANTIES

13.1 Standard Representations and Warranties

Each Party represents and warrants to the other Party that on the date hereof:

(a) it is an independent legal person duly organized, validly existing in good standing under the laws of the place of its establishment or incorporation;

(b) it has full authority to enter into this Contract and to perform its obligations hereunder;




(c) it has authorized its representative to sign this Contract and from and after the Effective Date the provisions of this Contract shall be legally binding upon it;

(d) its execution of this Contract and its performance of its obligations hereunder: (i) will not violate any provision of its business license, articles of incorporation, articles of association or similar organizational documents; (ii) will not violate any Applicable Laws or any governmental authorization or approval; and (iii) will not violate or result in a default under any contract to which it is a party or to which it is subject;

(e) no lawsuit, arbitration or other legal or governmental proceeding is pending or, to its knowledge, threatened against it that would affect its ability to perform its obligations under this Contract; and

(f) it has disclosed to the other Party all documents issued by any governmental department that may have a material adverse effect on its ability to fully perform its obligations under this Contract, and the documents previously provided by it to the other Party do not contain any misstatements or omissions of material facts.

13.2 Consequences of Inaccuracy in Representations and Warranties

If any of the above representations and warranties of a Party are not accurate in all material respects on the date hereof, then such Party shall be in material breach of this Contract.

14. TERM

This Contract shall automatically terminate and expire upon the full performance or discharge of all the obligations of the Parties hereunder.

15. TERMINATION

15.1 Termination

(a) This Contract may be terminated at any time prior to the Expiration Date by the mutual written agreement of the Parties.

(b) At any time prior to the Expiration Date, a Party (“Notifying Party”) may terminate this Contract through notice to the other Party in writing if:

(i) the other Party materially breaches this Contract, and such breach is not cured within the Cure Period granted pursuant to Article 17.1(a); or

(ii) the other Party becomes bankrupt, or is the subject of proceedings for liquidation or dissolution, or ceases to carry on business or becomes unable to pay its debts as they come due; or

(iii) the conditions or consequences of Force Majeure which have a material adverse effect on the affected Party's ability to perform continue for a period in excess of six (6) months and the Parties have been unable to find an equitable solution pursuant to Article 18.2(c) hereof; or




(iv) [insert other conditions triggering termination as appropriate]

15.2 Continuing Obligations

The provisions of Article 16 (Confidentiality), Article 17 (Breach of Contract) (but only with respect to claims arising prior to the termination hereof or with respect to other continuing obligations) and Article 19 (Settlement of Disputes) shall survive the termination of this Contract.

16. CONFIDENTIALITY

16.1 Confidentiality Obligations

From time to time prior to and during the Term either Party (“disclosing Party”) has disclosed or may disclose Confidential Information to the other Party (“receiving Party”). The receiving Party shall, during the Term and for [●] years thereafter:

(a) maintain the confidentiality of Confidential Information;

(b) not use Confidential Information for any purposes other than those specifically set out in this Contract; and

(c) not disclose any such Confidential Information to any person or entity, except to its employees or employees of its Affiliates, its agents, attorneys, accountants and other advisors who need to know such information to perform their responsibilities and who have signed written confidentiality agreements containing terms at least as stringent as the terms provided in this Article 16 (collectively "Permitted Disclosure Parties").

16.2 Confidentiality Exceptions

The provisions of Article 16.1 above shall not apply to information that:

(a) can be shown to be known by the receiving Party by written records made prior to disclosure by the disclosing Party;

(b) is or becomes public knowledge otherwise than through the receiving Party's breach of this Contract; or

(c) was obtained by the receiving Party from a third party having no obligation of confidentiality with respect to such information.

16.3 Confidentiality Rules

Each Party shall formulate rules and regulations to inform its directors, senior staff, and other employees, and those of their Affiliates of the confidentiality obligation set forth in this Article 16.

16.4 Return of Material

On the Expiration Date [or upon the disclosing Party's request at any time], the receiving Party shall (i) return to the other Party, or at the disclosing Party's direction destroy, all




materials (including any copies thereof) embodying the other Party's Confidential Information and (ii) certify in writing to the other Party, within ten (10) days following the other Party's request, that all of such materials have been returned or destroyed. Notwithstanding the foregoing provisions of this Article 16.4, following the Expiration Date, Buyer may retain copies of technical information relating to the use and maintenance of the Equipment, provided that Buyer shall keep such information confidential in accordance with the provisions of Article 16.1 above.

17. BREACH OF CONTRACT

17.1 Remedies for Breach of Contract

Except as otherwise provided herein, if a Party ("breaching Party”) fails to perform any of its material obligations under this Contact or otherwise is in material breach of this Contract, then the other Party (“aggrieved Party”) may:

(a) give written notice to the breaching Party describing the nature and scope of the breach and demand that the breaching Party cure the breach at its cost within a reasonable time specified in the notice ("Cure Period") (provided that if any representation and warranty of a Party under Article 13.1 is not true and correct in all material respects when made, or if there is a breach of Article 16, then there shall be no Cure Period); and

(b) if the breaching Party fails to cure the breach within the Cure Period (or, if there is none, at any time following such breach), then in addition to its other rights under Article 15.1(b)(i) or Applicable Laws, the aggrieved Party may claim direct and foreseeable damages arising from the breach.

17.2 Limitation on Liability

Notwithstanding any other provision of this Contract, [except for breach of confidentiality obligations or infringement of the other Party's IPR,] neither Party shall be liable to the other Party for damages for loss of revenues or profits, loss of goodwill or any indirect or consequential damages in connection with the performance or non-performance of this Contract. [Except for breach of confidentiality obligations or infringement of the other Party's IPR] The aggregate liability of a Party for all claims for any loss, damage or indemnity whatsoever resulting from such Party’s performance or non-performance of this Contract shall in no case exceed [●] United States Dollars (US$[●]) or the RMB equivalent thereof.

18. FORCE MAJEURE

18.1 Definition of Force Majeure

"Force Majeure" shall mean all events which are beyond the control of the Parties to this Contract, and which are unforeseen, unavoidable or insurmountable, and which prevent total or partial performance by either of the Parties. Such events shall include earthquakes, typhoons, flood, fire, war, strikes, riots, acts of governments, changes in law or the application thereof or any other instances which cannot be foreseen, prevented or controlled, including instances which are accepted as Force Majeure in general




international commercial practice.

18.2 Consequences of Force Majeure

(a) If an event of Force Majeure occurs, a Party's contractual obligations affected by such an event under this Contract shall be suspended during the period of delay caused by the Force Majeure and shall be automatically extended, without penalty or liability, for a period equal to such suspension.

(b) The Party claiming Force Majeure shall promptly inform the other Parties in writing and shall furnish within [fifteen (15)] days thereafter sufficient proof of the occurrence and duration of such Force Majeure. The Party claiming Force Majeure shall also use all reasonable endeavours to terminate the Force Majeure.

(c) In the event of Force Majeure, the Parties shall immediately consult with each other in order to find an equitable solution and shall use all reasonable endeavours to minimize the consequences of such Force Majeure.

19. SETTLEMENT OF DISPUTES

19.1 Friendly Consultations

In the event of any dispute, controversy or claim arising out of or relating to this Contract, or the breach, termination or invalidity hereof ("dispute"), the Parties shall attempt in the first instance to resolve such dispute through friendly consultations.

19.2 Arbitration

[Choose one of the following two alternatives:

Either

Option (1): CIETAC Rules

(a) In the event such dispute is not resolved through consultations within [sixty (60)] days after the date such consultations were first requested in writing by a Party, then any Party may submit the dispute for arbitration in [Beijing] before the China International Economic and Trade Arbitration Commission ("CIETAC") in accordance with CIETAC Arbitration Rules then in force, and as amended by this Article 19.2 ("Arbitration Rules").

(b) The arbitration tribunal shall consist of three arbitrators, one appointed by each Party and, if either of the Parties fails to appoint an arbitrator within the time specified in the Arbitration Rules, the Chairman of CIETAC shall make such appointment, taking into consideration the criteria set out in this Article 19.2.

(c) A third arbitrator (the "Presiding Arbitrator") shall be appointed by agreement between the Parties in accordance with the provisions of Articles 19.2 (d) and (e) below, and, if the Parties fail to jointly appoint the Presiding Arbitrator within the time specified in the Arbitration Rules, the Chairman of CIETAC shall make such appointment, taking into consideration the criteria set out in this Article 19.2.




(d) No arbitrator may be a national of (i) the PRC or (ii) [home country of Party B].

(e) The Presiding Arbitrator (and any successor or replacement appointee in place of any Presiding Arbitrator initially appointed) shall, unless otherwise agreed in writing by the Parties, be a national of one of the following countries:

(i) Australia; (ii) Belgium;

(iii) Canada; (iv) New Zealand;

(v) Sweden; (vi) Switzerland;

(vii) The Netherlands; or (viii) The United Kingdom.

(f) The arbitration proceedings shall be conducted in the English language.

(g) All costs of arbitration (including but not limited to arbitration fees, costs of arbitrators and legal fees and disbursements) shall be borne by the losing party, unless otherwise determined by the arbitration tribunal.

(h) The provisions of Chapter III of the Arbitration Rules (concerning summary procedure) are excluded, regardless of whether the total amount of the claim amounts to RMB 500,000.

[NB: This clause could be considered to be a variation to the CIETAC Rules. Article 7 of the CIETAC Rules states that variations to the Rules are subject to consent by the Arbitration Commission].

Or

Option (2): SIAC Rules

(a) In the event the dispute is not resolved through consultations within [sixty (60)] days after the date such consultations were first requested in writing by a Party, then any Party may submit the dispute to Singapore International Arbitration Centre ("SIAC") for arbitration in Singapore in accordance with the Arbitration Rules of the SIAC then in force, and as amended by this Article 19.2 ("Arbitration Rules").

(b) The tribunal shall consist of [one] [three] arbitrator(s) to be appointed by the Chairman of the SIAC.

(c) The language of the arbitration shall be English.]




19.3 Procedural Compliance

The Parties undertake:

(a) to comply strictly with the time limits specified in the Arbitration Rules for the taking of any step or the performance of any act in or in connection with any arbitration; and

(b) to comply with and to carry out, in full and without delay, any procedural orders (including, without limitation to, any interim measures of protection ordered) or any award (interim or final) made by the arbitral tribunal.

19.4 Enforcement of Award

Each of the Parties irrevocably:

(a) agrees that any arbitral award shall be final and binding;

(b) undertakes that it will execute and perform the arbitral award fully and without delay. In the event of judicial acceptance and an order of enforcement, each party expressly waives all rights to object thereto, including any defense of sovereign immunity and any other defense based on the fact or allegation that it is an agency or instrumentality of a sovereign state; and

(c) waives any rights which it may have to contest the validity of the arbitration agreement set forth in this Article or the jurisdiction of the relevant arbitration institution to hear and to determine any arbitration begun pursuant to this Article 19.

When any dispute occurs and is the subject of friendly consultations or arbitration, the Parties shall continue to exercise their remaining respective rights and fulfil their remaining respective obligations under this Contract, except in respect of those matters under dispute.




19.5 Injunctive Relief

Notwithstanding the foregoing, the Parties agree that each Party has the right to seek temporary or permanent injunctive or other similar relief in any court or other authority of competent jurisdiction in respect of any claims of breach of confidentiality or IPR infringement or for an order of specific performance or other injunctive relief as permitted under Applicable Laws.

19.6 Governing Law

The validity, interpretation and implementation of this Contract shall be governed by the laws of the People's Republic of China.

20. MISCELLANEOUS PROVISIONS

20.1 Independent Contractor Relationship

The Parties are only establishing an independent contractor relationship with each other by entering into this Contract. Nothing in this Contract shall be construed or implied as:

(a) establishing between the Parties hereto any partnership or any other form of relationship entailing joint liability;

(b) constituting either of the Parties hereto as the agent of the other Party (except with the other Party's prior written consent); or

(c) authorizing either Party to incur any expenses or any other form of obligation on behalf of the other Party (except with the other Party's prior written consent).

20.2 Binding Effect

This Contract is made for the benefit of the Parties hereto and their respective lawful successors and assignees and is legally binding on them.

20.3 Amendment

This Contract shall not be changed verbally, but only by a written instrument signed by the Parties.




20.4 Mutual Agreement of the Parties

THE PARTIES DECLARE THAT THE PROVISIONS OF THIS CONTRACT REFLECT THE RESULTS OF THEIR COMMERCIAL NEGOTIATIONS CONDUCTED IN GOOD FAITH AND THAT NONE OF THE PROVISIONS HEREOF CONSTITUTES THE STANDARD TERMS OF EITHER PARTY. BUYER ACKNOWLEDGES THAT IT HAS REVIEWED AND UNDERSTANDS THE PROVISIONS OF THIS CONTRACT AND HAS RECEIVED SATISFACTORY EXPLANATIONS AS TO ANY ISSUE RAISED BY IT IN RESPECT THEREOF.

20.5 No Publicity

The existence of this Contract, as well as its contents, shall be deemed to fall within the scope of Confidential Information and subject to Article 16, and shall not be disclosed in whole or in part to any person or entity, except (i) to Permitted Disclosure Parties, (ii) to authorized securities regulators or exchanges in accordance with Applicable Laws or the relevant rules of the securities exchange to which the Party in question is subject, (iii) to officials in relevant government departments pursuant to the requirements of Applicable Laws (iv) in order to fulfil any conditions precedent to the effectiveness of this Contract, (v) for the purpose of the performance by a Party of its obligations or exercise of its rights hereunder or relating hereto[, or (vi) to financial institutions for the purpose of arranging debt financing for either Party].

20.6 No Solicitation

Neither Party shall, during the Term or within one (1) year after the Expiration Date, directly solicit for employment the other Party's personnel who are engaged in the performance of this Contract without the prior written consent of the other Party.

20.7 Notices

(a) Any notice or written communication provided for in this Contract by either Party to the other, including but not limited to any and all offers, writings, or notices to be given hereunder, shall be made in [language] and delivered:

(i) by hand;

(ii) by courier service delivered letter; or

(iii) by facsimile.

(b) Notices shall be deemed to have been delivered at the following times:

(i) if by hand, on reaching the designated address and subject to return receipt or other proof of delivery;

(ii) if by courier, the [fifth] Business Day after the date of dispatch; and

(iii) if by fax, upon the next Business Day following the date marked on the confirmation of transmission report by the sender's fax machine, indicating completed uninterrupted transmission to the relevant facsimile number.




(c) During the Term, each Party may change its particulars for receipt of notices at any time by notice given to the other Party in accordance with this Article 20.7.

Party A:

[mailing address]

People's Republic of China

Facsimile No:

Attention:

Party B:

[mailing address]

Facsimile No:

Attention:




20.8 Waiver

Either Party's failure to exercise or delay in exercising any right, power or privilege under this Contract shall not operate as a waiver thereof, and any single or partial exercise of any right, power or privilege shall not preclude the exercise of any other right, power or privilege.

20.9 Assignability

This Contract may not be assigned in whole or in part by any Party without the prior written consent of the other Party hereto, provided that Seller may solely upon written notice to Buyer assign Seller's rights to receive payments and other benefits of this Contract to one or more financial institutions for purposes of arranging debt financing or similar financial arrangements, but in such event Seller shall remain fully liable for the performance of its obligations under this Contract.

20.10 Severability

The invalidity of any provision of this Contract shall not affect the validity of any other provision of this Contract.

20.11 Entire Agreement

This Contract and the Schedules and Annexes hereto constitute the entire agreement between the Parties hereto with respect to the subject matter of this Contract and supersede all prior discussions, negotiations and agreements between them, including, the [Memorandum of Understanding between [●] and [●] dated [●]] the [Letter of Intent between [●] and [●] dated [●]] [refer to all MOUs, LOIs previously signed]

20.12 Further Endeavours

A Party shall, at any time, upon the request of the other Party, execute or procure the execution of such documents, agreements, contracts or deeds and do or procure the doing of such acts and things as may be [reasonably] necessary to give full effect to the provisions of this Contract.

20.13 Costs

Save as otherwise provided in this Contract, each Party shall bear its own legal and other professional costs in relation to the preparation, negotiation and entry into of this Contract.

20.14 Schedules and Annexes

The Schedules and Annexes hereto are made an integral part of this Contract and are equally binding with the main body of the Contract. In the event of any conflict between the terms and provisions of the main body of the Contract and the Schedules or Annexes, the terms and provisions of the main body of this Contract shall prevail.

20.15 Language

This Contract is executed in the Chinese language in [●] ([●]) originals and in the English




language in [●] ([●]) originals. Both language versions shall be equally authentic.

IN WITNESS WHEREOF, each of the Parties hereto has caused this Contract to be executed by its duly authorized representative on the date first set forth above.

[Buyer name] [Seller name]

By: ____________________ By: ____________________

Name: [Buyer rep name] Name: [Seller rep name]

Title: [Buyer rep position] Title: [Seller rep position]

Nationality: [Chinese] Nationality: [Seller rep nationality]




SCHEDULE A – DEFINITIONS AND INTERPRETATION

Part A - Definitions

Unless the terms or context of this Contract otherwise provide, the following terms shall have the meanings set out below:

"Acceptance" in respect of any Equipment comprising any Shipment, means the acceptance by Buyer of such Equipment, as referred to and in accordance with Article 8.7.

“Acceptance Certificate” refers to the certificate in the form attached as Annex 6 to this Contract.

"Acceptance Test" refers to the series of tests of the Equipment set forth in the Acceptance Test Plan and performed before Installation by Buyer's fully qualified technical personnel.

"Acceptance Test Plan” refers to the Acceptance Test Plan attached hereto as Annex 5 as such plan may be supplemented or revised in writing signed by the Project Supervisors. The Acceptance Test Plan shall identify the individual Sub-Networks comprising the Project, if any.

"Affiliate" means any entity which, directly or indirectly, is controlled by, under common control with, or in control of, a Party; the term "control" being used in the sense of power to elect or appoint a majority of directors or to direct the management of a company.

"aggrieved Party" shall have the meaning set out in Article 17.1.

"Applicable Laws" means the laws, regulations, rules, notices, and other legislative, executive or judicial decisions or pronouncements binding on either Party or in relation to the subject matter of this Contract.

"breaching Party" shall have the meaning set out in Article 17.1.

"Business Day" means:

(a) in respect of any action to be taken in the PRC, any day on which the companies in the PRC are generally open for business in the PRC, including a Saturday or Sunday which the PRC government temporarily declares to be a working day ("Working Rest Day"), but excluding a statutory holiday, or a Saturday or Sunday other than a Working Rest Day; and

(b) in respect of any action to be taken in [Seller Home Country], any day on which the companies in [Seller Home Country] are generally open for business in [Seller Home Country].

"Buyer" shall have the meaning set out in the preamble.

["China" and "PRC" mean the People’s Republic of China, [but for purposes of this Contract do not include the special administrative regions of Hong Kong and Macau and the region of Taiwan.]]




"Commissioning" shall mean the on-site testing of Equipment in accordance with the standard test procedures of Seller as described in the Documentation.

"Confidential Information" means any business, marketing, technical, scientific or other information disclosed by any Party (including in the case of Seller, its Affiliates) which, at the time of disclosure, is designated as confidential (or like designation), is disclosed in circumstances of confidence, or would be understood by the Parties, exercising reasonable business judgement, to be confidential.

"Contract" shall have the meaning set out in the preamble.

"Cure Period" shall have the meaning set out in Article 17.1(a).

“Delivery” shall mean, in respect of a Shipment, arrival of such Shipment at the applicable Place of Delivery.

"disclosing Party" shall have the meaning set out in Article 16.1.

"dispute" shall have the meaning set out in Article 19.1.

"Documentation" shall mean the Equipment documentation delivered to Buyer containing standard descriptive information as well as engineering, installation, operation and maintenance instructions for the Equipment. All Documentation delivered to Buyer shall be subject to any copyright and confidentiality restrictions.

"Effective Date" means the date of this Contract first shown above or in Schedule B (Special Terms).

"Equipment" shall mean the Hardware, OEM Equipment and Software License.

"Expiration Date" means the day on which the Term expires in accordance with the provisions of Article 14.

"Force Majeure" shall have the meaning set out in Article 18.1.

"Hardware" shall mean the hardware components listed in Annex 1 hereto.

“Hardware Defect” shall mean a defect in material and workmanship or failure of the Hardware to comply in all material respects with the Specifications.

"Installation" shall mean the installation of the Equipment, including connection and placing of the parts in position at the Installation Site(s), according to installation drawings provided by Seller for the Equipment.

"Installation Site(s)" shall mean the location(s) specified by the Buyer for Installation of the Equipment.

"Intellectual Property Rights" or "IPR" means any and all rights in any invention, discovery, improvement, utility, model, copyrightable work, industrial design or mask work, algorithm, data structure, trade secrets or know-how, Confidential Information, or any idea having commercial value. IPR shall include any trademark, trade dress, trade name, domain name, or other marks




that serve to identify and distinguish goods or services as coming from, or falling under the control of, a single source. IPR shall include all rights of whatsoever nature in computer software and data, all intangible rights or privileges of a nature similar to any of the foregoing in every case in any part of the world and whether or not registered, and all rights in any applications and granted registrations for any of the foregoing rights.

"Notifying Party" shall have the meaning set out in Article 15.1(b).

“OEM Equipment” shall mean miscellaneous items of non-Seller hardware and software made available for sale to Buyer by Seller under this Contract, not integrated into the Hardware or Software during the manufacturing process.

"Party" shall have the meaning set out in the preamble.

"Parties" shall have the meaning set out in the preamble.

"Permitted Disclosure Parties" shall have the meaning set out in Article 16.1(c).

"receiving Party" shall have the meaning set out in Article 16.1.

"Renminbi" or "RMB" means the lawful currency of China.

"Seller" shall have the meaning set out in the preamble.

"Services" shall mean the Installation support, Commissioning support and other services to be performed by Seller under this Contract. Unless training is excluded as part of Services in Schedule B (Special Terms), training shall comprise part of the Services.

“Shipment” shall mean the set of Equipment comprising an individual shipment to be delivered to Buyer by Seller pursuant to this Contract.

"Software" shall mean the proprietary and/or third party computer programs (consisting of firmware and logic instructions in machine-readable code residing in, or intended to be loaded in Equipment memories which provide basic logic, operating instructions and user-related application instructions, but excluding customer data) as well as associated documentation (if any) used to describe, maintain and use the programs which are integral to any Hardware furnished to Buyer.

“Software Defect” shall mean failure of the Software to function in accordance with the relevant Specifications in a manner that materially affects Buyer's use of the Software.

"Specifications" shall mean the specifications and performance standards of the Equipment as set forth in Annex 2.

“Term” means the term of the Contract from the Effective Date through the Expiration Date.

"United States Dollars" or "US$" means the lawful currency of the United States of America.

[Insert other definitions as appropriate]

Part B - Interpretation




1. A reference to any Applicable Laws or to any legislation or to any provision of Applicable Laws or of any legislation includes a reference to such Applicable Laws or legislation as amended or modified from time to time.

2. Other terms used in this Contract which are not otherwise defined in Part A of this Schedule A, shall have the meanings set out in Schedule B (Special Terms).

3. A reference to a "person" includes any individual or entity (including any company, business or other enterprise or entity, joint venture, institution, state or government department), as the context permits.

4. References to Schedules, Annexes, Articles and Sections are references to schedules, annexes, articles and sections of this Contract. References in this Contract to contracts, agreements or other documents, shall mean the same as amended from time to time.

5. A reference to any PRC government authority or department includes such authority or department at State, provincial, municipal and other levels.

6. References in this Contract to government ministries, bureaux, departments, commissions, agencies, etc. shall include all successor entities thereto.

7. In this Contract, the masculine form includes the feminine form and the singular form includes the plural form, and vice versa.

8. Headings are for convenience of reference only and shall not affect the construction or interpretation of this Contract.

9. A reference to any Party to this Contract or to any other party to any contract, agreement or document includes a reference to that party's successors and permitted assigns.

10. The words "includes" or "including" mean "includes without limitation" and "including without limitation" respectively.




SCHEDULE B - SPECIAL TERMS

Contract Location: [city, province, country]

Contract Date: [●]

Project: [●]

Buyer: [NAME OF BUYER]，a [Buyer entity form] established

and existing under the laws of China, with its [registered

address] [principal place of business] at [address]

Seller: [NAME OF SELLER], a [Seller entity form] established and

existing under the laws of [Seller jurisdiction of

incorporation], with its [registered address] [principal place

of business] at [address]

Equipment: [type of equipment] as described in detail in Annex 1 to

this Contract

Services: Installation support, Commissioning support and other services as described in detail in Annex 1 to this Contract.

Contract Price: US$[●] ([Insert Relevant InCoterms], InCoterms 2000), to be paid to Seller pursuant to this Contract

Advance Payment: x% of Contract Price

Delivery Payment: y% of Contract Price

Acceptance Payment: z% of Contract Price

Relevant Percentage: with respect to Article 4.2 (Delivery Payment), y% of invoice price of relevant Shipment, and with respect to Article 4.3 (Acceptance Payment), z% of value of relevant Shipment

Seller’s Designated Bank

Account: [●]

Place(s) of Delivery: Seller's factory in [city, state/province, country]

Party Responsible for Shipment: Buyer




Maximum No. of Shipments: [●]

Customs Clearance Documents: [●]

Late Delivery Penalty Rate: [x% (x percent)] per [month] [week] [day] of the value of

the delayed Equipment

Maximum Late Delivery: [x] [days] [weeks] [months] following the Delivery Date for

the final shipment set forth in the Project Schedule

Maximum Late Delivery Penalty: [x% (x percent)] of the Contract Price

Installing Party: Buyer

Project Schedule: see Annex 3 to this Contract

Warranty Period: 12 months commencing from the date of Delivery of the final Shipment

Buyer’s Notice Address: [●]

Seller’s Notice Address: [●]




ANNEX 1 - EQUIPMENT, SERVICES & DOCUMENTATION LIST AND PRICES

[●]




ANNEX 2 - SPECIFICATIONS

[●]




ANNEX 3 - PROJECT SCHEDULE

[●]




ANNEX 4 - ENGINEERING NOTES AND INSTALLATION RESPONSIBILITIES

[●]




ANNEX 5 - EQUIPMENT ACCEPTANCE TEST PLAN

[●]




ANNEX 6 - SPECIMEN OF ACCEPTANCE CERTIFICATE

[●]




CAVEATS AND DRAFTING NOTES

1. Caveats

1.1 Independent Legal Advice

The user of this template is required to exercise independent legal judgment or take independent legal advice in respect of each provision of this template and make any and all revisions or supplements necessary or appropriate to ensure that such provisions (a) are applicable and appropriate to the subject transaction, and (b) comply with relevant requirements of applicable law as then in effect.

1.2 User Discretion

Items left blank in the template are to be completed by the user in accordance with the requirements of the subject transaction. Certain provisions and phrases have been placed in square brackets in order to draw the particular attention of the user thereto and such provisions or phrases in square brackets are to be used, completed, modified or deleted as the user determines appropriate.

2. Drafting Notes

2.1 General Drafting Notes

The user should note that this template has been drafted in contemplation of a sales transaction with the following characteristics (and thus may not be appropriate in this form without applicable substantive modifications for transactions with different characteristics):

(a) The goods are to be sold on an import basis from a foreign manufacturer-seller to a Chinese buyer-end user.

(b) No separate Chinese import-export company is a party to this transaction as it is assumed in this template that the manufacturer-seller has confirmed that the buyer/end user has adequate import-export trade authorization to enter into this transaction independently.

(c) The subject equipment includes software.

(d) The subject equipment requires installation.

(e) The governing law is Chinese law.

(f) This template is to be used for repeat transactions and thus employs a split format of general terms and special terms.

(g) This template is drafted in a manner favourable to the manufacturer/seller.

2.2 Specific Drafting Notes

Where the provisions of the sales contract template are self-explanatory, no supplemental comments are provided below. References to Article numbers are to the relevant Article numbers of the sales contract.




Article Specific Drafting Notes

1 The definitions which are set out in Schedule A can be moved to this Article 1 if the parties so agree. The same is true for the Special Terms set out in Schedule B; however, the structure of this template is intended to focus the Parties on the commercial terms in Schedule B without need to modify the general terms in the main body of the contract in an effort to minimize negotiations (at least in respect of repeat transactions). Since frame contracts in respect of multiple purchase orders are not yet common in China, particularly for cross-border contracts for the importation of goods, this structure can operate as the functional equivalent with many of the same virtues and benefits. Accordingly, for potential repeat transactions, it is advisable to keep the Special Terms in a separate Schedule as proposed. Comments on the individual defined terms, to the extent necessary, are set out in respect of Schedule A and B below.

2.2 It is desirable to establish a single point of contact to manage the transaction relationship, particularly in respect of installation and acceptance works; however, this is a matter for the Parties to negotiate and agree in the context of the particular transaction.

4.2 and 4.3 This template contemplates that separate Delivery Payments and Acceptance Payments will be made on a Shipment-by-Shipment basis in order to improve the Seller's cash position.

4.6 No reference is made in this clause to passage of risk of loss as the relevant IncoTerms designation in Special Terms (Schedule B) should be sufficient in this regard.

5.7 This template contemplates liquidated damages ("LDs") only for late delivery due to Seller's fault. Alternatively, the Parties may provide for LDs only for late cut-over or late Acceptance.

8.2 This template assumes that Buyer is responsible for acquisition and preparation of the Installation Sites. If this responsibility may change from project to project, this can be included in Special Terms (Schedule B).

8.7 These Acceptance terms may be the subject of intense negotiation. Again, the intention is that once the general terms are settled, they will not need to be revisited for repeat transactions and the Parties can focus only on the Special Terms in Schedule B.

9.1 Seller should take care to tie the warranty to the Specifications. Buyer should ensure that the Specifications set out all relevant performance benchmarks.

9.2 and 9.4 This template adopts the fault-based warranty format commonly used in China rather than the format of a general warranty subject to specific limitations as is common in many other jurisdictions.




9.4 The coverage of OEM Equipment is a commercial matter. If included within the Seller's warranty, then Seller should ensure adequate back-to-back warranty coverage is provided by the OEM supplier.

10 This template contemplates that the Software License is provided by Seller (and not an Affiliate of the Seller) and that the Seller can accept the application of PRC governing law to the software license terms. If either of these assumptions is not correct in the context of a particular transaction, the Seller may elect to break this out as a separate agreement to be signed contemporaneously. This Software License is also abbreviated in form and may need to be supplemented to meet the internal policy requirements of Seller.

19.2 Two alternative arbitration provisions are presented in this template for consideration, one for onshore CIETAC Rules arbitration, one for offshore SIAC Rules arbitration in Singapore. There are many other possibilities for international arbitration, such as ICC Singapore, Hong Kong HKIAC and so forth, depending on what is acceptable to the parties in question. CIETAC arbitration typically is not preferred by foreign investors for resolution of non-trade disputes, but is routinely proposed by Chinese parties as their preferred choice of arbitration venue. The suggested CIETAC arbitration provisions set out in the template are designed to ameliorate many of the more significant concerns most foreign parties have in relation to CIETAC arbitration in this context. You would still need to consider whether the enforcement of any CIETAC award could be refused on the grounds set out in Article 260 of the Civil Procedure Law.

Neutral third-country arbitration is permitted and is the preferred option in most major cross-border contracts. Such international arbitration awards if made in a New York Convention member state are in principle enforceable in China under the New York Convention (to which China is a party), subject to matters on which China expressed a reservation when joining the New York Convention and/or grounds on which enforcement can be denied under the New York Convention itself, notably where enforcement would go against public policy. In addition to third-country arbitration in Singapore, international arbitration in Hong Kong (enforceable in China under separate rules) and (historically) Stockholm have been common for Sino-foreign joint venture contracts, and apart from CIETAC Rules arbitration, most arbitration provisions usually contemplate Singapore, Stockholm and Hong Kong as the place of arbitration. The appropriate arbitration provisions for other arbitration venues should be determined in accordance with the applicable laws and rules. Where cost is a major factor or the contract value is relatively small, or where multiple parties are involved, consider appointing only one arbitrator and revising the clause accordingly (care needs to be taken as having one arbitrator as opposed to three raises its own issues). Note that in order to satisfy the Chinese legal requirements for an arbitration agreement under the PRC Arbitration Law, three elements must be present:

(a) an intention to arbitrate (problems may arise in practice where you have split clauses which allow either court based proceedings or arbitration proceedings);




(b) the matters subject to arbitration; and

(c) a named arbitration institution (China does not generally recognise ad hoc, non-institutional arbitrations).

20.4 This provision is included on the assumption that this contract template may be used as a standard form of the Seller, in which case this provision will help reduce the risk that the contract terms may be construed narrowly against the Seller.
