Sample Business Contracts

Automobile Parts Purchase Contract - SAIC Chery Moto Co. Ltd. and JingZhou HengLong Automotive Parts Co. Ltd.

Sponsored Links

                    Chery Automobile Parts Purchase Contract

Party A: SAIC Chery Moto Co., Ltd.

Party B: JingZhou HengLong Automotive Parts CO., Ltd.

The Place of Sign:Wuhu                  The Date of Sign: Oct. 13th, 2003


     PREFACE This  agreement is made and effective on this 13th day of Oct. 2002
at City Wuhu.  Between:  SAIC Chery Moto Co., Ltd.  (hereinafter  referred to as
"Party A"), a Chinese Corporation organized and existing under the laws of China
and registered  legal address as No. 8 Changchun Road,  Development  Zone, Wuhu,
Anhui Province.

     Henglong Automotive Parts Co., Ltd. (hereinafter referred to as "Party B"),
a  Corporation  organized  and existing  under the laws of China and  registered
legal address as No. 1 Henglong Road Yuqiao Economic Development Zone, Jingzhou,
Hubui. Province.

     "The Party B" are  manufacturing  products refer to appendix 1 (hereinafter
referred to as Contract Products) and willing to sell to Party A.

     "The Party A" is willing to buy the Contract Products  manufactured by "The
Party B".

     "The Party A" and "The Party B" should honor the signed  "Supply  agreement
of assembled  units and materials"  Subject to above items,  both parties agreed
the following items and reach the agreement as follows:

Clause 1   Purchase Order:

1. "The Party A" should  purchase  the goods from "The Party B" via the purchase
order.  The purchase order as a formal  contract,  it aimed to confirm the name,
price,  quantity and destination of contract  products.  The purchase order will
come into force after signed by authorized  person of both  parties.  The signed
purchase  order  becomes a part of the contract and have the same legal power as
the contract (referred to Appendix 1).

2. The purchase order is also acting as a delivery timetable by "The Party A" to
"The Party B". The aim of the  purchase  order is for "The Party B" to  fulfills
the order in terms of delivery  time and  quantity.  The signed  purchase  order
becomes a part of the  contract  and have the same legal  power as the  contract
(referred to Appendix 2).

3. The Party B should deliver the contract products to the destination  location
specified by The Party A. The delivery time means the date of goods delivered to
The Party B's factory floor.

4. In order to  guaranty  the  balanced  production  of The Party A. The Party B
should  have at  least  half  month of  inventory  to  guaranty  The  Party  A's
production .

5. The Party A have the rights to  change/cancel  the  quantity of the  purchase
order from the time to time according  Party A's market and progress  situation.
The above-mentioned  change are based on quality,  delivery time and after sales
service by Party B.

6. Party B should supply the contract  products to Party A for their  production
and after sale products.  Party B should follow the  specification  specified by
Party  A and it is  not  allowed  to  supply  contract  products  and  technical
information  owned by Party A to third party by any way without  previous agreed
by Party A. Otherwise Party A has the rights to claim penalty of RMB$500,000.00.

Clause 2   Modification of Technical Issues

     Party A should inform any technical modification to Party B immediately. If
the mentioned  modification will effect the jig and fixture, both parties should
negotiate with the increased cost.

Clause 3      Quality of the Contract Products

1. All the contract products should meet the specification of government quality
control  standard  and also meet the  current  quality  control  by Party A. The
quality of production process should final proved by Party A.

2. If the contract products are required a audit by Party A, then Party B should
supply the required samples to Party A free of charge.

3. If the location,  process,  materials and vendors have any change by Party B,
Party B should inform Party A in advance two months before it happens.  If Party
B fail to inform  Party A then Party A have the  rights to claim the  penalty of


4.  Party B  should  delivery  the  good  contract  products  to Party A. If any
unqualified contract products have been delivered to Party A then Party B should
replace the faulty products within specified time and bear all the lose.

5. The faulty of vendor's quality refer to "Auto parts supply agreement".

Clause 4   Package of Contract Products

1. The package of contract products used by Party B should proved by Party A and
both parties should sign the agreement of Products Package

2. Part B should meet the  package  specifications  specified  be Party A except
specified otherwise.

3. Part B should meet the package specifications  specified be Party A for spare
parts and after sale service parts except specified otherwise.

4. The package should  withstander any damage during the shipment to protect the
contract products.

5. Part A have no reasonability for return the empty package, if any should sign
the "Return package agreement"

Clause 5   Delivery

1. If the Party B have the  accident  during  delivery,  Party B should take the
fast  methods to  guarantee  the  delivery  to avoid the  stoppage  of Party A's

2.  Party B  delivery  contract  products  should  supply  with  "packing  list"
specified part number, name, quantity,  number of boxes, code,  production date,
order  number and batch  number...etc.  The test report and quality  certificate
should be attached with delivery.  If Party B failed, it will apply a penalty of
5% of price supplied.

3. Party B have the  responsibility of shipment,  If any damage or lose happened
during shipment,  Party B should make  replacement/recover the contract products
and pay the lose to Party A.

4. Party A found any  mis-assembly,  missing parts during receiving the contract
products should inform Party B for exchange or replace.  Party B should bear all
the cost.

5. Party A found any defected  parts should  inform Party B in writing.  Party B
should fix all the defected parts within specified time and bear all the cost.

6. Party B should pay the direct lose because of late delivery.

7. If Party B can not meet the  specified  delivery  time,  quantity and quality
specified in the contract caused Party A stoppage of production or force Party A
alternate the supplier, Party B should pay all the lose.

Clause 6    Payment

1. Party A should pay the price of "purchase order" to Party B.

2. The period of payment:  According  the "Table of  Inventory",  Party A should
make a payment of 90 days via bank.  It required  Party B issue the invoice.  If
Party B delivered the contract products in advance, Party A should make the same
payment period through the bank.

3. Party A have the rights deduct the amount of defect parts,  missing parts and
late delivered parts.

4. Party B should offer the real accounts to Party A. unless there is Party A to
agree in writing in advance,  Party A does not take the  obligation  to pays the
third party the payment for goods.

5. Party B should provide the special invoices of increasing taxes with standard
form.  Party B should mail by express or send directly the invoices to appointed
purchasing department of Party A and require "invoice receipt".  Otherwise cause
payment overdue or lose the invoice, the consequence is undertaken by Party B.


Chapter Seven Product Duty

1. If the third  party  accuse  Party A of the defect  contract  products  cause
automobile damaged or  personal/property  lossed, which the products was offered
and installed by Party B, and claim for compensation or prosecute,  then Party A
should inform Party B with the fax or the telephone immediately .

2.  Party B  should  participate  in the  investigation,  technical  inspection,
technologic arbitrage and offer all  essential/necessary  information during the
above-mentioned  arbitrate.  If the lawsuit takes place,  the- both sides should
participate in dealing with arbitrate together .

3. The costs relevant to claim compensation of products duty should undertake by
the Responsibility side.

4. Both parties should determine the reason of the claim  compensation  basis of
information, appeal and judgment (If have).

5. If the product responsibility totally caused by Party B's fault, then Party B
should agree and undertaken that Party A is free of bearing all expenses related
to what the third party put forward claim and lawsuit,  Including  attorney fee,
court costs, etc.

6. If the product  responsibility totally caused by Party A's fault,, then Party
A should  agree and  undertaken  that  Party B is free of bearing  all  expenses
related  to what the  third  party put  forward  claim  and  lawsuit,  Including
attorney fee, court costs, etc.

7. If the products  responsibility imputed to this both sides. Both sides should
consult each other on how to state the claim most effectively.

8. Responsibility should include:

The compensation of the damage of the automobile or its parts

Bodily injury and property loss that the third party suffered;  other costs that
relevant  to  claim  compensation  and  lawsuit,  such  as:  Investigation  fee,
technical inspection, technologic arbitrate cost, attorney fee, court cost.

Chapter Eight  Confidentiality

1. Have not been agreed in writing in advance,  Party B should not  disclose any
technology from Party A to the third party.

2. Party B should get the permission from Party A if there is necessary to offer
the  technology  of  Party  to  Subordinate  supplier  who  will  also  take the
confidentiality obligation.

3.  Party B should  require  its worker to take the  corresponding  confidential
obligation in written form.

4. Party A also  should take the  confidential  obligation  with the  technology
which relevant to develop parts of contract.

5. The  supplier  of party B have the right to use the  technology  that Party A
offered within this contract period, and it will not bring the transformation of
the technological ownership.

Chapter Nine  Industrial Property Right

1. Party B should bear all the responsibility and claim compensation, if use the
contract  parts  purchased  according to this contract  terms infringe the third
party's industrial property with responsibility of Party B

2.  Party B  should  guarantee  that  Party A and its  customer  do not bear any
responsibility with above-mentioned  industrial  properties . The following case
will not  belong  to the  regulation  if Party B  produce  and  supply  contract
products  with the drawing of Party A offered and it is  impossible to know that
has already infringed the third party's  industrial  property.  In case of this,
Party A should  guarantee  that Party B will not get any claim  compensation  or
loss from the third party

3. When Party A put forward the request, Party B should inform Party A as to all
the things of industrial property related to contract products,  No matter these
industrial  properties  belong  to  Party  B , or is  permitted  using,  or  any
industrial property given special approval to.

4. The  trade  mark of  Gmcherry  should  only used for  supplying  Party A with
production or after sale.

Chapter Ten  The Responsibility for Breach of Contract

1.  Party B  should  change  or  repair  the  defect  one as  soon  as  possible
immediately  if supplies  defect  products and undertake the  responsibility  of
overdue supply.

2. Party B should supply contract products according to Party A's requirement.If
supply  quantity  less  than  Party  A's  requirement  supplies,  Party B should
supplying the remaining  parts,  and the remaining  parts will deal with overdue

3. Party B should  bear the costs that Party A take the  rational  measures  for
preventing or reduce the fault loss from Party B .

4. If Party A will claim the  compensation  with the  responsibility  of Party B
according  to  above-mentioned  regulations,  Party A should  inform Party B and
offer them suitable period to investigation.

5. If Party B exceed  the time  limit  to  Party B or break  the  contract,  the
delinquent  party should pay penalties to the other  according to the regulation
of" contract law of the People's Republic of China".

6. If one party have break the contract as following shows, the other party have
the  right to  rescission  of the  contract  and claim  the  economic  losses of

Party B terminate the contract unilaterally without reason, stopping to make and
supply the contract  products or give the contract  relevant  right to the third
party without the permission of Party A.

Party B violate the contract  (Clause  1,item 6) offer the contract  products to
the third party

Party B have supplied constantly the defect contract products

Either party violate the regulation of Clause 8.

Party A terminate the contract  unilaterally without reason,  refuses Party B to
supply the contract parts midway.

Chapter Eleven  Force Majeure

1.The either party should bearing any obligation or  responsibility,  If fail to
fulfill a contract during force majeure occurs,  but still comply with the other
clause of the  contract.  Both  party  should try their best to solve the matter
properly through the negotiation.

2. The party who suffer  from the force  majeure  should  inform  another  party
immediately  by mail or fax or telegram,  and have the  obligation  to prove the
influence from force majeure, duration and the influence of contract.

Chapter Twelve  Contract Duration

The contract will become into force after  stamping both parties  company seals.
Contract duration is one year. Namely from Jan. 1th, 2003 to Dec. 31th, 2004

With the Party A cooperate  with Party B lasting and  stability , This  contract
will  automatically  prolong if the either party has not propose  terminate  the
contract after expire in three months in this contract.

After this contract is terminate, Party B should stop the production of contract
products at the same time , And return all technological files to Party A .

Chapter Thirteen   Arbitration

All  disputes in  connextion  with the contract or  execution  thereof  shall be
settled friendly through negotiations. In case no settlement can be reached ,the
case may then be submitted  for  arbitration  according to " contract law of the
People's  Republic  of China".  The  arbitration  shall take place in Wuhu city,
Anhui province.

Three copies of the contract in Chinese. Two for Party A and one for Party B.

Party A: SAIC Chery Moto Co., Ltd.              Party   B:   JingZhou   HengLong
                                                Automotive Parts CO., Ltd.

Representative:                                 Representative:


Appendix 1
------------------------- --------------- ------------ ----------  -------------
    Part Description           Part No.    Unit Price   Quantity      Extension
------------------------- --------------- ------------ ----------  -------------
   P/S Gear assembly       A11-3400010BC     1150        45000      51750000.00
 Mechanic Steering Gear     A11-3400010       630         1200        756000.00
   High Pressure Hose       A11-3406100        45        10000        450000.00
   P/S Gear assembly       S11-3400010BB      790         7000       5530000.00