1. What is a Contract? We cannot just send out our purchase terms and conditions and then sit back and rely on them. We have to be vigilant about enforcing those terms or we may waive our rights. The written contract terms agreed upon by the parties. Good faith and fair dealing, regardless of contract terms. Cannot act in bad faith or unconscionably.

2. What is a Contract? The agreement will be interpreted according to the performance accepted by the parties. If the term is ambiguous or unclear, and you do not object to the other party’s actions, those actions will be interpreted as the understanding between the parties.

3. What is a Contract? Prior course of dealing between two parties that creates an understanding between them of how they are expected to perform the future. Express term: “delivery within reasonable period from purchase order.” Always 3 weeks, over the years, may not be able to suddenly demand 2 weeks. If change, state “_____ prior practice...”

4. What is a Contract? Standard practice within the industry. Purchase order states 200 units. However, in the industry, it is standard to be 3-4% off in delivery due to the process of manufacture. You may not be able to require perfect tender because of the doctrine of Trade Usage.

5. What is a Contract? Finally, as a buyer, you may have greater or lesser rights and remedies under the UCC. If you send your P.O. with NEI’s standard terms and conditions of purchase, and the seller sends an acknowledgment with their standard terms and conditions of sale, you need to pay attention. By example, if your warranty states that the seller must repair or replace defective goods and the seller’s warranty states that you have no recourse in the event defective goods are delivered, you may know from a past presentation by us that the UCC remedy will apply, giving you, the buyer, a nice warranty. However, if you rely on the seller’s lack of warranty, you may actually waive your rights under the UCC because under the doctrine of “Course of Performance” that Natella explained, your actions have indicated an acceptance of the seller’s lack of warranty – you have in effect, modified the terms of the agreement and waived your greater rights.

6. What is a Contract? Draft the authorization to ____, no _______ on drawing from Phil. This is a ____________ of our ____ agreement. If ______, respond ASAP. P.O. status “____ person only, in writing.” No waiver of our rights under terms and conditions. Nondisclosure agreement ____.

7. Important Terms for Purchase  Protect supply and protect delivery  Define adequately what you are buying;  Insist on timely delivery;  Allow flexibility for your business needs: Ability to reschedule, cancel No set forecast Minimize consequences

8. Important Terms for Purchase Use care with sole source suppliers or will be at tremendous disadvantage; the only leverage is when you strike the deal. Need back-up plan, know ramp up time and insist on this number of days = SIGNED CONTRACT If you do not do the above, you will be stuck with the course of performance. When something doesn’t meet your expectations, stop and say “wait a minute!”

9. Important Terms for Purchase Notwithstanding prior practice” “Trade usage irrelevant” If important, bargain for it Know your contract