Commercial Trade Transaction
Date: _____________________________________________
Reference: _____________________________________________
These Heads of Terms (the "HOT") record the principal commercial terms agreed between the Parties identified below in respect of the transaction described herein. Save for the provisions expressly stated to be binding in clause 12 (Binding Provisions), these Heads of Terms are subject to contract and do not constitute a legally binding agreement. The Parties intend to negotiate and execute a formal commercial contract (the "Definitive Agreement") incorporating these terms in good faith and as expeditiously as possible.
1. The Parties
Seller / Supplier: _____________________________________________ ("Seller")
Registered Address: _____________________________________________
Country: _____________________________________________
Contact Person: _____________________________________________
Buyer / Offtaker: _____________________________________________ ("Buyer")
Registered Address: _____________________________________________
Country: _____________________________________________
Contact Person: _____________________________________________
Facilitating Agent: _____________________________________________ ("Agent") — where applicable.
2. Subject Matter
Goods / Services: _____________________________________________
HS Code(s): _____________________________________________
Technical Specification: As per the product specification attached hereto as Annex A (or to be agreed and attached prior to execution of the Definitive Agreement).
Country of Origin: _____________________________________________
Country of Destination: _____________________________________________
3. Quantity and Delivery Schedule
Total Quantity: _____________________________________________
Unit of Measure: _____________________________________________
Initial Order Quantity: _____________________________________________
Subsequent Order Schedule: _____________________________________________
Delivery Period: _____________________________________________
Lead Time from Order Confirmation: _____________________________________________
Tolerance on Quantity: +/- _____ per cent on each shipment.
4. Price
Unit Price: _____________ per _____________
Incoterms: _____________ (_____________) [City / Port]
Currency: _____________________________________________
Price Validity: Fixed / Subject to review as follows: _____________________________________________
Price Review Mechanism: _____________________________________________ (e.g. annual review linked to commodity index / CPI / other).
Estimated Total Contract Value: _____________________________________________
5. Payment Terms
Payment Method: _____________________________________________ (e.g. Letter of Credit / TT / Open Account / CAD)
Payment Terms: _____________________________________________ (e.g. 30% advance, 70% against BL copy)
LC Type (if applicable): _____________________________________________ (e.g. Irrevocable, confirmed, at sight)
LC Issuing Bank: _____________________________________________
LC Confirming Bank: _____________________________________________
Payment Currency: _____________________________________________
Late Payment Interest: _____ per cent per annum above _____________ base rate.
6. Shipping and Logistics
Port / Place of Loading: _____________________________________________
Port / Place of Discharge: _____________________________________________
Mode of Transport: _____________________________________________ (Sea / Air / Road / Rail / Multimodal)
Container Type: _____________________________________________ (e.g. 20' FCL / 40' FCL / LCL / Reefer)
Freight Responsibility: As per Incoterms stated in clause 4.
Insurance: As per Incoterms stated in clause 4. Minimum coverage: _____________ per cent of CIF value.
Shipping Documents Required: Commercial invoice, packing list, bill of lading, certificate of origin, _____________.
7. Quality and Inspection
Quality Standard: _____________________________________________ (e.g. ISO / BIS / EU Regulation / buyer's specification)
Pre-Shipment Inspection: Required / Not required. If required: _____________ (inspection agency).
Sampling Method: _____________________________________________ (e.g. AQL 2.5)
Rejection Procedure: In the event of rejection: _____________________________________________
Warranty Period: _____________________________________________
8. Certifications and Compliance
Required Certifications: _____________________________________________
Labelling / Marking: _____________________________________________
Phytosanitary / Health Certificate: Required / Not required.
REACH / RoHS / CE Compliance: Required / Not required.
Other Regulatory Requirements: _____________________________________________
9. Commission and Facilitation Fee
Where a Facilitating Agent is identified in clause 1, the following commission arrangement applies:
Commission Payable By: _____________________________________________
Commission Rate: _____ per cent of the _____________ value of the transaction.
Commission Currency: _____________________________________________
Commission Payment Trigger: _____________________________________________
Commission Tail Period: Twenty-four (24) months from the date of introduction.
10. Governing Law and Dispute Resolution
Governing Law: _____________________________________________
Dispute Resolution: _____________________________________________ (e.g. ICC Arbitration / LCIA / Courts of _____________)
Language of Proceedings: English.
Jurisdiction: _____________________________________________
11. Conditions Precedent
The Definitive Agreement is subject to the following conditions precedent being satisfied:
Completion of satisfactory due diligence by both Parties;
Agreement on and execution of the full form Definitive Agreement;
Receipt of all required export and import licences and regulatory approvals;
Arrangement of financing / payment instrument as specified in clause 5;
_____________________________________________ (any other conditions agreed between the Parties).
12. Binding Provisions
The following provisions of these Heads of Terms are legally binding upon signature and shall remain binding regardless of whether a Definitive Agreement is executed:
Confidentiality: Each Party shall keep the terms of these Heads of Terms and all information exchanged in connection herewith strictly confidential and shall not disclose such information to any third party without the other Party's prior written consent.
Exclusivity: During the Exclusivity Period of _____ days from the date of signature, the Parties shall negotiate exclusively with each other in respect of the transaction described herein and shall not enter into negotiations with any third party for a substantially similar transaction.
Governing Law of these Heads of Terms: These Heads of Terms (including the binding provisions) shall be governed by the laws of _____________________________________________.
All other provisions of these Heads of Terms are non-binding and subject to contract.
13. Next Steps and Timeline
Target date for execution of Definitive Agreement: _____________________________________________
Responsible parties for drafting: _____________________________________________
Outstanding items to be agreed prior to Definitive Agreement: _____________________________________________
AGREED AND SIGNED
Signed by the Parties as a record of the commercial terms agreed between them.
For and on behalf of the Seller:
Authorised Signatory: _____________________________________________
Full Name: _____________________________________________
Title: _____________________________________________
Date: _____________________________________________
For and on behalf of the Buyer:
Authorised Signatory: _____________________________________________
Full Name: _____________________________________________
Title: _____________________________________________
Date: _____________________________________________
For and on behalf of the Agent (if applicable):
Authorised Signatory: _____________________________________________
Full Name: _____________________________________________
Title: _____________________________________________
Date: _____________________________________________
Annex A — Product Specification
Annex B — Shipping and Logistics Requirements
Doc 13 — Heads of Terms (Commercial Trade Transaction) — Neutral Template