Terms & Conditions of Purchase

of Lock GmbH, Ertingen, Germany, governing transactions with suppliers based outside the European Union and outside Switzerland


1. Authoritative Terms & Conditions

1.1 These Terms & Conditions of Purchase apply to the entire scope of business transactions with suppliers or with other contractors (hereinafter jointly referred to as ‘Supplier’).
In particular, they apply to contracts for the purchase and/or delivery of movable objects (‘Goods’), regardless of whether suppliers manufacture those goods themselves or purchase them from sub-contractors (Sections 433, 651 of the German Commercial Code [BGB]). Unless otherwise agreed, these terms & conditions of purchase apply at the time we place an order in accordance with the currently valid version of the general agreement, i.e. the one most recently communicated to the supplier in text format, as well as to future contracts of the same nature without the need for us to refer to them in each individual case. They also apply if the supplier refers to his own terms & conditions of business, in particular when accepting an order or in the order confirmation, unless we expressly consent to the application of those terms & conditions.

1.2 These terms & conditions of purchase only apply if the supplier is a businessman (section 14, BGB), a legal person under public law or a special fund under public law.

2. Ordering

2.1 An order is only deemed to have been placed by us (Lock) if it was produced by us in writing and signed and was received by the supplier. To comply with the requirement for written form, the text form described in section 126 b) BGB is sufficient. Orders placed verbally or by telephone are only binding upon us if these are confirmed subsequently by a written order. In individual cases, drawings including tolerance details stipulated by ourselves are binding in nature. When an order is accepted, the supplier acknowledges that he has been informed, through viewing access to the existing drawings, of the nature and scope of the work involved.  We cannot be held liable in the event of any obvious mistakes, typographical and computational errors being found in the documents, drawings and diagrams presented by us. The supplier is obliged to notify us of any such errors to enable our order to be corrected and reissued. This also applies to any missing documents or drawings.

2.2 Variations in quantity and quality compared to the text and contents of our order, and subsequent contractual amendments are only deemed to have been agreed if we have expressly confirmed them in writing.

2.3 Drawings, tools, samples, models, marks and mock-ups or similar items as well as finished products and semi-finished products awarded by us or manufactured on our behalf must be treated in the strictest of confidence. They remain our property and must not be supplied to third parties without our express consent in writing. In the absence of one-off agreements to the contrary, these items must be returned to us unsolicited on completion of the order. Products manufactured or marked using production equipment, marks and mock-ups may only be supplied to third parties with our express written consent.

2.4 We reserve the right to cancel an order wholly or in part on compelling grounds. On receipt of written cancellation, the supplier is obliged to cease work. We are committed to paying the agreed price for completed goods accepted by us, and to reimburse the supplier for costs incurred by partially completed items or for the raw materials already obtained to satisfy the order, unless the supplier is responsible for the cancellation taking place. The supplier undertakes to follow our instructions relating to the use of such materials. The supplier has no further entitlements in this regard.

3. Delivery Deadlines

3.1 The agreed delivery lead times and deadlines are binding commitments. They run from the date the order was placed. Within that delivery lead time and/or that delivery date, the goods must be received at the reception point nominated by ourselves. If delays are anticipated, the supplier must notify us immediately to this effect in text form and must obtain our decision about whether the order continues to exist.

3.2 If the supplier falls into arrears, and if a fixed delivery date was agreed, we are entitled after first serving a reminder, to impose a contractual penalty amounting to 0.5% of the net order value per commenced week, although said amount cannot exceed 5% of the net order value and/or the value of the delayed portion of the delivery, and/or to withdraw from the contract. We reserve the right to apply further demands for compensation. The contractual penalty imposed shall be added to any claim for compensation.

3.3 Before the delivery deadline expires, we are not obliged to accept the delivery.

4. Delivery / Packaging / Shipment

4.1 Without our prior consent in writing, the supplier is not entitled to arrange for any third party to perform a service owed by himself (e.g. sub-contractors). The supplier bears the purchasing risk for his services unless otherwise agreed in individual cases (e.g. restriction to supplies).Delivery is made at the cost of the supplier, without charges, to the reception point stipulated by ourselves (DDP 'Delivery Duty Paid'  Incoterms 2010). In exceptional cases, if we are required to pay for transport, the supplier must choose the mode of transport specified by ourselves and must otherwise select the form of transport and delivery that is least expensive to us.

4.2 The transfer of risk occurs after acceptance by ourselves at our reception point.

4.3 Packaging is included in the price. In exceptional cases, if something different has been agreed, the packaging must then be charged to us at cost. The supplier must choose the packaging specified by ourselves and must ensure that this packaging protects the goods against damage. When goods are returned, at least two thirds of the calculated value of the packaging must be credited back to us.

4.4 With freight shipments, a dispatch announcement must be communicated to us on the day of shipment. In all other cases, our dispatch specifications must be followed precisely. Overdeliveries are not permitted.

5. Documentation

5.1 Invoices, delivery notes and packaging slips must be attached to each shipment in duplicate. These documents must contain:

  • our order number;
  • the quantity and unit of quantity;
  • gross and net weights and, where necessary, the calculated weight;
  • item designation with our item number;
  • remaining balances in the case of partial deliveries.
  • VAT identification number.

5.2  In the event of failure to comply with the invoice contents listed under Clause 5.1, all resultant costs such as truck demurrage charges, reorganization fees and the like shall be charged to the supplier.

6. Prices and Scope of Delivery

6.1 Unless otherwise expressly defined, the agreed prices are fixed prices unless the supplier generally reduces his related prices.

6.2 All ancillary services, e.g. compilation drawings, sketches, calculations, auxiliary tools etc. needed for the manufacture of the object of delivery and its accessories are included in the price and shall be handed over to us together with any spare parts required after delivery to and acceptance by ourselves.

7. Billing / Payment / Assignment

7.1 Separate invoices must be issued for each order. Payment is not made until after full receipt of the goods in perfect condition or of complete and error-free delivery of services and after receipt of the invoice, except in cases where phased payments have been agreed. The same applies to partial deliveries. Arrears caused by incorrect or incomplete invoices shall not adversely affect any prompt payment discount periods. Where a prompt payment discount has been agreed, payment is made, with the prompt payment discount being applied within the named deadlines on any partial deliveries made: up to 14 days from receipt of the invoice less 3% prompt payment discount and the net amount for up to 30 days from receipt of the invoice.

7.2 Supplier receivables to us may only be assigned to third parties with our prior consent. Payments must always be made to the supplier. Rights and obligations of the supplier arising from this contract cannot be assigned unless we consent to this in writing.

8. Guarantee / Statutory Warranty Rights / Complaints

8.1 The supplier shall take on the obligation of ensuring that the goods, including their appearance and dimensioning, comply with our stipulations. Our order and/or our assignment shall be executed professionally and accurately in accordance with state-of-the-art technical standards.

8.2 In accordance with legislative stipulations, the seller is liable in particular for ensuring that the goods are in the agreed condition at the time of transfer of risk to ourselves. With regard to an agreement about properties, the product descriptions apply - in particular where designated or referred to in our order - that form part of this contract or were incorporated in the contract in the same way as these terms & conditions of purchase. It is immaterial whether the product description comes from us, from the seller or from the manufacturer.

8.3 At variance to Section 442 (1) p. 2 BGB, we are entitled to unrestricted claims for defects even if the defect was not known at the time the contract was concluded and was due to gross negligence.

8.4 With regard to the commercial duty of inspection, notification, and rejection, the legislative provisions of sections 377 and 381 of the German Commercial Code (HGB) apply with the following stipulation. Our duty of inspection is limited to defects that were discovered during our incoming goods inspection under external supervision, including delivery documents (e.g. Damage while in transit, incorrect or short deliveries) or that were identified by our quality control staff while conducting random sample inspections. If an acceptance test has been agreed, then the duty of inspection does not apply. In other respects, the need or otherwise for an inspection is based on the circumstances of the individual case, and on what is feasible by way of a proper business transaction. This does not affect our obligation to inspect, notify and reject in relation to defects discovered at a later date. Unaffected by our duty of inspection, our notification of defects is deemed to be immediate and timely if it was sent out within 10 working days from detection and/or, in the case of visually obvious defects, from the date of delivery.

8.5 Supplementary performance also includes removal of defective goods and reinstallation, provided that the goods is installed and used in its intended manner in another item, or fitted to a different item, and this does not affect our legal entitlement to reimbursement for associated expenditure. The expenditure required for inspection and supplementary performance shall be met by the seller, even it becomes apparent that no actual defect existed. Our entitlement to compensation in the event of an unjustified demand for remedial action to defects remains unaffected; however, to this extent, we are only liable if we established that no defect existed, or failed to establish this fact through gross negligence on our part.

8.6 Irrespective of our legal rights, and the provisions of Para. 5, the following applies: In the event of the seller failing to meet his supplementary performance obligation - where we can choose between remedial action on the defect (supplementary performance) or delivery of an item that is not defective (replacement delivery) – we are then entitled to remedy the defect ourselves and to demand reimbursement of the expenditure involved and/or obtain a corresponding advance payment in relation to that expenditure. In the event of the seller failing to deliver supplementary performance, or of that performance being unacceptable to us (e.g. due to particular urgency, a threat to operational safety or the pending threat of disproportional damage), no term needs to be defined; instead, we can notify the seller of circumstances of this nature immediately after, or if possible prior to, their occurrence.

8.7 Furthermore, in the event of a material defect or legal infringement, we are entitled in accordance with legislative provisions to demand a reduction in the purchase price, or to withdraw from the contract. In addition, and in accordance with legislative stipulations, we are entitled to claim for compensation and for reimbursement of expenditure.

9. Supplier recourse

9.1 Our legal claims to recourse within a supply chain (supplier recourse in accordance with Sections 445a, 445b, 478 BGB) remain fully enforceable alongside our claims in relation to defects. In particular, we are entitled to demand the type of remedial action (remedial work or replacement delivery) from the seller that we are obliged in individual cases to provide to our customer. This does not restrict our legal right of choice (section 439 para. 1, BGB).

b) Before we recognise or fulfil a defect claim from our customer (including reimbursement of expenditure in accordance with sections 445a para. 1, 439 paras. 2 and 3 BGB), we shall notify the seller, setting out the factual content in a concise manner, and shall request a written response. If the seller fails to provide this response within a reasonable period, and if no mutually agreeable solution is forthcoming, the assured warranty claims shall be owed to the customer. In such cases, the seller is obliged to provide evidence to refute his responsibility for the claim.

9.3 Our claims resulting from supplier recourse also apply if the goods were further processed before they were sold to another consumer by us or by one of our customers, e.g. through installation in a different product.

10. Manufacturer’s Liability

10.1 If the seller is responsible for a product defect, he is obliged to indemnify us from the claims of third parties to the extent that the cause lies in his area of control and organization, and he himself is liable to outside parties.

10.2 In the context of his indemnity obligation, as defined in sections 683 and 670 of the German Civil Code (BGB), the seller is required to reimburse expenditure incurred in respect of third party claims, including the costs of any recall campaigns we may conduct. We shall notify the seller about the content and scope of recall measures - to the extent of what is possible and can reasonably be expected - and shall give him an opportunity to comment on them. This does not have any effect on more extensive legal claims.

10.3 The seller must take out and keep current a product liability insurance policy with a lump-sum cover amount of at least €5 million per individual case of injury to people or of damage to property.

11. Industrial property rights

The supplier is liable for ensuring that the goods he delivers and the use to which we put them does not infringe any patents or other third-party property rights. He indemnifies us and our customers from all claims arising from the use of such property rights. This does not apply in cases where the supplier has manufactured the supplied goods on the basis of drawings, models or equivalent descriptions or stipulations and does not know, or in the context of the products manufactured by him cannot know, that property rights have been infringed.

12. Force majeure

War, civil war, export restrictions and/or trade restrictions resulting from a change in the political landscape and from legitimate strike action, legitimate lockouts, factory disruptions, restrictions on factory operation etc. Events that make it impossible or unreasonable for us to satisfy the contract and for which we were not responsible are considered to constitute force majeure and liberate us for their duration from our obligation to accept deliveries in a timely fashion. The parties to contract are obliged to notify each other of such events, and to adapt their obligations in good faith to reflect the changed circumstances.

The supplier is obliged to notify us immediately of all circumstances that make it impossible for him to honour his delivery commitment to us, to enable us to make alternative arrangements in a timely manner.

13. Retention of Title / Ownership

The material provided remains our property. As such, it must be stored separately and must only be used to fulfil our orders. The supplier is liable for any reduction in its value or for its loss, even if not culpable. The objects manufactured from materials provided by us become our property in their respective completed condition. The supplier shall store these items for us. The purchase price includes the costs of storing these objects and materials.

14. Business confidentiality

The supplier is obliged to treat our orders and all commercial and technical details associated with them as confidential, unless the pertinent facts are already in the public domain.

15. Cancellation

If the commercial and financial circumstances of the supplier worsen substantially, in particular if bankruptcy or insolvency proceedings have been instigated over his assets, we are entitled to cancel the contract if the aforementioned circumstances appear to jeopardize fulfilment of the contract. The acceptance of partial deliveries of goods and services after the onset of one of the above circumstances does not affect our right to terminate the contract for other reasons.

16. General provisions

16.1 In the event of a provision being inapplicable, or ceasing to apply, this shall not affect the effectiveness of the remaining provisions. The parties undertake to replace any inapplicable provision with one that most closely reflects the commercial purpose of the ineffective one, and that is itself effective. This does not apply to cases where a provision becomes inapplicable as the result of a violation of sections 305-310 of the German Civil Code [BGB]. In such cases, the legal provision applies, unless some supplementary contractual term is offered to fill the gap.

16.2 German Law applies to all legal relationships between the supplier and ourselves, and this also applies if the supplier's head office is not located in Germany and excludes the application of legislation governing the international sale of transportable goods and conflict / tie-breaker rules.

16.3 German is the language of this contract. In cases where the meaning of the German text may differ from a foreign language translation of the text of this contract, or where terms & conditions of delivery and payment might vary, the meaning of the German text shall take precedence.

16.4 The place of fulfilment is the receiving plant, and for payment, the head office location of our company.

16.5 If the purchaser is a businessman, a legal entity under public law or a special fund under public law, then the court of jurisdiction for all disputes that may arise is the one responsible at the head office location of our company. However, we are also entitled to take legal action in the court responsible for the head office location of the supplier.

Dated: September 2019