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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

INTRODUCTION Welcome to the OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis published by MEMA Original Equipment Suppliers (“MEMA OE Suppliers”) (revised September 2026). This document is a comparative analysis of general contract Terms and Conditions issued by automotive original equipment manufacturers in North America (“OEMs”) for production parts purchased in North America. Although some OEMs or associated entities may have more than one version of their Terms and Conditions, MEMA OE Suppliers has identified and analyzed the most broadly used Terms and Conditions for purchases in the North American market for each OEM. The specific Terms and Conditions analyzed and compared are as follows:

BMW (2018)

BMW Group International Terms and Conditions for the Purchase of Production Materials and Automotive Components (Version March 31, 2018) (Translation updated July 18, 2018)

BMW (2022)

BMW Group International Terms and Conditions for the Purchase of Production Materials and Automotive Components (IPC) (Version December 1, 2022)

FCA US (2021)

FCA Production and Mopar Purchasing General Terms and Conditions (January 2021)

FCA US / Stellantis (2022)

FCA US (January 2021) & Stellantis Global General Terms and Conditions (December 2021)

Ford (2004)

Ford Motor Company and Affiliates — Production Purchasing Global Terms and Conditions (PPGTC January 1, 2004)

Ford (2021)

Ford Motor Company and Affiliates — Production Purchasing Global Terms and Conditions (PPGTC July 1, 2021)

General Motors

General Terms and Conditions for Direct Material, CCA and Tooling Purchases (Revised February 2014)

Honda

Terms and Conditions for Purchase and Sale of Goods (rev. July 1, 2020)

Hyundai

Hyundai Motor Manufacturing Alabama, LLC — Parts Development General Terms and Conditions (Rev. 1 110103)

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Kia1

Kia Motors Manufacturing Georgia, Inc. — Parts Development Agreement (Rev. February 2010)

Lucid

Lucid USA, Inc. General Terms and Conditions for Prototype and Production Parts and Services (Parts GTC rev. October 2022)

Mazda

Mazda Motor of America, Inc. Master Sales and Purchase Agreement (August 11, 2020)

Mercedes

Mercedes-Benz US International, Inc. — Master Terms Direct Purchasing (December 2022)

Nissan

Nissan North America, Inc. — Purchase Order Terms and Conditions (October 1, 2023)

Rivian

Rivian General Terms and Conditions of Production Purchase (Rev. TC6)

Scout Motors

Scout - Production Terms and Conditions of Purchase (May 29, 2024)

Toyota (2009)

Toyota Motor Engineering & Manufacturing North America, Inc. — Terms and Conditions (April 1, 2009)

Toyota (2021)

Toyota Motor Engineering & Manufacturing North America, Inc. — Terms and Conditions (October 1, 2021)

Volkswagen

Volkswagen Group of America Chattanooga Operations, LLC — Production Terms and Conditions of Purchase (Last revised December 18, 2020)

Volvo

Volvo Cars Production Material Global Terms and Conditions (May 1, 2018)

MEMA OE Suppliers

MEMA OE Suppliers Model General Terms and Conditions for Light Vehicles (Updated September 2022)

Note 1: BMW issued new terms in 2022. It is unclear from the face of the terms whether and when they will apply to existing business, so we have included analyses of both the 2018 and 2022 terms. The 2004 Ford Terms remain applicable to disputes arising out of purchase orders issued before 7/1/21. The 2009 Toyota Terms remain applicable to disputes arising out of parts shipped prior to 10/1/21. The 2021 FCA Production and Mopar Purchasing General Terms and Conditions (1/2021) (“FCA North American Terms”) remain applicable for POs arising out of RFQs issued before 1/1/2022. Thereafter, the FCA / Stellantis (2022) Terms apply. The FCA / Stellantis (2022) Terms consist of the same /2021 FCA North American Terms together with newly issued Stellantis Global Terms and Conditions (“Stellantis Global Terms”). If the two terms conflict or are inconsistent, the FCA North American Terms prevail.

The Kia terms are, with limited exceptions, identical to the Hyundai terms. Therefore, the Comparative Analysis of the Kia terms is limited to “Same as Hyundai” unless there are material differences.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Note 2: For purposes of the Comparative Analysis, the term “OEM” is used to indicate the “buyer” in the analysis as referenced in the MEMA OE Suppliers Model General Terms and Conditions for Light Vehicles.

The purpose of this comparative analysis is to provide MEMA OE Supplier members a ready reference to understand the standard Terms and Conditions all OEMs routinely incorporate into Purchase Orders, and to highlight those areas most critical to today’s industry environment. It does not purport to be the “last word” on each of the topics covered. It can neither cover all of the relevant contract law and other legal principles, nor capture every clause and nuance of the OEM’s standard Terms and Conditions. However, it is the hope of MEMA OE Suppliers that the analysis will provide a useful resource and starting point for risk assessment and contract and dispute negotiations. The comments in the body of the comparative analysis are intended to highlight critical areas and hot-button issues in today’s Supplier/OEM relationships. About MEMA OE Suppliers MEMA Original Equipment (OE) Suppliers champions the business interests of the automotive supplier community, a key sector of the automotive parts manufacturing industry which represents more than 900,000 American jobs in all 50 states. MEMA OE Suppliers is recognized as an industry change agent – through industry analysis, topical events, and active peer group councils, the association helps suppliers stay informed and make mission-critical business decisions. MEMA OE Suppliers represents both light and commercial vehicles and is a membership group within MEMA, The Vehicle Suppliers Association. Its more than 1,000 members in the US, Canada, and Mexico are strong by Association. MEMA has offices in Southfield, Mich.; Research Triangle Park, N.C.; and Washington, D.C. Learn more at mema.org. The Authors This updated comparative analysis was prepared by MEMA OE Suppliers in collaboration with Butzel Long, Attorneys and Counselors. Butzel is a leading legal advisor to automotive supplier companies worldwide. The Firm has broad experience pertinent to all aspects of the Supplier-toOEM and Supplier-to-Supplier relationships. Butzel’s multi-disciplinary team of authors for this edition include Sheldon Klein, Cynthia Haffey, Daniel Rustmann, Jennifer Dukarski, Mitchell Zajac, and David DeVine.2 Format and Use In each Section, there is a Context and Questions introduction, which synthesizes the key points and considerations relevant to that Section. It is followed by a Comparative Analysis, which summarizes the main points of each OEM’s Terms and Conditions with regard to each subject matter. Certain summary points include brief comments, indicated by a flag (P) symbol, that identify distinctive or potentially problematic aspects of particular terms.

Additional information regarding the authors, and the Butzel firm, may be found at www.butzel.com. The Firm website contains a section pertinent to Supplier contracting at https://www.butzel.com/resources-automotive. Butzel and its automotive team may also be contacted at 313.225.7000.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Many sections include a “Dashboard.” The purpose of the Dashboard is to provide a simple, high-level comparison among the OEM and MEMA OE Suppliers Terms and Conditions. The Dashboard frames the topics as simplified questions, which are answered Yes (Y), No (N) or Silent (S) for each OEM. “Yes” indicates that there is an expressed provision responding affirmatively. “No” indicates that there is an expressed provision responding negatively. “Silent” indicates that there is no expressed provision. “Silent” is used because there may be a default rule of law under the Uniform Commercial Code or other applicable rules of law which address the issue in the absence of an agreement to the contrary. Because the Dashboard is necessarily simplified to make it useful for quick review, it should be used accordingly. Limitations This analysis summarizes the documents described above and is limited solely to them. As referenced in this analysis and highlighted in Appendix A, many of the documents analyzed in this comparative analysis reference and incorporate other documents, laws and industry standards that contain additional terms and requirements which the OEMs assert are part of the contract between the OEM and Supplier. Although some are referenced in summary fashion, these additional documents and laws are not reviewed in this analysis. This comparative analysis cannot, therefore, be used as the “last word” on a topic, especially regarding those topics (such as quality) addressed in multiple contract documents. Suppliers must also be mindful that a topic addressed in an OEM’s general Terms and Conditions might also be addressed differently on the face of the associated Purchase Order or in its other contract documents. For that reason, Suppliers should review all applicable contract documents in their entirety (as well as any applicable laws) with competent counsel in order to obtain a complete understanding of the Terms and Conditions governing its relationship with their particular OEM. The Supplier must regularly monitor changes to the OEM contract documents, which have become more frequent in recent years. OEMs typically reserve the right to change various contract documents at any time and often without notice. MEMA OE Suppliers, its counsel, individual member companies, their representatives, and attorneys assisting with this project do not warrant the accuracy or completeness of this analysis. This analysis is not intended to provide legal advice and should not be relied upon for that purpose. A Supplier should consult legal counsel about specific legal issues arising from its relationship with the OEMs. Please email suggestions, comments and questions to MEMA OE Suppliers at oesuppliers@mema.org or address them to MEMA OE Suppliers at 25925 Telegraph Road, Suite 350, Southfield, MI 48033. Electronic copies are available to MEMA OE Supplier members. Ordering information may be found under the Publications section at https://www.mema.org/. This document may not be copied or reproduced in whole or in part without the prior written consent of MEMA OE Suppliers.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

INTRODUCTION..........................................................................................................................1 PART ONE ..................................................................................................................................25 I. Contract Formation – Context and Questions.........................................................................26 I. Contract Formation – OEM Comparative Analysis................................................................31 1. BMW (2018) (Sections 1.1, 1.2, 2.1 and 2.2):......................................................................31 2. BMW (2022):........................................................................................................................31 3. FCA US (2021) (Sections 1 and 2):......................................................................................32 4. FCA US / Stellantis (2022) (FCA US Sections 1-2 and Stellantis Global Section 2):.........32 5. Ford (2004) (Sections 3, 4, 5 and 6.01):...............................................................................32 6. Ford (2021) (Sections 2, 3, and 4):.......................................................................................33 7. General Motors (Sections 1 and 2):......................................................................................33 8. Honda (Sections 1 and 2):.....................................................................................................34 9. Hyundai (Sections 1 and 2):..................................................................................................34 10. Kia (Sections 1 and 2):........................................................................................................35 11. Lucid (Sections 1.1, 1.2, 1.3, 23.7, 23.10 and Schedule 1):................................................35 12. Mazda (Sections 4.1, 4.2, 4.4, 4.6 and 29):.........................................................................35 13. Mercedes-Benz US International, Inc. (“MBUSI”):...........................................................36 14. Nissan (Sections 1.1, 2.1 and 29):.......................................................................................36 15. Rivian (Sections 1.1 and 39.6):...........................................................................................37 16. Scout Motors (Sections 1, 2 and 45):..................................................................................38 17. Toyota (2009) (Sections 1.1, 1.4, 1.5, 7.1, 7.5 and 7.6):.....................................................38 18. Toyota (2021) (Sections 2.2, 2.3, 2.4, 8.2, 8.6, and 8.7):....................................................39 19. Volkswagen (Sections 1, 2, 13, 42 and 44):........................................................................39 20. Volvo (Sections 1.1, 2.3, 3 and 4.2):...................................................................................40 21. MEMA OE Suppliers (Sections 2.1, 2.2 and 2.3):..............................................................41 I. Contract Formation – Dashboard............................................................................................42 II. Contract Changes – Context and Questions...........................................................................44 II. Contract Changes – OEM Comparative Analysis..................................................................46 1. BMW (2018) (Sections 2.3-2.5, 3.2 and 22.1):....................................................................46 2. BMW (2022) (Sections 2.4-2.5, 3.2 and 21.1):....................................................................46 3. FCA US (2021) (Section 12):...............................................................................................46 4. FCA US / Stellantis (2022) (FCA US Section 12 and Stellantis Global Section 7):............47 5. Ford (2004) (Sections 4, 9 and 44):......................................................................................47 6. Ford (2021) (Sections 3, 8 and 43):......................................................................................48 7. General Motors (Sections 2, 10 and 12):..............................................................................48 8. Honda (Sections 1.1, 2.1, 2.4 and 14.3):...............................................................................49 9. Hyundai (Sections 3, 11 and 20):..........................................................................................49 10. Kia (Sections 3, 11 and 20):................................................................................................49 11. Lucid (Sections 1.5, 1.6, 1.7, 5.5 and 23.1):.......................................................................49 12. Mazda (Section 4.7):...........................................................................................................50 13. Mercedes-Benz US International, Inc. (“MBUSI”):...........................................................50 14. Nissan (Sections 8 and 29):.................................................................................................50 © 2026 MEMA Original Equipment Suppliers

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

15. Rivian (Sections 8.1 and 13):..............................................................................................51 16. Scout Motors (Sections 10 and 43):....................................................................................51 17. Toyota (2009) (Sections 1.4, 2.2(b), 3.5(b) and 4.1):.........................................................52 18. Toyota (2021) (Sections 2.3, 3.2.4, and 5.1):......................................................................52 19. Volkswagen (Sections 10 and 42):......................................................................................52 20. Volvo (Section 7):...............................................................................................................53 21. MEMA OE Suppliers (Sections 2.4 and 2.5):.....................................................................53 II. Contract Changes – Dashboard..............................................................................................56 III. Assignment and Subcontracting – Context and Questions..................................................58 III. Assignment and Subcontracting – OEM Comparative Analysis.........................................60 1. BMW (2018) (Sections 1.5, 7.8, 9.6 13.7, 14.1, 18.3, 21.1 and 22.6):.................................60 2. BMW (2022) (Sections 7.8, 13.3, 14.1, 17.7, 20.5 and 21.6):..............................................60 3. FCA US (2021) (Sections 11(b) and 19):..............................................................................60 4. FCA US / Stellantis (2022) (FCA US Sections 11(b) and 19 and Stellantis Global Section 26):..........60 5. Ford (2004) (Sections 19, 36.02, 41.01 and 41.04):.............................................................61 6. Ford (2021) (Sections 19, 36.02, 41.01 and 41.04):.............................................................61 7. General Motors (Sections 11, 12, 31 and 37):......................................................................61 8. Honda (Section 14.1):...........................................................................................................62 9. Hyundai (Section 26):...........................................................................................................62 10. Kia (Section 26):.................................................................................................................62 11. Lucid (Sections 5.5, 23.2, and 23.13):................................................................................62 12. Mazda (Sections 8.3, 16, 21):.............................................................................................62 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 4.8, 45.3(t), 19.1 and 21.5):....63 14. Nissan (Sections 21 and 30):...............................................................................................63 15. Rivian (Sections 27 and 28):...............................................................................................64 16. Scout Motors (Sections 10 and 35):....................................................................................64 17. Toyota (2009) (Section 7.3):...............................................................................................64 18. Toyota (2021) (Sections 6.9 and 8.4):.................................................................................64 19. Volkswagen (Sections 16, 17 and 35):................................................................................65 20. Volvo (Sections 11 and 29.7):.............................................................................................65 21. MEMA OE Suppliers (Section 18):....................................................................................65 III. Assignment and Subcontracting – Dashboard.....................................................................66 IV. Expiration and Termination – Context and Questions.........................................................69 IV. Expiration and Termination – OEM Comparative Analysis................................................71 1. BMW (2018) (Section 2.8):..................................................................................................71 2. BMW (2022) (Section 2.1):..................................................................................................71 3. FCA US (2021) (Sections 22, 31 and 38):............................................................................71 4. FCA US / Stellantis (2022) (FCA US Sections 22, 31 and 38 and Stellantis Global n/a):...71 5. Ford (2004) (Sections 7, and 27-31):....................................................................................71 6. Ford (2021) (Sections 7, and 27-31):....................................................................................72 7. General Motors (Section 34):................................................................................................72 8. Honda (Section 4.7 and 13):.................................................................................................73 Page 6

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

9. Hyundai (Section 29):...........................................................................................................73 10. Kia (Section 29):.................................................................................................................74 11. Lucid (Sections 3.2, 13 and 14):.........................................................................................74 12. Mazda (Sections 4.2, 5.7, 17 and 18):.................................................................................75 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 20 and 21):.........................75 14. Nissan (Sections 26 and 27):...............................................................................................75 15. Rivian (Sections 2.2 and 21):..............................................................................................76 16. Scout Motors (Section 3, 14, 19, 20, and 21):....................................................................76 17. Toyota (2009) (Section 5.8):...............................................................................................77 18. Toyota (2021) (Section 6.9):...............................................................................................78 19. Volkswagen (Sections 3, 14 and 21):..................................................................................78 20. Volvo (Sections 7.1.2, 12.1, 13.3, 13.7, 15.1.3, 15.2.3, 22.5, 25, 27.4, and 29.7):.............79 21. MEMA OE Suppliers (Sections 14.1 and 15):....................................................................80 IV. Expiration and Termination – Dashboard............................................................................81 PART TWO ..................................................................................................................................83 I. Releases and Delivery – Context and Questions......................................................................84 I. Releases and Delivery – OEM Comparative Analysis..............................................................86 1. BMW (2018) (Sections 2.4, 3.1-3.5, and 5):........................................................................86 2. BMW (2022) (Sections 2.4, 3.1, 3.2, 3.3, 3.4, 3.5 and 5):....................................................86 3. FCA US (2021) (Sections 3-5):............................................................................................87 4. FCA US / Stellantis (2022) (FCA US Sections 3-5 and Stellantis Global Section 29:.........87 5. Ford (2004) (Sections 6 and 13):..........................................................................................87 6. Ford (2021) (Sections 5 and 12):..........................................................................................87 7. General Motors (Sections 3, 7, 8 and 14):............................................................................88 8. Honda (Sections 2.4, 3.2, and 4):..........................................................................................88 9. Hyundai (Sections 3-6):........................................................................................................89 10. Kia (Sections 3-6):..............................................................................................................89 11. Lucid (Sections 2.3, 2.4 and 2.5):.......................................................................................89 12. Mazda (Sections 1.2, 1.3, 5.1, 5.5, and 5.6):.......................................................................89 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 3.2, 7.2, 11.1, and 11.2):......90 14. Nissan (Sections 1.1, 4 and 5):............................................................................................90 15. Rivian (Sections 1.3, 2, 2.5, and 6):....................................................................................91 16. Scout Motors (Section 4 and 5):.........................................................................................91 17. Toyota (2009) (Sections 2.1(a), 2.4 and 2.7):.....................................................................92 18. Toyota (2021) (Sections 3.1.1, 3.6 and 3.8):.......................................................................93 19. Volkswagen (Section 4):.....................................................................................................93 20. Volvo (Sections 1.1, 8 and 15):...........................................................................................94 21. MEMA OE Suppliers (Sections 3.1-3.4; 4.2):....................................................................95 I. Releases and Delivery – Dashboard.........................................................................................96 II. Packing, Marking, and Shipping – Context and Questions..................................................98 II. Packing, Marking, and Shipping – OEM Comparative Analysis..........................................99 © 2026 MEMA Original Equipment Suppliers

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

1. BMW (2018) (Section 4):.....................................................................................................99 2. BMW (2022) (Section 4):.....................................................................................................99 3. FCA US (2021) (Section 4):.................................................................................................99 4. FCA US / Stellantis (2022) (FCA US Section 4 and Stellantis Global Section 3):..............99 5. Ford (2004) (Sections 10.03 and 13):.................................................................................100 6. Ford (2021) (Sections 9.02, 12.01, 12.03):.........................................................................100 7. General Motors (Sections 4 and 14):..................................................................................100 8. Honda (Sections 2.4 and 4):................................................................................................101 9. Hyundai (Section 5):...........................................................................................................101 10. Kia (Section 5):.................................................................................................................101 11. Lucid (Section 2.7):...........................................................................................................101 12. Mazda (Sections 5.2 and 5.4):...........................................................................................101 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 11):....................................101 14. Nissan (Sections 4.1.1 and 6):...........................................................................................101 15. Rivian (Sections 6.2 and 6.3):...........................................................................................102 16. Scout Motors (Sections 6 and 7):......................................................................................102 17. Toyota (2009) (Sections 3.6.1 through 3.6.5):..................................................................103 18. Toyota (2021) (Sections 3.6.1 through 3.6.5):..................................................................104 19. Volkswagen (Section 6):...................................................................................................104 20. Volvo (Section 8):.............................................................................................................104 21. MEMA OE Suppliers (Section 4):....................................................................................104 III. Inspections and Non-Conforming Parts – Context and Questions...................................105 III. Inspections and Non-Conforming Parts – OEM Comparative Analysis...........................106 1. BMW (2018) (Sections 6, 10.3-10.5 and 22.5):.................................................................106 2. BMW (2022) (Sections 6, 10.3-10.5):................................................................................106 3. FCA US (2021) (Section 6):...............................................................................................107 4. FCA US / Stellantis (2022) (FCA US Section 6 and Stellantis Global Section 5):............107 5. Ford (2004) (Section 14):....................................................................................................107 6. Ford (2021) (Section 13):....................................................................................................108 7. General Motors (Sections 6 and 15):..................................................................................108 8. Honda (Sections 1.1(b), 4.6, 4.7 and 4.10):........................................................................108 9. Hyundai (Sections 8 and 11):..............................................................................................108 10. Kia (Sections 8 and 11):....................................................................................................109 11. Lucid (Sections 5.1, and 5.4-5.7):.....................................................................................109 12. Mazda (Section 5.6):.........................................................................................................109 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 12):....................................109 14. Nissan (Section 5):............................................................................................................110 15. Rivian (Section 5.3):.........................................................................................................110 16. Scout Motors (Section 8):.................................................................................................110 17. Toyota (2009) (Sections 1.7(a) and (b), 2.5, 2.6 and 3.6):................................................111 18. Toyota (2021) (Sections 1.6.1, and 3.6.6 and 3.7):...........................................................111 19. Volkswagen (Section 8):...................................................................................................112 20. Volvo (Sections 8.5 and 15.2):..........................................................................................113 21. MEMA OE Suppliers (Section 5):....................................................................................113 IV. Supplier Quality – Context and Questions...........................................................................114 Page 8

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

IV. Supplier Quality – OEM Comparative Analysis..................................................................115 1. BMW (2018) (Sections 9 and 22.8):...................................................................................115 2. BMW (2022) (Section 9):...................................................................................................115 3. FCA US (2021) (Section 6):...............................................................................................115 4. FCA US / Stellantis (2022) (FCA US Section 6 and Stellantis Global Sections 9 and 22):.......115 5. Ford (2004) (Section 12):....................................................................................................115 6. Ford (2021) (Section 11):....................................................................................................116 7. General Motors (Sections 12 and 15):................................................................................116 8. Honda (Sections 4.7 and 4.10):...........................................................................................116 9. Hyundai (Section 11):.........................................................................................................116 10. Kia (Section 11):...............................................................................................................117 11. Lucid (Sections 3.3 and Section 5):..................................................................................117 12. Mazda (Section 8):............................................................................................................117 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 11.9, 12.2 and 23):...........117 14. Nissan (Section 10):..........................................................................................................118 15. Rivian (Sections 5 and 6.4):..............................................................................................118 16. Scout Motors (Section 12):...............................................................................................118 17. Toyota (2009) (Sections 1.6, 5.4(b) and 5.4(c)):...............................................................119 18. Toyota (2021) (Sections 1.3, 1.5, 6.4.2 and 6.4.3):...........................................................119 19. Volkswagen (Sections 12 and 13):....................................................................................119 20. Volvo (Section 9):.............................................................................................................120 21. MEMA OE Suppliers (Section 8.2):.................................................................................120 IV. Supplier Quality – Dashboard..............................................................................................121 V. Service Parts – Context and Questions..................................................................................123 V. Service Parts – OEM Comparative Analysis..........................................................................124 1. BMW (2018) (Sections 13.7 and 14):.................................................................................124 2. BMW (2022) (Section 14):.................................................................................................124 3. FCA US (2021) (Section 13):.............................................................................................124 4. FCA US / Stellantis (2022) (FCA US Section 13 and Stellantis Global Section 4):..........125 5. Ford (2004) (Section 33):....................................................................................................125 6. Ford (2021) (Section 33):....................................................................................................125 7. General Motors (Section 5):................................................................................................126 8. Honda (Section 9):..............................................................................................................127 9. Hyundai (Section 21):.........................................................................................................127 10. Kia (Section 21):...............................................................................................................127 11. Lucid (Section 4.1):...........................................................................................................127 12. Mazda (Section 12 and Exhibit F):...................................................................................127 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 8.7 and 17):......................128 14. Nissan (Section 19):..........................................................................................................128 15. Rivian (Sections 2, 3.1, 3.2, and 3.3):...............................................................................128 16. Scout Motors (Section 14):...............................................................................................128 17. Toyota (2009) (Sections 4.2 and 5.4(d)):..........................................................................129 18. Toyota (2021) (Sections 5.2.1 through 5.2.5 and 6.4.4):..................................................129 19. Volkswagen (Section 14):.................................................................................................129 © 2026 MEMA Original Equipment Suppliers

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

20. Volvo (Section 19):...........................................................................................................130 21. MEMA OE Suppliers (Section 3.5):.................................................................................130 V. Service Parts – Dashboard.....................................................................................................131 VI. Invoices and Payment – Context and Questions.................................................................132 VI. Invoices and Payment – OEM Comparative Analysis........................................................133 1. BMW (2018) (Section 7):...................................................................................................133 2. BMW (2022) (Section 7):...................................................................................................133 3. FCA US (2021) (Section 14):.............................................................................................133 4. FCA US / Stellantis (2022) (FCA US Section 14 and Stellantis Global Section 9):..........134 5. Ford (2004) (Sections 10, 11 and 14.7):.............................................................................134 6. Ford (2021) (Sections 9.01, 9.02, 9.04):.............................................................................134 7. General Motors (Sections 6 and 17):..................................................................................134 8. Honda (Section 3.4):...........................................................................................................134 9. Hyundai (Sections 7 and 8):................................................................................................135 10. Kia (Sections 7 and 8):......................................................................................................135 11. Lucid (Sections 8.1 and 8.2):............................................................................................135 12. Mazda (Section 3):............................................................................................................135 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 8.6, 8.8, and 9.6):.............135 14. Nissan (Section 7):............................................................................................................135 15. Rivian (Sections 8 and 10):...............................................................................................136 16. Scout Motors (Section 9):.................................................................................................136 17. Toyota (2009) (Sections 3.2, 3.3 and 3.4):........................................................................136 18. Toyota (2021) (Sections 3.2, 3.3 and 3.4):........................................................................137 19. Volkswagen (Sections 5 and 9):........................................................................................137 20. Volvo (Section 13):...........................................................................................................138 21. MEMA OE Suppliers (Section 7):....................................................................................138 VII. Taxes – Context and Questions...........................................................................................139 VII. Taxes – OEM Comparative Analysis...................................................................................140 1. BMW (2018) (Section 7.2):................................................................................................140 2. BMW (2022) (Section 7.2):................................................................................................140 3. FCA US (2021) (Section 41):.............................................................................................140 4. FCA US / Stellantis (2022) (FCA US Section 41 and Stellantis Global Section 16):........140 5. Ford (2004) (Sections 10.03 and 10.04):............................................................................140 6. Ford (2021) (Sections 9.03 and 9.04):................................................................................140 7. General Motors (Section 19):..............................................................................................140 8. Honda (Section 3.2.b and 3.3):...........................................................................................141 9. Hyundai (Sections 12, 16, 22 and 30):................................................................................141 10. Kia (Sections 12, 16, 22, 30 and 41):................................................................................141 11. Lucid (Section 21):............................................................................................................141 12. Mazda (Section 3.7):.........................................................................................................141 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 5.1(b), 8.8(c) and 25):......142 14. Nissan (Section 39):..........................................................................................................142 15. Rivian (Section 9):............................................................................................................142 Page 10

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

16. Scout Motors (Sections 5 and 36):....................................................................................142 17. Toyota (2009) (Sections 5 and 7):.....................................................................................142 18. Toyota (2021) (Section 6.8):.............................................................................................142 19. Volkswagen (Sections 5 and 36):......................................................................................142 20. Volvo (Section 13.1):........................................................................................................143 21. MEMA OE Suppliers (Section 6.1):.................................................................................143 VIII. Setoff – Context and Questions.........................................................................................144 VIII. Setoff – OEM Comparative Analysis.................................................................................146 1. BMW (2018) (Section 7.11):..............................................................................................146 2. BMW (2022) (Section 7.11):..............................................................................................146 3. FCA US (2021) (Section 14):.............................................................................................146 4. FCA US / Stellantis (2022) (FCA US Section 14 and Stellantis Global n/a):....................146 5. Ford (2004) (Section 11):....................................................................................................146 6. Ford (2021) (Section 10):....................................................................................................146 7. General Motors (Section 17):..............................................................................................146 8. Honda (Section 3.6):...........................................................................................................146 9. Hyundai (Sections 7 and 28(e)):.........................................................................................147 10. Kia (Sections 7 and 28(e)):...............................................................................................147 11. Lucid (Section 8.3):...........................................................................................................147 12. Mazda (Section 6.2):.........................................................................................................147 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 21.10):...............................147 14. Nissan (Section 7.5):.........................................................................................................147 15. Rivian (Section 11):..........................................................................................................147 16. Scout Motors (Section 29):...............................................................................................147 17. Toyota (2009) (Sections 2.3(a), 2.6, 3.9, 3.12 and 5.9(b)(7)):..........................................147 18. Toyota (2021) (Sections 3.3.1 and 3.5):............................................................................148 19. Volkswagen (Sections 9 and 29):......................................................................................148 20. Volvo (Section 13.5):........................................................................................................148 21. MEMA OE Suppliers (Section 7):....................................................................................149 VIII. Setoff – Dashboard.............................................................................................................150 PART THREE.............................................................................................................................153 I. Parts Warranty – Context and Questions..............................................................................154 I. Parts Warranty – OEM Comparative Analysis......................................................................158 1. BMW (2018) (Sections 10.1 and 10.2):..............................................................................158 2. BMW (2022) (Section 10):.................................................................................................158 3. FCA US (2021) (Section 8):...............................................................................................158 4. FCA US / Stellantis (2022) (FCA US Section 8 and Stellantis Global Sections 10 and 12):.....158 5. Ford (2004) (Section 22):....................................................................................................159 6. Ford (2021) (Section 22):....................................................................................................159 7. General Motors (Section 13):..............................................................................................160 8. Honda (Section 5):..............................................................................................................160 9. Hyundai (Section 12):.........................................................................................................161 © 2026 MEMA Original Equipment Suppliers

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10. Kia (Sections 12 and 31):..................................................................................................161 11. Lucid (Sections 6.2-6.7):...................................................................................................161 12. Mazda (Sections 9.1 and 9.2):...........................................................................................162 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 15):....................................162 14. Nissan (Sections 3, 9, 10 and 13):.....................................................................................163 15. Rivian (Sections 4.2, 4.5, 5 and 39.23):............................................................................164 16. Scout Motors (Sections 11 and 15):..................................................................................164 17. Toyota (2009) (Section 6.4):.............................................................................................165 18. Toyota (2021) (Sections 1.3 and 6.4):...............................................................................166 19. Volkswagen (Sections 11 and 15):....................................................................................167 20. Volvo (Sections 1.1, 14 and 15.2.6)..................................................................................168 21. MEMA OE Suppliers (Section 8.1):.................................................................................169 I. Parts Warranty – Dashboard..................................................................................................170 II. Recall – Context and Questions.............................................................................................172 II. Recall – OEM Comparative Analysis.....................................................................................174 1. BMW (2018) (Section 11.4):..............................................................................................174 2. BMW (2022) (Section 11.4):..............................................................................................174 3. FCA US (2021) (Sections 11 and 26):................................................................................174 4. FCA US / Stellantis (2022) (FCA US Sections 11 and 26 and Stellantis Global Section 21):...174 5. Ford (2004) (Section 23):....................................................................................................174 6. Ford (2021) (Section 23):....................................................................................................175 7. General Motors (Section 25):..............................................................................................175 8. Honda (Section 6.1):...........................................................................................................175 9. Hyundai (Section 13):.........................................................................................................175 10. Kia (Section 13):...............................................................................................................175 11. Lucid (Sections 7.2-7.5):...................................................................................................175 12. Mazda (Section 9.3):.........................................................................................................176 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 18):....................................176 14. Nissan (Section 11):..........................................................................................................176 15. Rivian (Section 18.1(b)):..................................................................................................176 16. Scout Motors (Sections 11.c and 15):...............................................................................176 17. Toyota (2009) (Sections 5.5(a) and 5.5(b)):......................................................................176 18. Toyota (2021) (Section 6.5):.............................................................................................177 19. Volkswagen (Sections 15 and 17):....................................................................................177 20. Volvo (Section 15.3):........................................................................................................177 21. MEMA OE Suppliers (Section 8.3):.................................................................................178 II. Recall – Dashboard................................................................................................................179 III. Price Warranty – Context and Questions............................................................................181 III. Price Warranty – OEM Comparative Analysis...................................................................182 1. BMW (2018):......................................................................................................................182 2. BMW (2022):......................................................................................................................182 3. FCA US (2021) (Section 9):...............................................................................................182 Page 12

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

4. FCA US / Stellantis (2022) (FCA US Section 9 and Stellantis Global n/a):......................182 5. Ford (2004):........................................................................................................................182 6. Ford (2021):........................................................................................................................182 7. General Motors:..................................................................................................................182 8. Honda:.................................................................................................................................182 9. Hyundai (Section 14):.........................................................................................................182 10. Kia (Section 14):...............................................................................................................183 11. Lucid (Section 8.1):...........................................................................................................183 12. Mazda (Section 3.3):.........................................................................................................183 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 15.14):...............................183 14. Nissan:..............................................................................................................................183 15. Rivian (Section 8):............................................................................................................183 16. Scout Motors (Section 5f):................................................................................................183 17. Toyota (2009) (Section 2.2(a)):.........................................................................................183 18. Toyota (2021):...................................................................................................................184 19. Volkswagen (Sections 5 and 11):......................................................................................184 20. Volvo (Section 13.7):........................................................................................................184 21. MEMA OE Suppliers:.......................................................................................................184 IV. Indemnification and Product Liability – Context and Questions......................................185 IV. Indemnification and Product Liability – OEM Comparative Analysis..............................187 1. BMW (2018) (Sections 10.3, 10.4, 11):..............................................................................187 2. BMW (2022) (Sections 11.2, 11.3, 11.4 and 11.5):............................................................187 3. FCA US (2021) (Sections 11 and 24):................................................................................187 4. FCA US / Stellantis (2022) (FCA US Sections 11 and 24 and Stellantis Global Sections 10 and 21):..........187 5. Ford (2004) (Section 25):....................................................................................................187 6. Ford (2021) (Section 25):....................................................................................................188 7. General Motors (Sections 16, 25 and 31):..........................................................................188 8. Honda (Section 6):..............................................................................................................188 9. Hyundai (Section 18):.........................................................................................................189 10. Kia (Sections 18 and 21):..................................................................................................189 11. Lucid (Section 10):............................................................................................................189 12. Mazda (Section 11):..........................................................................................................190 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 16 and 23):.......................190 14. Nissan (Section 12):..........................................................................................................191 15. Rivian (Sections 18 and 22):.............................................................................................191 16. Scout Motors (Section 17):...............................................................................................192 17. Toyota (2009) (Sections 4.3, 4.6, 5.5 and 6.16):...............................................................192 18. Toyota (2021) (Section 7):................................................................................................192 19. Volkswagen (Section 17):.................................................................................................193 20. Volvo (Sections 1.1 and 15):.............................................................................................193 21. MEMA OE Suppliers (Section 8):....................................................................................194 IV. Indemnification and Product Liability – Dashboard.........................................................195 V. Default and Remedies – Context and Questions...................................................................197 © 2026 MEMA Original Equipment Suppliers

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V. Default and Remedies – OEM Comparative Analysis..........................................................200 1. BMW (2018) (Sections 2.6, 2.7, 2.8, 10.3 and 22.4):.........................................................200 2. BMW (2022) (Sections 2.7, 2.8 and 10.3):.........................................................................200 3. FCA US (2021) (Sections 21 and 23):................................................................................200 4. FCA US / Stellantis (2022) (FCA US Sections 21 and 23 and Stellantis Global Section 12):............ 201 5. Ford (2004) (Sections 26, 28 and 41):................................................................................201 6. Ford 2021 (Sections 26, 28 and 44):...................................................................................202 7. General Motors (Sections 9, 15, 20, 25, 26, 33 and 36):....................................................202 8. Honda (Sections 4, 13 and 14.10):......................................................................................203 9. Hyundai (Sections 27, 28, 31 and 34):................................................................................203 10. Kia (Sections 27, 28, 31 and 34):......................................................................................204 11. Lucid (Sections 3, 7 and 11):............................................................................................204 12. Mazda (Sections 18 and 20):.............................................................................................204 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 21, 29.1 and 30.4):...........204 14. Nissan (Sections 27 and 28):.............................................................................................205 15. Rivian (Sections 7, 19.3 and 25):......................................................................................206 16. Scout Motors (Sections 15 and 20):..................................................................................207 17. Toyota (2009) (Sections 2.6, 3.7, 5.4 and 5.9):.................................................................207 18. Toyota (2021) (Sections 3.5, 6.9):.....................................................................................208 19. Volkswagen (Sections 15, 19 and 20):..............................................................................209 20. Volvo (Sections 16.2 and 29.4):........................................................................................210 21. MEMA OE Suppliers (Sections 8.2, 8.3, 14 and 23.5):....................................................210 V. Default and Remedies – Dashboard......................................................................................211 VI. Excusable Delays/Force Majeure – Context and Questions..............................................213 VI. Excusable Delays/Force Majeure – OEM Comparative Analysis......................................215 1. BMW (2018) (Sections 3.6-3.7):........................................................................................215 2. BMW (2022) (Section 3.6):................................................................................................215 3. FCA US (2021) (Section 7):...............................................................................................215 4. FCA US / Stellantis (2022) (FCA US Section 7 and Stellantis Global n/a):......................215 5. Ford (2004) (Section 40):....................................................................................................215 6. Ford (2021) (Section 39):....................................................................................................216 7. General Motors (Sections 8 and 27):..................................................................................216 8. Honda (Section 4.8-4.9):.....................................................................................................216 9. Hyundai (Section 10):.........................................................................................................217 10. Kia (Section 10):...............................................................................................................217 11. Lucid (Section 15.1):.........................................................................................................217 12. Mazda (Section 19):..........................................................................................................217 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 1.1(u) and 13):.................218 14. Nissan (Section 33):..........................................................................................................218 15. Rivian (Sections 2.3 and 2.4):...........................................................................................218 16. Scout Motors (Section 23):...............................................................................................219 17. Toyota (2009) (Section 2.7):.............................................................................................219 18. Toyota (2021) (Sections 3.8 and 3.9):...............................................................................220 19. Volkswagen (Sections 21 and 23):....................................................................................220 Page 14

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

20. Volvo (Sections 16 and 27):..............................................................................................221 21. MEMA OE Suppliers (Section 19):..................................................................................221 VI. Excusable Delays/Force Majeure – Dashboard..................................................................223 VII. Dispute Resolution – Context and Questions.....................................................................226 VII. Dispute Resolution – OEM Comparative Analysis............................................................227 1. BMW (2018) (Section 23):.................................................................................................227 2. BMW (2022):......................................................................................................................227 3. FCA US (2021) (Section 26 and Appendix A):..................................................................227 4. FCA US / Stellantis (2022) (FCA US Section 26 and Annex A and Stellantis Global n/a):.......227 5. Ford (2004) (Section 39):....................................................................................................228 6. Ford (2021) (Section 38):....................................................................................................228 7. General Motors (Section 35):..............................................................................................229 8. Honda (Section 14.7):.........................................................................................................229 9. Hyundai (Section 36):.........................................................................................................229 10. Kia (Section 36):...............................................................................................................229 11. Lucid (Sections 23.5 and 23.9):........................................................................................229 12. Mazda (Sections 24, 26 and 28):.......................................................................................230 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 30):....................................230 14. Nissan (Section 43):..........................................................................................................230 15. Rivian (Section 33):..........................................................................................................231 16. Scout Motors (Sections 37 and 38):..................................................................................231 17. Toyota (2009) (Section 7.8):.............................................................................................232 18. Toyota (2021) (Section 8.12):...........................................................................................232 19. Volkswagen (Sections 37, 38 and 43):..............................................................................233 20. Volvo (Section 28):...........................................................................................................233 21. MEMA OE Suppliers (Section 20):..................................................................................233 PART FOUR................................................................................................................................235 I. OEM’s Intellectual Property – Context and Questions........................................................236 I. OEM’s Intellectual Property – OEM Comparative Analysis................................................237 1. BMW (2018) (Sections 12.1-12.3, 15 and 18):..................................................................237 2. BMW (2022) (Sections 12.1-12.3, 15 and 18):..................................................................237 3. FCA US (2021) (Sections 4, 10, 16, 17 and 18):................................................................237 4. FCA US / Stellantis US (2022) (FCA US Sections 4, 10, 16, 17 and 18 and Stellantis Global Sections 19 and 20):.............238 5. Ford (2004) (Sections 15, 17, 35.03 and 46):.....................................................................239 6. Ford (2021) (Sections 14, 15, 16):......................................................................................240 7. General Motors (Sections 23 and 30):................................................................................240 8. Honda (Section 8):..............................................................................................................241 9. Hyundai (Sections 19, 24 and 25):......................................................................................241 10. Kia (Sections 19, 24 and 25):............................................................................................241 11. Lucid (Sections 10.2, 12, 17.1-17.3 and Schedule 1):......................................................241 12. Mazda (Sections 13, 14.1, 14.2, 14.4, 14.5 and 14.6):......................................................242 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 5.3(f)(t), 14.1, 14.3, 24.1 and 32):....243 © 2026 MEMA Original Equipment Suppliers

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14. Nissan (Sections 15, 17, 22 and 23):.................................................................................243 15. Rivian (Sections 12, 14, 39.10 and 39.11):.......................................................................243 16. Scout Motors (Sections 24, 26, and 31):...........................................................................244 17. Toyota (2009) (Sections 2.1(b), 4.5, 4.6 and 5.6):............................................................244 18. Toyota (2021) (Sections 3.1.3, 5.6, and 5.7 and Schedule A):..........................................245 19. Volkswagen (Sections 24, 25, 26, 30 and 31):..................................................................245 20. Volvo (Sections 10.1 and 12):...........................................................................................246 21. MEMA OE Suppliers (Sections 11, 16 and 17):...............................................................246 I. OEM’s Intellectual Property – Dashboard............................................................................247 II. Supplier’s Intellectual Property – Context and Questions..................................................249 II. Supplier’s Intellectual Property – OEM Comparative Analysis.........................................251 1. BMW (2018) (Sections 12.2, 15.3, 18):............................................................................251 2. BMW (2022) (Sections 12.2, 13.1, 15 and 18.1):.............................................................251 3. FCA US (2021) (Sections 10, 16, 17 and 23):..................................................................251 4. FCA US / Stellantis (2022) (FCA US Sections 10, 16, 17 and 23 and Stellantis Global Sections 19 and 20):.........252 5. Ford (2004) (Sections 16, 17, 19 and 20):........................................................................252 6. Ford (2021) (Sections 15, 16, 18, and 19):.......................................................................252 7. General Motors (Sections 22, 23 and 29):........................................................................253 8. Honda (Section 8):............................................................................................................253 9. Hyundai (Section 19):.......................................................................................................254 10. Kia (Section 19):...............................................................................................................254 11. Lucid (Section 17.4):........................................................................................................254 12. Mazda (Section 18.4):.......................................................................................................254 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 14.1, 14.3, 19.1 and 24.1):.......254 14. Nissan (Sections 14, 15 and 22):.......................................................................................255 15. Rivian (Section 12):..........................................................................................................256 16. Scout Motors (Sections 24 and 27):..................................................................................256 17. Toyota (2009) (Sections 4.5, 4.6 and 4.7):........................................................................256 18. Toyota (2021) (Section 5.7):.............................................................................................257 19. Volkswagen (Section 24):.................................................................................................258 20. Volvo (Sections 10.2, 10.3, 10.4 and 10.6):......................................................................258 21. MEMA OE Suppliers (Sections 11, 16 and 17.2):............................................................259 II. Supplier’s Intellectual Property – Dashboard.....................................................................260 III. Infringement – Context and Questions................................................................................263 III. Infringement – OEM Comparative Analysis.......................................................................264 1. 2. 3. 4. 5. 6. 7.

BMW (2018) (Section 15):...............................................................................................264 BMW (2022) (Section 15):...............................................................................................264 FCA US (2021) (Sections 8 and 18):................................................................................264 FCA US / Stellantis (2022) (FCA US (2021) Sections 8 and 18 and Stellantis Global Section 20):.265 Ford (2004) (Section 21):..................................................................................................265 Ford (2021) (Sections 19, 20, 21):....................................................................................265 General Motors (Section 24):............................................................................................266

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

8. Honda (Section 6.1):.........................................................................................................267 9. Hyundai (Sections 12(c) and 19(a)):.................................................................................267 10. Kia (Sections 12(c) and 19(a)):.........................................................................................267 11. Lucid (Sections 6.2 and 10.2):..........................................................................................267 12. Mazda (Sections 9.1, 11.1, 11.2):......................................................................................267 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 14.2 and 14.4):.................268 14. Nissan (Section 16):..........................................................................................................268 15. Rivian (Section 18.3):.......................................................................................................268 16. Scout Motors (Section 24f):..............................................................................................268 17. Toyota (2009) (Section 4.6(e)):.........................................................................................269 18. Toyota (2021) (Sections 7.1 and 7.2):...............................................................................269 19. Volkswagen (Sections 24 (e) and (f)):..............................................................................269 20. Volvo (Section 10.6):........................................................................................................270 21. MEMA OE Suppliers (Section 11.7):...............................................................................270 III. Infringement – Dashboard...................................................................................................271 IV. Cybersecurity – Context and Questions...............................................................................274 PART FIVE ................................................................................................................................275 I. OEM-Owned Tooling and Other Property – Context and Questions..................................276 1. BMW (2018) (Section 13):.................................................................................................279 2. BMW (2022) (Section 13):.................................................................................................279 3. FCA US (2021) (Section 10):.............................................................................................280 4. FCA US / Stellantis (2022) (FCA US Section 10 and Stellantis Global Sections 17 and 18):...280 5. Ford (2004) (Sections 14, 32.01 and 34):...........................................................................280 6. Ford (2021):........................................................................................................................281 7. General Motors (Section 22):..............................................................................................281 8. Honda (Section 8.1):...........................................................................................................282 9. Hyundai (Section 16):.........................................................................................................282 10. Kia (Sections 16 and 41):..................................................................................................282 11. Lucid (Sections 9.1-9.3):...................................................................................................283 12. Mazda (Section 14.4, 14.7, 14.8 and 14.9):......................................................................283 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 1.1 (j-l), 5, 10, 22 and 25):...283 14. Nissan (Sections 17, 18 and 39):.......................................................................................284 15. Rivian (Sections 5.3, 15 and 21.6):...................................................................................285 16. Scout Motors (Section 25 and 27):...................................................................................286 17. Toyota (2009) (Sections 3.1(f), 3.2(c), 3.6, 3.10-3.11 and 4.5):.......................................287 18. Toyota (2021) (Sections 3.1(f), 3.2(c), 3.6, 3.10-3.11 and 4.5):.......................................287 19. Volkswagen (Sections 24, 25, 26 and 28):........................................................................288 20. Volvo (Section 18):...........................................................................................................289 21. MEMA OE Suppliers (Section 12):..................................................................................290 I. OEM-Owned Tooling and Other Property – Dashboard.....................................................291 II. Payment for OEM-Owned Tooling – Context and Questions.............................................293

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II. Payment for OEM-Owned Tooling – OEM Comparative Analysis....................................295 1. BMW (2018) (Section 13.8):..............................................................................................295 2. BMW (2022) (Section 13):.................................................................................................295 3. FCA US (2021) (Section 10):.............................................................................................295 4. FCA US / Stellantis (2022) (FCA US Section 10 and Stellantis Global n/a):....................295 5. Ford (2004) (Sections 34.04, 34.15 and 34.16):.................................................................295 6. Ford (2021) (Sections 34.04, 34.15 and 34.16):.................................................................295 7. General Motors:..................................................................................................................295 8. Honda:.................................................................................................................................295 9. Hyundai:..............................................................................................................................296 10. Kia (Section 41):...............................................................................................................296 11. Lucid (Section 9.3):...........................................................................................................296 12. Mazda (Section 14.7):.......................................................................................................296 13. Mercedes-Benz US International, Inc. (“MBUSI”):.........................................................296 14. Nissan (Section 18):..........................................................................................................296 15. Rivian:...............................................................................................................................297 16. Scout Motors (Sections 9 and 28):....................................................................................297 17. Toyota (2009) (Sections 3.45 and 3.11):...........................................................................297 18. Toyota (2021) (Sections 3.2.2, 3.3, 4.1.3 and 4.6):...........................................................298 19. Volkswagen (Section 28):.................................................................................................298 20. Volvo (Section 18.2):........................................................................................................299 21. MEMA OE Suppliers (Section 12.3):...............................................................................299 II. Payment for OEM-Owned Tooling – Dashboard................................................................300 III. Supplier-Owned Tooling – Context and Questions.............................................................302 III. Supplier-Owned Tooling – OEM Comparative Analysis....................................................303 1. BMW (2018) (Sections 13.4-13.6 and 13.8):.....................................................................303 2. BMW (2022) (Section 13.2):..............................................................................................303 3. FCA US (2021):..................................................................................................................303 4. FCA US / Stellantis (2022) (FCA US n/a and Stellantis Global Section 17):....................303 5. Ford (2004) (Section 35):....................................................................................................303 6. Ford (2021):........................................................................................................................303 7. General Motors (Section 21):..............................................................................................303 8. Honda:.................................................................................................................................304 9. Hyundai (Section 15):.........................................................................................................304 10. Kia (Sections 15 and 41):..................................................................................................304 11. Lucid (Section 9.3):...........................................................................................................304 12. Mazda (Section 14.7):.......................................................................................................304 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 5.7):...................................304 14. Nissan (2023) (Section 18.1):...........................................................................................305 15. Rivian:...............................................................................................................................305 16. Scout Motors (Section 27):...............................................................................................305 17. Toyota (2009) (Section 3.3):.............................................................................................305 18. Toyota (2021) (Sections 3.6.5, 4.4):..................................................................................306 19. Volkswagen (Section 27):.................................................................................................306 Page 18

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

20. Volvo (Section 18.3):........................................................................................................306 21. MEMA OE Suppliers (Section 13):..................................................................................306 III. Supplier-Owned Tooling – Dashboard................................................................................307 PART SIX

................................................................................................................................309

I. Advertising – Context and Questions......................................................................................310 I. Advertising – OEM Comparative Analysis.............................................................................311 1. BMW (2018) (Section 12.3):............................................................................................311 2. BMW (2022) (Section 12):...............................................................................................311 3. FCA US (2021) (Section 16):...........................................................................................311 4. FCA US / Stellantis (2022) (FCA US Section 16 and Stellantis Global n/a):..................311 5. Ford (2004) (Section 46):..................................................................................................311 6. Ford (2021) (Section 45):..................................................................................................311 7. General Motors (Section 30):............................................................................................311 8. Honda (Section 11.2):.......................................................................................................311 9. Hyundai (Section 24):.......................................................................................................312 10. Kia (Section 24):...............................................................................................................312 11. Lucid (Section 20):...........................................................................................................312 12. Mazda (Section 14.3):.......................................................................................................312 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 32):....................................312 14. Nissan (Section 23):..........................................................................................................312 15. Rivian (Section 38):..........................................................................................................312 16. Scout Motors (Section 31):...............................................................................................312 17. Toyota (2009) (Section 6.7):.............................................................................................312 18. Toyota (2021) (Section 6.7):.............................................................................................313 19. Volkswagen (Section 31):.................................................................................................313 20. Volvo (Section 24):...........................................................................................................313 21. MEMA OE Suppliers (Section 23.1):...............................................................................313 II. Audit and Inspection Rights – Context and Questions........................................................314 II. Audit and Inspection Rights – OEM Comparative Analysis...............................................315 1. BMW (2018) (Sections 9.4, 22.5, 22.8 and 22.9):............................................................315 2. BMW (2022) (Sections 9.4, 21.7, 21.8 and 21.9):............................................................315 3. FCA US (2021) (Sections 10, 12 and 21):........................................................................315 4. FCA US / Stellantis (2022) (FCA US Sections 10, 12, 20, 21 and 29 and Stellantis Global Section 12):....315 5. Ford (2004) (Sections 17 and 32):....................................................................................316 6. Ford (2021) (Sections 16 and 32):....................................................................................316 7. General Motors (Sections 15 and 34):..............................................................................316 8. Honda (Sections 8.1 and 13.3c):.......................................................................................316 9. Hyundai (Sections 11, 23 and 29):....................................................................................317 10. Kia (Sections 11, 23 and 29):............................................................................................317 11. Lucid (Sections 19.1 and 19.2):........................................................................................317 12. Mazda (Section 25):..........................................................................................................317 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 19 and 24):.......................318 © 2026 MEMA Original Equipment Suppliers

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

14. Nissan (Sections 22, 23A, 23B, and 24):..........................................................................318 15. Rivian (Sections 19.2 and 20):..........................................................................................318 16. Scout Motors (Sections 8 and 19):....................................................................................319 17. Toyota (2009) (Sections 3.6 and 4.6):...............................................................................319 18. Toyota (2021) (Sections 1.6.2, 3.6.6, 6.4.5, and 5.6):.......................................................319 19. Volkswagen (Sections 8 and 19):......................................................................................319 20. Volvo (Sections 20 and 23):..............................................................................................320 21. MEMA OE Suppliers (Sections 4, 14 and 23.2):..............................................................320 III. Labor Disputes – Context and Questions............................................................................322 III. Labor Disputes – OEM Comparative Analysis...................................................................323 1. BMW (2018) (Sections 3.6-3.8):......................................................................................323 2. BMW (2022) (Section 3.6):..............................................................................................323 3. FCA US (2021) (Section 7):.............................................................................................323 4. FCA US / Stellantis (2022) (FCA US Section 7 and Stellantis Global n/a):....................323 5. Ford (2004) (Section 38):..................................................................................................323 6. Ford (2021) (Section 37):..................................................................................................323 7. General Motors (Section 8):..............................................................................................323 8. Honda (Section 4.8):.........................................................................................................324 9. Hyundai (Section 9):.........................................................................................................324 10. Kia (Section 9):.................................................................................................................324 11. Lucid (Sections 2.5 and 15):.............................................................................................324 12. Mazda (Section 19.3):.......................................................................................................324 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 13.3):.................................324 14. Nissan (Section 33):..........................................................................................................325 15. Rivian (Section 24):..........................................................................................................325 16. Scout Motors (Section 23):...............................................................................................325 17. Toyota (2009) (Section 2.7(d)):........................................................................................325 18. Toyota (2021) (Section 3.9.3):..........................................................................................325 19. Volkswagen (Section 23):.................................................................................................325 20. Volvo (Section 16.3):........................................................................................................325 21. MEMA OE Suppliers (Sections 19 and 20):.....................................................................326 IV. Import and Export – Context and Questions......................................................................327 IV. Import and Export – OEM Comparative Analysis..............................................................329 1. BMW (2018) (Section 8):.................................................................................................329 2. BMW (2022) (Section 8):.................................................................................................330 3. FCA US (2021) (Sections 15 (a)-(f)):...............................................................................330 4. FCA US / Stellantis (2022) (FCA US Sections 15 (a)-(f) and Stellantis Global Section 15):..........330 5. Ford (2004) (Section 10.04):.............................................................................................330 6. Ford (2021) (Section 9.03):...............................................................................................331 7. General Motors (Sections 18 and 32):..............................................................................331 8. Honda (Sections 12 and 15):.............................................................................................331 9. Hyundai (Sections 22 (a)-(e)):..........................................................................................331 10. Kia (Sections 22 (a)-(e)):..................................................................................................332 11. Lucid (Section 18):...........................................................................................................332 Page 20

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

12. Mazda (Sections 15, 31):..................................................................................................332 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7):.......333 14. Nissan (Sections 4, 6.5 and 40):........................................................................................333 15. Rivian (Sections 6.2 and 16):............................................................................................334 16. Scout Motors (Section 7):.................................................................................................334 17. Toyota (2009) (Sections 5.7 (a) and (b)):..........................................................................334 18. Toyota (2021) (Section 6.8):.............................................................................................335 19. Volkswagen (Section 7):...................................................................................................335 20. Volvo (Section 22.2):........................................................................................................336 21. MEMA OE Suppliers (Section 21):..................................................................................336 IV. Import and Export – Dashboard..........................................................................................337 V. Suppliers with Special Needs – Context and Questions.......................................................339 V. Suppliers with Special Needs – OEM Comparative Analysis...............................................340 1. BMW (2018) (Section 21):...............................................................................................340 2. BMW (2022) (Section 20):...............................................................................................340 3. FCA US (2021) (Section 25):...........................................................................................340 4. FCA US / Stellantis (2022) (FCA US Section 25 and Stellantis Global n/a):..................340 5. Ford (2004) (Section 36.02):.............................................................................................340 6. Ford (2021) (Sections 35.03, 36.06):................................................................................340 7. General Motors:................................................................................................................340 8. Honda:...............................................................................................................................340 9. Hyundai (Section 33):.......................................................................................................340 10. Kia (Section 33):...............................................................................................................341 11. Lucid:................................................................................................................................341 12. Mazda:...............................................................................................................................341 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 34):....................................341 14. Nissan:..............................................................................................................................341 15. Rivian:...............................................................................................................................341 16. Scout Motors:....................................................................................................................341 17. Toyota (2009):...................................................................................................................341 18. Toyota (2021):...................................................................................................................341 19. Volkswagen:......................................................................................................................341 20. Volvo:................................................................................................................................341 21. MEMA OE Suppliers:.......................................................................................................341 VI. Electronic Communication – Context and Questions........................................................342 VI. Electronic Communication – OEM Comparative Analysis................................................343 1. 2. 3. 4. 5. 6. 7.

BMW (2018) (Sections 7.1, 16 and 17):...........................................................................343 BMW (2022) (Sections 7.1-7.2, 16 and 17):....................................................................343 FCA US (2021) (Section 27):...........................................................................................344 FCA US / Stellantis (2022) (FCA US Section 27 and Stellantis Global n/a):..................344 Ford (2004) (Section 44):..................................................................................................344 Ford (2021) (Section 43):..................................................................................................344 General Motors (Section 17):............................................................................................344

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8. Honda (Section 2.2):.........................................................................................................344 9. Hyundai (Section 38):.......................................................................................................344 10. Kia (Section 38):...............................................................................................................344 11. Lucid (Section 23.6):........................................................................................................344 12. Mazda:...............................................................................................................................344 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 11.3-11.6):.......................344 14. Nissan (2023) (Sections 1 and 45):...................................................................................344 15. Rivian (Section 32):..........................................................................................................345 16. Scout Motors (Section 33):...............................................................................................345 17. Toyota (2009) (Sections 1.4 and 6):..................................................................................345 18. Toyota (2021) (Sections 2.3 and 2.5):...............................................................................345 19. Volkswagen (Section 33):.................................................................................................345 20. Volvo (Sections 22.3 and 29.1):........................................................................................345 21. MEMA OE Suppliers (Section 23.3):...............................................................................346 VII. Compliance with Laws and Environmental, Social, and Corporate Governance Principles – Context and Questions.....................................................................347 VII. Compliance with Laws and Environmental, Social, and Corporate Governance Principles – OEM Comparative Analysis.............................................................348 1. BMW (2018) (Sections 10.1, 21 and 23):.........................................................................348 2. BMW (2022) (Section 20):...............................................................................................348 3. FCA US (2021) (Sections 24 and 26):..............................................................................348 4. FCA US / Stellantis (2022) (FCA US Sections 24 and 26 and Stellantis Global Sections 11, 23 and 25):....349 5. Ford (2004) (Sections 36, 37 and 39.07):.........................................................................349 6. Ford (2021) (Sections 35 and 36):....................................................................................349 7. General Motors (Sections 14 and 31):..............................................................................350 8. Honda (Sections 2.2, 14.5, 14.7 and 15):..........................................................................351 9. Hyundai (Sections 32 and 36):..........................................................................................351 10. Kia (Sections 32 and 36):..................................................................................................351 11. Lucid (Sections 22.1 and 23.9):........................................................................................351 12. Mazda (Sections 10, 24 and 31):.......................................................................................351 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 30):....................................352 14. Nissan (Sections 35, 36 and 40):.......................................................................................352 15. Rivian (Sections 4.1, 4.4, 31, and 33):..............................................................................353 16. Scout Motors (Sections 13 and 16):..................................................................................353 17. Toyota (2009) (Sections 4.3 and 7.2):...............................................................................353 18. Toyota (2021) (Sections 5.3 and 8.3):...............................................................................354 19. Volkswagen (Sections 16, 37, 38 and 41):........................................................................354 20. Volvo (Sections 22.1, 22.4, 22.5, 26 and 28):...................................................................355 21. MEMA OE Suppliers (Section 10):..................................................................................355 VIII. Relationship of the Parties – Context and Questions......................................................356 VIII. Relationship of the Parties – OEM Comparative Analysis..............................................357 1. BMW (2018):....................................................................................................................357 2. BMW (2022):....................................................................................................................357 3. FCA US (2021):................................................................................................................357 Page 22

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4. FCA US / Stellantis (2022) (FCA US n/a and Stellantis Global Section 27):..................357 5. Ford (2004):......................................................................................................................357 6. Ford (2021):......................................................................................................................357 7. General Motors (Section 38):............................................................................................357 8. Honda:...............................................................................................................................357 9. Hyundai (Section 35):.......................................................................................................357 10. Kia (Section 35):...............................................................................................................357 11. Lucid (Section 23.11):.......................................................................................................357 12. Mazda (Section 34):..........................................................................................................358 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 27):....................................358 14. Nissan (Section 31):..........................................................................................................358 15. Rivian (Section 26):..........................................................................................................358 16. Scout Motors (Section 32):...............................................................................................358 17. Toyota (2009) (Section 5.1):.............................................................................................358 18. Toyota (2021) (Section 6.1):.............................................................................................358 19. Volkswagen (Section 32):.................................................................................................359 20. Volvo (Section 29.6):........................................................................................................359 21. MEMA OE Suppliers (Section 23.4):...............................................................................359 IX. Ingredients – Context and Questions...................................................................................360 IX. Ingredients – OEM Comparative Analysis..........................................................................361 1. BMW (2018) (Section 20):.................................................................................................361 2. BMW (2022) (Section 20):.................................................................................................361 3. FCA US (2021) (Section 28):.............................................................................................361 4. FCA US / Stellantis (2022) (FCA US Section 28 and Stellantis Global Section 11):........361 5. Ford (2004) (Sections 24.04 and 24.05):............................................................................361 6. Ford (2021) (Sections 24.04 and 24.05):............................................................................361 7. General Motors (Section 14):..............................................................................................361 8. Honda:.................................................................................................................................361 9. Hyundai (Sections 5 and 12(d)):.........................................................................................362 10. Kia (Sections 5 and 12(d)):...............................................................................................362 11. Lucid (Sections 2.8 and 22):.............................................................................................362 12. Mazda (Exhibit C):...........................................................................................................362 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 35.2):.................................362 14. Nissan (Section 38):..........................................................................................................362 15. Rivian (Section 16.1):.......................................................................................................362 16. Scout Motors (Section 6(b)):............................................................................................363 17. Toyota (2009) (Section 4.4):.............................................................................................363 18. Toyota (2021) (Section 4.4):.............................................................................................363 19. Volkswagen (Sections 6 and 11):......................................................................................363 20. Volvo (Section 21.3):........................................................................................................363 21. MEMA OE Suppliers (Section 10):..................................................................................363 X. Insurance – Context and Questions.......................................................................................364 X. Insurance – OEM Comparative Analysis..............................................................................365 1. BMW (2018) (Section 19):.................................................................................................365 © 2026 MEMA Original Equipment Suppliers

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2. BMW (2022) (Section 19):.................................................................................................365 3. FCA US (2021) (Section 11(a)):.........................................................................................365 4. FCA US / Stellantis (2022) (FCA US Section 11(a) and Stellantis Global Section 22):....365 5. Ford (2004) (Section 34.18):...............................................................................................365 6. Ford (2021) (Section 34.18):...............................................................................................365 7. General Motors (Section 28):..............................................................................................365 8. Honda (Section 7):..............................................................................................................365 9. Hyundai (Section 17):.........................................................................................................367 10. Kia (Sections 17 and 41):..................................................................................................367 11. Lucid (Section 16):............................................................................................................367 12. Mazda (Section 40):..........................................................................................................368 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 23.4):.................................368 14. Nissan (Section 18A):.......................................................................................................368 15. Rivian (Section 17):..........................................................................................................368 16. Scout Motors (Section 18):...............................................................................................369 17. Toyota (2009) (Section 5.3):.............................................................................................369 18. Toyota (2021) (Section 6.3 and Schedule B):...................................................................369 19. Volkswagen (Section 18):.................................................................................................370 20. Volvo:................................................................................................................................370 21. MEMA OE Suppliers (Section 12):..................................................................................370

Appendix A – Documents Referenced in OEM Terms and Conditions Appendix B – MEMA Original Equipment Suppliers Updated Model General Terms and Conditions for Light Vehicles (September 2022)

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

PART ONE I.

Contract Formation 26

II.

Contract Changes 44

III. Assignment and Subcontracting IV.

Expiration and Termination 69

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

I. Contract Formation – Context and Questions 1. Not a “Legal Technicality” When auto industry disputes wind up in court, more often than not, the dispute centers on what documents make up the contract, rather than what those documents mean. For example, a Supplier’s bid may condition its price quote on volume and raw material assumptions. When volumes disappoint and raw material prices soar, the Supplier’s right to relief may be determined by whether the bid is part of the contract and, as many Suppliers have painfully learned, if the Supplier did not make the bid part of the production Purchase Order, the answer may be unsettled and the risks high. This means that Suppliers must understand that contract formation is not a legal technicality. Once the contract is formed, it is often too late for the Supplier to protect itself. The lesson is clear: If an assumption, past practice, understanding, or document is critical to the Supplier, the Supplier should do all that it can to see that it is specifically included in the contract. 2. Offer and Acceptance A contract is formed, of course, when an offer is accepted. Acceptance is clearest when expressed in writing. Acceptance may also occur by performance or other acts. See UCC 2-2043 (“A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract”) and UCC 2-206 (generally allowing acceptance “in any manner … reasonable in the circumstances …”). Although written acceptance is not essential, whether conduct is sufficient for acceptance can be unclear. At one time if the terms of an offer and acceptance differed, either there would be no contract at all, or one party’s terms would be completely discarded. UCC Article 2 recognizes that variations between offer and acceptance often involve the question of what are the terms, rather than whether there is a contract at all, especially when production has launched. The terms of the contract might be only the Buyer’s terms, only the Supplier’s, some of both, or some of both combined with UCC terms that fill in contractual gaps, which neither Buyer nor Supplier proposed. The Uniform Commercial Code’s Battle of the Forms provisions are intended to determine the terms but as discussed in the following section, it frequently does not provide clear and simple answers. 3. Lack of Actual Agreement on Terms = Uncertainty All OEM terms say, in varying ways, that the goods are sold only on their terms, regardless of whether the Supplier expressly agreed, objected, or proposed different terms. Although this language is not meaningless, when the OEM and Supplier do not expressly agree on the terms, and particularly when they exchange conflicting terms, there is room for uncertainty and argument as to the actual terms of the parties’ agreement. As stated in the leading treatise:

This Book will make other references to Article 2 of the UCC (e.g., UCC 2-###). Article 2 applies only to the sale of goods, not to the sale of services or other things.

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 There is no language that a lawyer can put on a form that will always assure the client of forming a contract on the client’s own terms. . . . [T]he only answer may be to raise the price, buy insurance, or—as a last resort—have an extra martini every evening and do not capitalize the corporation too heavily.4 4. Battle of the Forms Does Not Eliminate Uncertainty UCC 2-207 provides rules for resolving these “Battle of the Forms” disputes.5 Extensive consideration of the highly technical (and often misunderstood, even by some attorneys) nuances of UCC 2-207 is beyond the scope of this Comparative Analysis. However, a few points are in order The Battle of the Forms provides rules for determining the terms of a contract, not whether a contract exists. It typically comes into play when the parties have already begun doing business, often for years, before a dispute arises. Also, the Battle of the Forms applies only if there is a battle, i.e., the parties have proposed different terms. In light of these complexities, a Supplier would be wise to seek legal advice on how to most effectively wage the battle before the battle begins, beginning with RFQs and quotations. 5. Who are the Parties to the Contract? Usually only the parties to a contract can sue, be sued, and recover or be held liable if the contract is breached. The parties are usually identified on the face of the purchase order. However, that is becoming less certain as corporate and management structures of buyers and sellers become more complex. For example, often a PO may be issued between US subsidiaries, but parents or other affiliated entities are extensively, or solely, responsible for the negotiations or performance of the contract. Uncertainty leads to disputes and litigation over matters such as product conformance (“Buyer Subsidiary told me it would pay for a design change, but Parent says it never agreed and will not pay”), or the subsidiary is financially distressed and the other party looks for recovery from the foreign parent, or that foreign parent is sued in the US and contests whether it can be sued there – in legal lingo, whether personal jurisdiction exists, often a matter of great importance to the foreign subsidiary because of the US’s (actual or perceived) burdensome, expensive and risky litigation. Careful contract drafting can avoid many of these problems. For example, a framework agreement should, and often does, address the process for subsidiaries to contract under it and the legal effect of their doing so. Or a contract may address the possibility that Buyer entities other than the one identified in the PO may be involved in the negotiation and performance of the contract, and the legal effect of their doing so. However, both the factual variations and the legal questions are endless and contracting cannot completely eliminate the risks.

White and Summers, Uniform Commercial Code, Fourth Ed., §1-3, p. 31. Some OEM and other buyer’s standard terms expressly provide that UCC 2-207 does not apply. Although there is little law on point, it is questionable whether these provisions matter. The Battle of the Forms is fundamentally a set of rules for determining which terms are part of a contract. The Battle of the Forms itself will determine whether the “Battle of the Forms does not apply” language is part of the contract.

4 5

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

6. Directed Suppliers A variation of the “who are the parties” problem is directed supplies. Often there is nothing in the contract that identifies directed suppliers or addresses the contractual significance of being one, let alone making the directed supplier a party to the contract. Under basic contract principles, and, also under the specific terms of many contracts, the higher tier supplier is fully liable to the buyer for the performance of a lower tier supplier, including, for example, delivery and warranty failures, unless the contract terms expressly say otherwise. Most OEMs have standard directed supply agreements which better define the respective responsibilities of the OEM, the Tier 1 and the lower-tier directed supplier. However, these standard forms vary widely both in their contract structure and in their substantive provisions regarding the responsibilities and liability of the several parties, such as, for example, whether the higher-tier supplier remains fully responsible for quality failures of the directed supplier. Ideally, there will be a three-party agreement contractually linking the parties, but although contract architecture matters, the substance of how rights and responsibilities are allocated is far more important. Directed supply agreements should be carefully negotiated, and often counsel should be consulted to ensure that the agreed deal is properly made part of the Agreement. 7. Integration (the “4-Corners” Rules) OEM terms almost always include an “integration clause” saying that the Agreement (usually carefully defined in the standard terms) is the complete agreement and any prior agreement or promise are not part of the contract. The integration clause is usually combined with formal modification rules that exclude any post-contracting changes that do not satisfy formal requirements for amendment. Note that the fact that a promise is in writing does not matter– integration and modification provisions apply equally to oral and written agreements.6 For Suppliers, the lesson is clear – if the Supplier believes that a promise is part of the deal, it should insist that it be included in the Agreement, as defined in the Buyer’s terms. This is often done by referencing pre-contracting promises in the purchase order. 8. Pre-Production Agreements The commercial agreements between Suppliers and OEMs often do not begin with the production Purchase Order. Commonly there are RFQs, quotations, pre-production awards, engineering and development agreements, or a form of a master supply agreement, which often include terms that may be intended to be part of the parties’ production relationship. These terms may be excluded by the production agreement unless care is taken to properly include them in that Agreement. Frequently, this is done by referencing the prior agreement in the production Purchase Order, such as “Subject to Program Award letter dated XXXX.” However, if only specific portions of the pre-production agreements are intended to be part of the Agreement, that should be specified.

See UCC 2-202 and Ferndale Labs., Inc. v. Schwarz Pharma, Inc., 123 F. Appx 641, 646 (6th Cir. 2005) (Michigan law)

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9. Incorporation of Web Terms Almost all OEM terms include various documents that are posted on the OEM Supplier website and are incorporated by reference, covering topics such as packaging, warranty claim processing and quality manuals, but also matters such as “social responsibility” policies. This analysis does not attempt to completely catalog or analyze all such incorporated terms. The Supplier must, however, take active steps to locate and understand the incorporated provisions. 10. The Need for a Quantity – What is a Requirements Contract? Prior versions of this Comparative Analysis explained that the most important and unsettled issue in Michigan7 contract law for the sale goods is what promises are required to create a requirements contract and, if it is not a requirements contract, what is it? As of August 2026, that has not changed. The answer to this question is crucial to the automotive supply chain, because it is largely built on the long-term, reliable, supply of parts from a single seller as and when required by the buyer. A contract that straightforwardly promises that Buyer will buy and Supplier will sell 100% (or another specific percentage) of Buyers’ requirement, as communicated through Releases, is a requirements contract. But over time, many Buyers including many tiered suppliers, have moved away from this straightforward promise, instead promising to purchase its requirements within a range (in FCA’s case for example, between “approximately 65% and 100%”) or even between one unit and 100% of requirements. And in some cases, the contract makes no buyer promise at all, saying in substance, Supplier will sell whatever Buyer orders and Buyer will pay if it chooses to order anything. The question of what promises create a requirements contract is not new, and from time to time going back at least 20 years it has been addressed by courts, not always consistently. However, the question became of central importance under Michigan law following the Michigan Supreme Court’s decision in MSSC, Inc. v. Airboss Flexible Prods. Co., 511 Mich. 176, 999 N.W.2d 335 (2023). Airboss addressed a contract in which the Buyer only promised to pay for whatever it chose to order. The court held that: (1) that promise does not create a requirements contract; (2) “blanket” is not a synonym for requirements, so the label “Blanket Purchase Order” does not make it into a requirements contact; and (3) if it is not a requirements contract, then it is a “release-by-release contract,” in which the Supplier’s only obligation is to satisfy the firm quantities in accepted releases, but need not accept future releases. From a legal perspective, the uncertainty relates to the interplay between the UCC’s “statute of frauds,” (UCC 2-201) and its requirements contract provision, UCC 2-306. Under the

The issue has so far been addressed only under Michigan law, probably because of the central role of Michigan law in auto supply chain contracting. However, that same provisions of the UCC apply in all 50 states, so it is likely that the same questions, not necessarily with the same answers, will, arise under other state’s law.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

UCC statute of frauds, a contract that does not have a written quantity is unenforceable and, if it has a quantity, it is only enforceable to that quantity. In other words, a contract for the sale of 10 widgets means that the parties are obligated to buy and sell 10 widgets and have no obligation to do so for an 11th widget. A requirements contract, by definition, lacks a numeric quantity. However, UCC 2-306 says, in substance, that “requirements” counts as a quantity for purpose of the statute of frauds. From a practical perspective, the uncertainty under Michigan law revolves around two questions: (i) which court is “the boss” and (ii) what did the boss say? The answer to the first question differs between state and federal court. The answer to the second is unclear because the reasoning of “the boss” in Airboss and related federal cases is difficult to apply beyond the specific contract language A full discussion of AirBoss and the subsequent cases arising out of it would be lengthy and beyond the scope of this volume, except to say that since AirBoss was decided there has been a great deal of litigation addressing many particular contract provisions, with difficult to reconcile, if not contradictory, outcomes. In light of the uncertainty, buyers intending to create a requirements contract should consider whether their standard terms create an unnecessary risk that it will be found to be a release-by-release contract. Once the contract is agreed to, both buyers and sellers should assess whether the particular contract terms (whether contained in the Terms and Conditions or the PO) create an enforceable long term requirements contracts and, if not, consider the risks and opportunities created by a releaseby-release or other quantity term. It is prudent to involve counsel in these assessments and decisions 11. The MEMA OE Suppliers Alternative The MEMA OE Suppliers model terms generally have a substantially different approach than the OEM standard terms. They allow the Supplier to propose different or additional terms. Rather than rejecting these proposals outright (as most OEM forms do) or accepting them outright (as can occur under UCC 2-207), the MEMA OE Suppliers model terms generally require mutual agreement before the contract is formed.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

I. Contract Formation – OEM Comparative Analysis 1. BMW (2018) (Sections 1.1, 1.2, 2.1 and 2.2): •

Agreement consists of: (i) Purchase Order; (ii) standard terms; and (iii) any applicable framework supply agreement.

•

BMW uniquely does not include a separate “integration clause,” but § 2.1 does state that any additional or different Terms and Conditions are expressly excluded and are not part of the parties’ contract.  The lack of an integration clause increases the possibility of a court finding that a prior agreement is included in the Agreement. Nevertheless, a Supplier is at considerable risk if the prior agreement is not referenced in the Purchase Order.

•

Acceptance is by “any act taken by Seller for the fulfillment of a Purchase Order.”

•

Supplier must give a written acknowledgement of acceptance within 14 working days after receipt of the Purchase Order. BMW may revoke a Purchase Order if not accepted (by acknowledgement or performance) within 14 working days.

•

Acceptance is limited to the terms of the Purchase Order.

•

Additional or different terms presented by Supplier are excluded.

•

The Purchase Order will prevail over the Terms and Conditions in the event of a discrepancy, contradiction, or inconsistency.

•

Each Purchase Order is a separate and individual Supply Contract.

2. BMW (2022) (Sections 1.1, 1.2, 1.3, 2.1 and 2.2): •

A Supply Contract is concluded if BMW Group, as Buyer, issues a Purchase Order on the basis of a Long-term Supply Contract for a specific period of time (usually a calendar year).

•

If a Purchase Order is issued under a Long-term Supply Contract, acceptance occurs by: seller’s (i) written acceptance within 14 work days of receipt of the Purchase Order or (ii) any action taken by Supplier to fulfill the order.

•

Somewhat contradictory to the above, the Terms also say that they become binding no later than delivery of Goods.

•

If Supplier fails to accept within 14 days (either by non-performance or no written acceptance), BMW has the right, but not the obligation to withdraw the order without Seller having entitlement to raise any claim against BMW.

•

The Supply Contracts consists of (i) any terms and conditions in the Supply Contract, (ii) the 2022 Terms and Conditions, as well as (iii) the terms of the Long-term Supply Contract. Any documents or requirements referenced in the terms are provided on a BMW portal.

•

Any additional or deviating terms or supply conditions of Supplier are expressly excluded and are not part of the Supply Contract, unless agreed in writing by the parties.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

As with its earlier terms, BMW uniquely does not include a separate “integration clause,” but § 2.2 does state that any additional or different Terms and Conditions are expressly excluded and are not part of the parties’ contract.  The lack of an integration clause increases the possibility of a court finding that a prior agreement is included in the Agreement. Nevertheless, a Supplier is at considerable risk if the prior agreement is not referenced in the Purchase Order.

•

If there is a discrepancy between the 2022 Terms and Conditions, the Long-term Supply Contract and the Supply Contract, the Supply Contract prevails.

3. FCA US (2021) (Sections 1 and 2): •

Agreement consists of: (i) Purchase Order; (ii) standard terms; (iii) FCA US supplemental clauses that are referenced in the Purchase Order; and (iv) other documents referenced in the Purchase Order.  FCA US uniquely relies on incorporated standard clauses regarding basic terms. For example, other OEMs have a single standard termination provision in their standard terms, while FCA US maintains a menu of termination clauses in its Supplier Portal from which it picks and incorporates by reference for each Purchase Order. This “menu” approach leads to greater variability in FCA US contracts than other OEMs.  Prior agreements will likely not be part of the Agreement unless referenced in the Purchase Order.

•

Acceptance is by signed acknowledgment (including electronic communication), by delivery of parts, rendering of services, or by commencement of work after Seller’s receipt of the Order.

•

Acceptance is limited to the terms of the Purchase Order.

•

Additional or different terms presented by Supplier are rejected unless expressly agreed in writing and made part of the Purchase Order.

•

The Purchase Order and any documents referenced in the Purchase Order constitute the entire agreement of the parties and supersede any prior or contemporaneous agreements.

4. FCA US / Stellantis (2022) (FCA US Sections 1-2 and Stellantis Global Section 2): •

No material additions or changes from FCA 2021.

5. Ford (2004) (Sections 3, 4, 5 and 6.01): •

The Agreement consists of: (i) the Purchase Order; (ii) the standard terms; (iii) all other types of agreements defined within the standard terms, such as Web Guides and Supplemental Terms and Conditions (posted on Ford’s Supplier web portal); and (iv) “Earlier Agreements,” such as Sourcing Agreements and Statements of Work.  Ford’s terms are uniquely detailed as to the types of documents used by Ford in its production purchasing and their status in the Agreement. Ford also uses an elaborate and unusual nomenclature to

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

describe and categorize the various documents used in purchasing activities. Careful attention to Section 2 and 4 may be required to determine whether and how a particular document fits into the Agreement. •

Ford’s Purchase Order is an offer by Ford. Acceptance is by notice of acceptance from Supplier or Supplier’s commencement of work.

•

Acceptance is limited to the terms of the Purchase Order. Any terms submitted by the Supplier are not part of the Agreement, and any Supplier quotation must be based on Ford’s terms.

•

Ford’s standard terms and related “General Purchase Order” documents can be modified only through an elaborate procedure, including a formal Written Notice and written approval of Ford’s Vice President-Global Purchasing.  Many commercial agreements can be interpreted to modify the standard terms. Since Ford’s CPO typically will not sign a commercial agreement, this provision casts a cloud of legal uncertainty over many agreements with Ford.

•

Agreements regarding service and component parts must be approved by the “highest ranking executive of the activity responsible for purchasing those parts.”

•

Earlier agreements (like a target agreement or technology agreement) will continue to apply. However, earlier agreements that modify the standard terms are subject to approval of Ford’s Vice President-Global Purchasing.

•

The Agreement is the entire agreement of the parties and supersedes any prior or contemporaneous agreements.

•

Ford will purchase and Supplier will supply all (or a specified percentage of) Ford’s quantity requirements.

6. Ford (2021) (Sections 2, 3, and 4): •

Ford’s 2021 Terms are materially unchanged except: •

Section numbers have been changed.

•

“Web Guides” are now “Supplier Guides.”

•

Approvals which were previously required from Ford’s Vice President-Global Purchasing now must be provided by Ford’s Chief Procurement Officer.

7. General Motors8 (Sections 1 and 2): •

The Agreement consists of: (i) Purchase Order; (ii) standard terms; and (iii) attachments, exhibits, supplements or other terms of Buyer specifically referenced.  Prior agreements are likely not part of the Agreement unless referenced in the Purchase Order.

General Motors’ 2014 terms apply to RFPs issued after July 15, 2013.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Acceptance is by written acceptance or commencement of any work or services under the Agreement.

•

Acceptance is limited to the terms of the Agreement.

•

The Agreement is the entire agreement of the parties and supersedes any prior or contemporaneous agreements.

•

The Agreement may only be modified by a contract amendment issued by Buyer.

•

Seller’s differing or additional terms are rejected, and Seller’s acceptance is limited to GM’s terms.

8. Honda (Sections 1 and 2): •

The terms contemplate a master Agreement, although that term is never defined.

•

“Orders,” which is defined as purchase orders, material release requests, or other form adopted by Honda, are issued under the Agreement.

•

Each Order is a separate agreement between Honda and Supplier.

•

Documents transmitted to Supplier that are applicable to the Agreement, are incorporated in the Agreement, including but not limited to Honda Specifications (which is broadly defined to include among other things: specifications, Engineering Standards, Supplier’s specification that have been accepted in writing by Honda, Honda quality control regulations and quality standards, guidelines for electronic transactions, packaging and transportation guidelines, and other standards, procedures and guidelines).

•

The terms of the Agreement are exclusive and can only be modified by written agreement or modification by authorized representatives of both parties.  Acceptance of a Purchase Order occurs by: (i) written acceptance; (ii) acceptance via an electronic transmission; (iii) shipment or other performance; or (iv) failure to object to an order within 5 business days of Supplier’s receipt. This “failure to object” means acceptance provision creates both risks and potential benefits for the Supplier. The risk is that it may increase the likelihood that silence will be treated as acceptance. The benefit is that a Supplier who does timely object may be in a stronger position to argue that as a result of its objection, its performance should not be construed as acceptance.

9. Hyundai (Sections 1 and 2): •

Agreement consists of: (i) Purchase Order; (ii) standard terms; and (iii) any signed document referenced in the Purchase Order.  Prior agreements are likely not part of the Agreement unless referenced in the Purchase Order.

•

The Purchase Order is an offer that is not binding until accepted by Supplier.

•

Acceptance is by signed acknowledgment, by shipment of parts, or by other commencement of work.

•

Acceptance is limited to the terms of the Purchase Order.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Additional or different terms presented by Supplier are rejected unless expressly agreed.

•

The Agreement is the entire agreement and supersedes any prior or contemporaneous agreements

•

The Battle of the Form’s provisions of §2-207 shall not apply.  See comment below regarding similar Toyota provision.

10. Kia (Sections 1 and 2): •

Same as Hyundai.

•

Unlike Hyundai, Kia’s incorporated documents include an Acceptance/Burden Ratio Agreement (relating to Supplier’s warranty cost-sharing obligations).

11. Lucid (Sections 1.1, 1.2, 1.3, 23.7, 23.10 and Schedule 1): •

All Orders are an offer by Lucid for the purchase of Goods or Services specified on the Order.

•

Acceptance occurs on the earliest of: (i) Supplier commences work to provide the Goods or Services; (ii) Supplier submits an invoice conforming to the terms of the Order; (iii) Supplier submits an advance shipment notification or other evidence that it intends to supply the Goods or Services; (iv) Supplier provides written acceptance of an Order (which may be by electronic means); or (v) Supplier fails to object within five (5) business days after Lucid sends the Order.

•

If Supplier cannot accept an Order, it must notify Lucid and propose alternative terms. If the terms are acceptable to Lucid a revised Order will be issued.

•

Lucid’s Orders are limited to the terms of each Order and all other terms are rejected. Lucid’s General Terms and Conditions (“GTC”) are notice of Lucid’s rejection of any different or additional terms.

•

The parties’ Agreement is comprised collectively of Lucid’s GTC and all documents, exhibits, schedules incorporating the GTC.

•

If there is a conflict between the documents, the order of precedence is: (i) the applicable Order; (ii) the GTC; (iii) any other exhibits or attachments to the GTC, including any SOW, except that the terms of the GTC regarding Warranty (Section 6), Confidentiality (Section 12) and Intellectual Property (Section 17) shall prevail over the terms of any other document.

12. Mazda (Sections 4.1, 4.2, 4.4, 4.6 and 29): •

The contract is comprised of the following “Contract Documents”: (i) the standard terms (“Agreement”); (ii) Purchase Orders; (iii) Firm Orders; and (iv) any other documents “attached” to any of the above. NOTE – Firm Orders appear to be the equivalent of a release.

•

A Purchase Order is accepted upon the first of written acceptance; (ii) start of performance; or (iii) Seller fails to object within 5 days of receipt.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Acceptance is limited to the Mazda “Contract Documents.” The Battle of the Forms does not apply.

•

Purchase Orders establish the Specifications, the “general pricing terms,” and delivery point, but do not commit Mazda to purchase Products, the pricing terms of the Purchase Order are “binding.”

•

“Firm Orders” commit Mazda to purchase specific quantities, subject to Mazda’s right to terminate the Firm Order for convenience.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 1.1 (b), (g), (o), (r) and (mm), 2, 9.1, 9.2 and 38): •

The Agreement consists of: (i) Master Terms, (ii) its attachments, including MBUSI’s Quality Manual, (iii) any “Source Package” issued by MBUSI (generally consisting of the RFQ and related materials), (iv) specifications, (v) Purchase Order, (vi) any “Development Agreement” (relating to pre-production development); and (vii) the AKV, Matrix C, Collaboration Model, Directed Lower Tier Directive, and/or Responsibility Matrix, if any. In case of inconsistencies, the documents will prevail over each other in the priority listed.

•

The Agreement is accepted upon the first to occur of (a) written, acceptance, (b) Supplier’s submission of a bid or quote in response to the Source Package (c) Supplier’s first shipment or other commencement of performance, (d) issuance by Buyer of a Scope of Work to source the Product with the Supplier; or (e) issuance of any Purchase Order for tooling and/or for any Product or Service Part.

•

Products are purchased through issuance of a Purchase Order. Supplier is obligated to accept each Purchase Order issued in accordance with the Contract Documents.

•

Acceptance is limited to the terms of the Agreement and the Contract Documents. Agreement is defined as the entire agreement between MBUSI and the Supplier represented by the Contract Documents, which may be modified, amended, supplemented or restated from time to time.

•

Additional or different terms presented by Supplier are rejected and are not part of the Contract Documents.

•

The Agreement is the entire agreement and supersedes any prior or contemporaneous agreements.

14. Nissan (Sections 1.1, 2.1 and 29): •

The standard terms are considered the “Master Agreement” with Purchase Orders issued under the Master Agreement.

•

The Agreement consists of the 2023 Purchase Order Terms and Conditions and all Purchase Orders (“PO”), Generic Documents, and Specific Documents issued by Nissan in connection therewith.  Prior agreements are likely not part of Agreement unless referenced in the Purchase Order.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Nissan’s PO is the offer, and its terms control the Agreement. Supplier’s terms are proposals which are rejected by Nissan.

•

Nissan rejects any terms and conditions other than those stated in this Agreement. The Agreement and supersedes all prior agreements and understandings.

•

In the event of inconsistency among the PO terms and other documents, the order of priority that shall apply, from highest priority to lowest priority, is as follows: o Ancillary Documents (defined as each other document mutually negotiated and executed by the parties and identifying itself as an Ancillary Document). o Legacy Documents (defined as a valid, pre-existing Master Purchase Agreement and any amendment thereto). o Nissan North America Purchase Order Terms and Conditions.

o Specific Documents (defined as documents specific to Supplier and/or a Part (including, without limitation, contracting documents, notices, releases, specifications, and drawings) that are generated or provided (or otherwise approved in writing) by or on behalf of Nissan to supplement these Nissan PO Terms and Conditions and further define the relationship between the parties, together with all documents incorporated by reference therein). o Generic Documents (defined as documents that are generic to all suppliers and available on the Nissan Supplier portal). •

The standard terms contemplate Supplier signing the Master Agreement. No means for accepting or rejecting individual Purchase Orders are specified.

•

The Agreement shall be deemed accepted by Supplier’s commencement of work, performance of services, engineering, design, production, manufacture or shipment of Parts, or other indication of agreement, whichever occurs first (understood as, the “PO Effective Date”).

•

Unless the PO specifies a fixed quantity, Nissan agrees to purchase, and Supplier agrees to sell, Nissan’s requirements for the Parts (understood as the Agreement’s “Quantity” term).

•

All references to terms of sale are governed by “INCOTERMS ® 2020,” as such may be modified, amended, or replaced from time to time.

•

Supplier agrees to pursue actively ongoing reduction in the cost and Price and ongoing improvement in the quality of the Parts.

15. Rivian (Sections 1.1 and 39.6): •

The terms of all Purchase Orders, Rivian’s Terms and Conditions, all other applicable agreements, including Development, Production, and Supply Agreements, and all attachments referenced in them, such as Specifications and Releases, pricing agreements, statements of work, and any other written agreements provided that such are signed by authorized representatives of both parties collectively make up the contract.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Seller is obligated to accept any Purchase Order that conforms to the terms of a mutually executed written agreement, including Development, Production, and Supply Agreements.

•

Acceptance is by (i) written acceptance, (ii) shipment of Goods, performance of services, or commencement of work on Goods, or (iii) any other conduct of Seller that recognizes the existence of a contract pertaining to the subject matter.

•

Acceptance of a Purchase Order will also occur if Seller fails to object to the order prior to 5 days from receipt of the order.

•

Any terms that modify, supersede, supplement or otherwise alter Rivian’s terms and conditions are expressly rejected unless otherwise agreed in writing.

•

All Supplier offers are expressly rejected.

•

The order of precedent of documents: a) Purchase Order amendment, b) Purchase Order, c) a production supply agreement or other written agreement between the parties, and d) Rivian terms and conditions.

16. Scout Motors (Sections 1, 2 and 45): •

The contract is referred to in the terms as the “Order”. The contract is comprised of the following documents, in order of precedence: (i) Nomination Agreement; (ii) the Production Terms and Conditions of Purchase (“Terms”); (iii) Purchase Orders (“P.O.”); (iv) RFQ Documents; and (v) Supplier’s response to quote or bid. Material Releases are also included (but not listed in order of precedence).

•

Seller accepts the Order (contract) upon the first of (a) commencing any work under the Order; (b) written acceptance; (c) electronically accepting the Order; or (d) any other conduct that recognizes the existence of a contract with respect to the subject matter of the Order.

•

Acceptance is limited to and conditional upon Scout’s Terms exclusively. Any additional terms proposed by Seller, wherever located, are deemed a material alteration of the Terms and objected to and rejected by Scout.

•

Any modification to the Terms must be expressly stated in the Order pursuant to Section 1.

•

Scout’s terms expressly provide that “the Battle of the Forms sections of § 2-207 … shall not apply to the Order or these Terms or to any invoice or acceptance form of Seller…” o This language may not eliminate the Battle of the Forms, as the court must first determine that the Supplier agreed that 2-207 does not apply, and that determination may require a Battle of the Forms analysis.

17. Toyota (2009) (Sections 1.1, 1.4, 1.5, 7.1, 7.5 and 7.6): •

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The Agreement consists of: (i) the Purchase Order; (ii) the standard terms; and (iii) the “Contract Documents.” “Contract Documents” is defined as any documents designated by Toyota in its sole discretion and subject to change by Toyota at any time in its sole discretion. Contract Documents include Purchase Order specific documents, such as

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

releases and specifications, and general documents, such as quality manuals, and every good faith agreement and form in Toyota’s Supplier portal.  The extraordinarily broad and vague definition of Contract Documents and the broad discretion given to Toyota to specify and change those documents may give rise to a non-trivial challenge to Toyota’s terms as illusory or void for indefiniteness in certain circumstances. However, Toyota would likely argue that its discretion is subject to express and implied good faith obligations and that its discretionary rights are therefore enforceable.  The limitation of Contract Documents to those designated by Toyota makes it particularly important that any terms or prior agreements the Supplier intends to include be specified or referenced in the Purchase Order. •

The Agreement is accepted by the Supplier’s commencing performance, submitting an invoice, or other acts.  Toyota uniquely states that it does not contemplate an actual signature from Supplier.

•

Toyota’s terms expressly provide that “the Battle of the Forms sections of § 2-207 … shall not apply…”  This language may not eliminate the Battle of the Forms, as the court must first determine that the Supplier agreed that 2-207 does not apply, and that determination may require a Battle of the Forms analysis.

•

If any inconsistency arises among the various documents issued by Toyota relating to the sale of parts, the Terms and Conditions of the Master Agreement will control. The Agreement constitutes the entire agreement of the parties and supersedes all prior agreements.

•

Agreement is not a requirements contract unless otherwise agreed in writing.

18. Toyota (2021) (Sections 2.2, 2.3, 2.4, 8.2, 8.6, and 8.7): •

Other than section numbering, material changes are as follows:

•

2021 Terms are effective as to any items delivered on or after 10/1/21, not just as to purchase orders accepted after the effective date.

•

Replace the penultimate 2009 bullet with: If there is an inconsistency between different contractual documents, “Specific Contract Documents” have priority over the new Terms and the new Terms have priority over “Generic Contract Documents.”

19. Volkswagen (Sections 1, 2, 13, 42 and 44): •

The Agreement consists of: (i) the Purchase Order; (ii) exhibits, attachments and documents specifically referenced in the Purchase Order; (iii) the standard terms; (iv) Supplier requirements posted on VW’s Supplier web portal (such as labeling, packaging and quality), as revised by VW from time to time; (v) documents provided by Buyer

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

with the request for quote for the Supplies, including but not limited to, the drawings, data, technical information and statement of work; (vi) prior agreements signed by an authorized representative of VW (but excluding prior purchase orders), such as a nomination letter or Non-Disclosure Agreement; (vii) Material Releases; and Buyer and Volkswagen Group Standards for Sustainable Development, which are incorporated into the standard terms. Any reference to a Supplier quotation, or similar document, is strictly to incorporate the specifications, and no other terms.  Properly authorized award letters, SOWs, etc., should be covered under this provision. It is nevertheless prudent to specifically identify surviving agreements in the Purchase Order. •

Any modification to the standard terms must be expressly stated in the Purchase Order.

•

The Purchase Order is an offer which is accepted by: (i) commencing any work; (ii) a written acceptance; (iii) an electronic acceptance; or (iv) any other conduct that recognizes the contract.

•

Acceptance is limited to VW’s terms, and any Supplier terms are rejected.

•

In the event of a conflict, the electronic Nomination Agreement shall take precedence over the standard terms, the standard terms shall take precedence over a Purchase Order, and the Purchase Order shall take precedence over the RFQ Documents. The final document in order of precedence shall be the submitted response or bid of the Supplier.

•

Standard terms prevail over any inconsistent term in Supplier’s invoices, etc.

•

The Battle of the Forms provisions of 2-207 shall not apply to the Order or these Terms or to any invoice or acceptance form of Seller relating to the Order.

•

See comment above regarding similar Toyota provision.

•

The Agreement constitutes the entire agreement of the parties and supersedes all prior agreements.

•

Supplier shall be responsible for reviewing VW’s website periodically for the most current version of the standard terms and any other applicable requirements of VW regarding the Purchase Order. In the event of any inconsistency between the Purchase Order and Buyer’s website, the terms of the Purchase Order shall prevail, unless the requirements specified on Buyer’s website provide otherwise.  Note that this provision arguably conflicts with the order of precedence provisions set forth in Section 2.

20. Volvo (Sections 1.1, 2.3, 3 and 4.2): •

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Volvo’s contracts can be any one of the following: (a) a Blanket Purchase Order which is used for the purchase of goods for serial production and service parts; (b) a Framework Purchase Agreement which is an agreement that establishes the general terms applicable to Volvo’s purchase of goods and under which there may be several Purchase Agreements; (c) Lump-Sum Purchase Order which is used for prototype good and tooling; (d) a Purchase Agreement which is an agreement for the purchase of goods; and (e) Purchase Order which is the instrument that contains either a Blanket Purchase Order or a Lump-Sum Purchase Order. © 2026 MEMA Original Equipment Suppliers

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

General Purchase Agreement Documents are Volvo terms and conditions, any Supplement term and conditions and Volvo Car instructions.

•

Issuing a purchase order is the offer by Volvo to purchase goods. A blanket purchase order constitutes an offer to purchase goods if a “Call-Off” is issued. In the case of a blanket purchase order, the first Call-Off under a blanket purchase order is the offer.

•

Acceptance occurs when (i) the Supplier begins work or performance pursuant to the offer, (ii) the date on which Volvo receives Supplier’s notice of acceptance, or (iii) twenty (20) working days from the date of issue of the offer, unless Supplier’s written objection has been received by Volvo beforehand.

•

The Purchase Agreement goes into effect on the date stated on the relevant purchase order and is valid until terminated.

•

The following documents and terms are incorporated into the purchase agreement: (i) appendices to the Framework Purchase Agreement; (ii) Volvo’s Production Material Global Terms and Conditions; (iii) any Supplemental Terms and Conditions referenced in any of the incorporated documents; (iv) the documents and their terms referenced, such as the Code of Conduct, Purchase Orders, Call offs, and Technical Specifications.

•

Each Purchase Agreement is a stand-along agreement.

•

Volvo may contract with others to provide goods or services the same as, or similar, the Goods.

•

No terms in Supplier’s quotation, acknowledgment, confirmation, Call-Off, invoice, specification or similar document form any part of the Purchase Agreement and Supplier waives any right to rely on their terms.

21. MEMA OE Suppliers (Sections 2.1, 2.2 and 2.3): •

The Purchase Order is an offer to contract that includes the MEMA model terms and any other documents incorporated in the Purchase Order.

•

No other documents or agreements are part of the contract.

•

Acceptance is by signed acknowledgment or if Supplier fails to object within 10 days and begins or continues shipping parts.

•

If Supplier timely objects to a Purchase Order or proposes alternate or additional terms, no contract is formed unless and until the parties agree on terms, unless the parties have commenced delivery, a contract will be formed and the terms will be determined in accordance with Section 2-207 of the UCC (Battle of the Forms).

•

Specific terms on the Purchase Order and other incorporated documents take priority over any inconsistent provisions in the model terms.

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Agreement (as defined in terms) expressly supersedes all prior agreements

Particular signatures of OEM executives required for effective modification? Agreement (as defined in terms) is the complete and exclusive agreement

Supplier failure to promptly object = acceptance Supplier signature expressly required for contract Supplier terms rejected/ excluded

UCC 2-207 (Battle of the Forms) expressly disclaimed Performance = acceptance

Specific Provisions Provided in Terms and Conditions

BMW 2018 N

BMW 2022

FCA US 2021 Y

FCA/ Stellantis 2022

I. Contract Formation – Dashboard Ford 2004 Y

Ford 2021 Y

GM Y

Honda S

Hyundai Y

Kia Y

Lucid S

Mazda Y

MBUSI Y

Nissan Y

Rivian Y

Scout Motors Y

Toyota 2009 Y

VW Y(c)

Volvo

Y(a)

Y(b)

Toyota 2021

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

(c) Documents provided by Buyer with the request for quote, the nomination letter, and other prior agreements such as Non-Disclosure Agreements signed by an authorized representative of Buyer shall continue to apply.

(b) Unless objected to within 10 days.

(a) If combined with commencement of performance.

For each question or statement, the response is either Yes (“Y”), No (“N”) or Silent (“S”). “Yes” indicates that there is an express provision responding affirmatively. “No” indicates that there is an express provision responding negatively. “Silent” indicates that there is no express provision and that there may be a default rule of law under the UCC or other applicable rules of law which provide for the right in the absence of an agreement to the contrary.

Specific Notes

The Dashboard is intended to provide a simple, high-level comparison among the OEM and MEMA OE Suppliers Terms and Conditions on certain basic issues. It is necessarily over-simplified, omitting limitations, exceptions and nuanced distinctions regarding the contract terms, and it should be used accordingly.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

II. Contract Changes – Context and Questions 1. Introduction This section covers modification of the contract terms and other changes, such as engineering and pricing changes, after contract formation. 2. OEM Right to Unilateral Modification It is a basic principle of contract law that “if there is no mutual agreement … there is no … modification. Simply put, one cannot unilaterally modify a contract….”9 At the same time, every Supplier knows that OEMs routinely unilaterally modify portions of the Agreement. The question of how they are able to do this is explained by the fact that most OEM standard terms allow OEMs to make unilateral changes to the Terms themselves or by requiring Supplier to comply with incorporated Buyer policies, “as modified from time-totime.” Whether and what limits there are on these rights is surprisingly unclear, with little or no case law or other guidance. In most circumstances the modification must be made in good faith, but the meaning of good faith in this context is often unclear. Common sense (an unreliable guide to the law) suggests that a court would allow unilateral modifications to collateral matters without major negative impact to the Supplier but would not allow the Buyer to unilaterally halve the price. But even common-sense cannot provide an answer to the many changes between those poles. Broad principles of good faith and unconscionability may impose some constraints, but those usually provide no better guidance than common-sense. For a Supplier, the best practice is to monitor the OEM’s unilateral modifications sufficiently to identify those that may have a material negative impact, communicate its disagreement and, if unable to resolve the issue with the OEM commercially, consult with counsel. 3. Amendments All OEMs except FCA US require that any amendment must be in a writing signed by the OEM. Several of the OEMs attempt to further restrict the ways in which the agreement may be amended. For example, Ford’s 2021 terms provide that any amendment must be approved by its Chief Procurement Officer and GM that any amendment must be reflected in a contract amendment issued by GM. These types of provisions create legal uncertainty for any “amendment” that does not conform to the special requirements of the OEM. 4. Modification Through Other Means OEMs are increasingly seeking to amend the contract through side-letters and other nonobvious methods to modify their standard terms. For example, several OEMs are using

Quality Prods. & Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 372-73 (2003); see also FCA US LLC v. Eagle Auto-Mall Corp., 702 Fed. Appx. 301, 304 (CA6 2017).

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

side-letters that grant some Suppliers immediate tariff or other economic relief, with a quid pro quo of modifying or releasing claims under the existing contract, often in non-obvious ways, The quid pro quo may extend to other programs or future business. Similarly, some OEMs have imposed important quid pro quos as a condition of quoting new business. A prudent Supplier should understand what it is giving up in exchange for economic relief or the opportunity for new business. 5. “Engineering” Changes to Parts All OEMs reserve the right to make revisions to the part and related terms (packaging, testing, etc…) in the OEM’s sole discretion. All OEMs provide for the possibility of price or other relief due to the change, but the specifics differ in important ways, such as: (i) the types of changes that are subject to relief; (ii) time restrictions and documentation requirements for relief; and (iii) how and by whom the relief will be determined. Those differences are addressed in the Comparative Analysis that follows. Suppliers should understand and comply with those specific contract provisions or, if necessary promptly communicate in writing why full compliance with deadlines or documentation requirements are not feasible. Failure to do so may be costly to the Supplier. 6. Relief Not a Condition to Change In most cases, the Supplier’s obligation to implement changes is not conditioned on a prior agreement on a price adjustment or schedule relief. In other words, the Supplier must make the change and then request and negotiate for relief. 7. Changes in External Standards A number of the OEMs require Suppliers to comply with external quality and testing standards, or laws, or other external requirements, as they may change from time to time.” Although those changes might be characterized as a contract change, they do not raise the same concerns as an OEM-initiated change and a court would likely consider them a contractual allocation of future risks, rather than a unilateral modification. 8. Supplier Risk Simply stated, contract law and the terms of the typical industry contracts do not always protect a Supplier from contract changes (whether by amendment or renewal) that significantly change the Supplier’s liabilities or responsibilities. This presents an obvious problem for the Supplier that has established its pricing and other expectations based on the original understanding of its liabilities and responsibilities. In these circumstances, Suppliers are frequently left to the goodwill of their customers and whatever commercial leverage they may have to protect themselves.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

II. Contract Changes – OEM Comparative Analysis 1. BMW (2018) (Sections 2.3 - 2.5, 3.2 and 22.1): •

BMW reserves the right to “request” changes to the goods, including specifications, design, timing and quality. The request must “duly consider Supplier’s reasonable interests.”  There is no explicit requirement that the Supplier comply with a “request.” Read together, there is a reasonable argument that BMW does not have the right to make unilateral revisions to the parts.

•

However, if Supplier does not object to a change order in writing within fourteen (14) days of receipt, it is deemed accepted.

•

Supplier has “a duty to suggest changes to BMW, which Seller considers necessary or expedient…”

•

Supplier must comply with changes to delivery schedule, unless Supplier promptly provides written notice of reasonable objections. The notice must be given within 1 to 10 days, depending on the timing of the delivery schedule change.

•

Supplier must promptly inform BMW of any impact on costs or timing. Supplier will receive a reasonable, mutually agreed, adjustment to the price.

•

If the change makes existing goods obsolete, BMW will reimburse Supplier for obsolete completed Goods, WIP, and raw materials (1) covered by releases with a delivery date within one month after receipt of BMW’s request for amendment, or (2) covered by buffer stock approved in writing by BMW.

•

Supplier may not make changes to the Goods without BMW’s prior written consent.

•

Amendments to the Terms and Conditions must be in writing, signed by both parties.

2. BMW (2022) (Sections 2.4 - 2.5, 3.2 and 21.1): •

No material changes from 2018.

3. FCA US (2021) (Section 12): •

FCA US reserves the right to unilaterally change the Agreement at any time.  On its face, this is an attempt to encompass any term of the Agreement, not only product specific terms (specifications, design, testing etc…).

•

Supplier price adjustment claims must be submitted within 10 days. Price adjustments for engineering changes will be based solely on design cost variances and must be substantiated with documentation satisfactory to FCA US.  No adjustment to time of performance is referenced.

•

Supplier must comply with any changes to FCA US’s quality manual.  No adjustment to price or time of performance is referenced.

•

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

 This may be intended to mean that Supplier compliance is required in advance of agreement on equitable adjustments, but it is not clearly stated. •

FCA US does not expressly require that amendments must be in writing or otherwise specify the requirements for an effective amendment.

4. FCA US / Stellantis (2022) (FCA US Section 12 and Stellantis Global Section 7): •

No material changes or additions from FCA US (2021).

5. Ford (2004) (Sections 4, 9 and 44): •

Ford may make unilateral changes to the Goods (specifications, designs, packaging, timing, etc.) at any time. The change will be documented in a Written Notice issued by Ford.  This means that Ford can argue that Ford-directed changes that are not documented in a Written Notice will not bind Ford.

•

Supplier must promptly notify Ford in a Written Notice if the change will impact cost or timing. Any impact must be documented. If Ford decides an adjustment is warranted, the Supplier and Ford will negotiate a written adjustment. If Ford decides no adjustment is warranted, it will inform Supplier in a Written Notice.  This provision makes Ford the decision-maker as to whether an equitable adjustment will be granted. Although Ford probably must decide in good faith, provided it does so, the Supplier may have little remedy if Ford rejects a claim for equitable adjustment.  This provision relates solely to changes in the Goods. There is no provision for equitable adjustments based on changes to the General Purchase Order documents (see following bullet).

•

Ford may unilaterally change its General Purchase Order Documents (the standard terms, Web Guides and Supplemental Terms) annually by posting the amended terms on its website. These annual changes are effective July 1.

•

Ford may unilaterally amend its Terms and Conditions at any time with notice to the Supplier. These changes are effective on the date specified by Ford. For blanket Purchase Order, the changes will apply to all releases following the effective date. It is not clear when the changes will apply to a Purchase Order other than a blanket Purchase Order. Any resulting difference in price, time of performance, or other relevant terms will be equitably adjusted by negotiation.

•

Supplier may not make changes to the parts without Ford’s written consent.

•

Ford’s standard terms and related “General Purchase Order” documents can be amended only through an elaborate procedure, including a formal Written Notice and the written approval of Ford’s Vice President-Global Purchasing.  This provision says that Ford will not be bound by any amendment agreed to by any of its purchasing personnel unless approved by its Vice President-Global Purchasing if the agreement modifies its

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

standard terms. This provision casts a cloud of uncertainty over many amendments. Of course, many other Ford representatives routinely must and do agree to amendments and those amendments are honored, but the legal cloud remains. •

All Amendments must be reflected in a “Written Notice” signed by Ford.

6. Ford (2021) (Sections 3, 8 and 43): •

Ford’s 2021 Terms are materially unchanged except:

•

Section numbers have been changed.

•

“Web Guides” are now “Supplier Guides.”

•

Approvals which were previously required from Ford’s Vice President-Global Purchasing now must be provided by Ford’s Chief Procurement Officer.

•

The 2004 terms provided that price adjustments in response to a design change would be “equitable.” “Equitable” has been deleted from the 2021 terms.  It is debatable whether this deletion has legal significance, as many courts would read a “good faith” obligation into the provision, but Ford might take a contrary position.

7. General Motors (Sections 2, 10 and 12): •

GM reserves the right to make unilateral revisions to the drawings and specifications, as well as to the scope of work (such as quality and testing requirements) at any time.

•

The parties are required to discuss change-based adjustments reasonably and in good faith.

•

If adjustments are not agreed GM will equitably adjust the price or time of performance resulting from the revisions to the specifications or scope based on a “fair cost assessment”, subject to satisfactory Supplier documentation.

•

GM may revise its quality and development programs, requirements and procedures at any time.  Equitable adjustment may be available if Supplier’s cost or timing is affected by these revisions, but there is some lack of clarity. Section 5 suggests that such changes may be a change in the scope of work, for which equitable adjustment is available, but Section 6 allows such changes without addressing equitable adjustment.

•

Any revisions, any corresponding equitable adjustment and any other amendment must be reflected in a contract amendment or subsequently issued contract issued by GM.  It is not specified what constitutes a “contract amendment issued by GM.” It is unclear, for example, whether an engineering communication instructing a Supplier to change the design is itself a contract amendment. At a minimum, however, this provision suggests that a document issued by Supplier may not amend the agreement even if agreed to by GM.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

 Contract changes must also be accepted by the Supplier in any subsequently issued contract that captures and implements changes. 8. Honda (Sections 1.1, 2.1, 2.4 and 14.3): •

Honda reserves the right to make unilateral changes to Specifications, delivery, packaging, or means of shipment at any time.

•

Supplier must immediately inform Honda of any change in cost. If cost change is demonstrated the parties will agree on an adjustment.

•

The Honda Terms and Conditions may not be added to, modified, superseded or altered except by written agreement or modification signed by both parties’ authorized representatives.

•

The terms of the Agreement are exclusive and can only be modified by written agreement or modification by authorized representatives of both parties.

9. Hyundai (Sections 3, 11 and 20): •

Hyundai reserves the right to make unilateral changes to the contract at any time.

•

Supplier must present any claim for price adjustment within 10 days of notification of the change.

•

Price adjustments for engineering changes will be allowed only for documented design cost variances.

•

Supplier must comply with Hyundai Quality Standards, as they may change from time to time.  Since Supplier must warrant compliance with Hyundai Quality Standards, this may be a method through which Hyundai attempts to unilaterally modify the scope of supplier warranty obligations by amending those standards.

•

Supplier may not change the manufacturing location without Hyundai prior approval.

•

No adjustment to time of performance is referenced.

10. Kia (Sections 3, 11 and 20): •

Same as Hyundai.

11. Lucid (Sections 1.5, 1.6, 1.7, 5.5 and 23.1): •

Lucid may cancel all or part of any Order, Production Order or Release at any time, subject to the obligations stated in Section 1.

•

Lucid reserves the right to unilaterally change the Agreement as to Goods or Services at any time. If changes result in additional costs or schedule changes, Supplier must immediately notify Lucid and include the basis. Failure to notify Lucid within five (5) business days will be deemed a waiver of any additional costs or schedule change.

•

Upon Supplier’s notice of cancellation directed by Lucid, Lucid will incur no further costs.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Lucid’s only obligation for cancelled Releases is to pay for up to two weeks of finished inventory and four weeks of process and raw materials costs.

•

The Agreement may be amended or modified only by an express writing signed by an authorized representative of each Party.

12. Mazda (Section 4.7): •

Mazda may request changes to the Product by delivering a written “Change Order.”

•

The changes may include, without limitation, Specifications, shipping, packaging or delivery requirements or “significant additional or different Products than required under the Purchase Order.

•

Seller may request a “firm” price adjustment (up or down) within 10 business days of the Change Order. The price may be increased only for: “significant additional work,” equal to documented “reasonable and necessary additional costs. The price shall be decreased for “omissions or deletions.”

•

Price adjustments will be negotiated in good faith.

•

Mazda may direct Seller must implement the change even if pricing has not yet been agreed to.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 8.1, 8.5, 8.6, 9.4, 11.2, 12.2 and 38): •

MBUSI may revise Purchase Order as to specifications, delivery, packaging, or means of shipment at any time.

•

Price shall be adjusted if approved design change results in change in Supplier cost, except that prices will not be adjusted for changes required for Supplier to meet the current specs. The price will be adjusted only if such increase was included in Supplier’s proposal for modification. Supplier shall make the change, even if a price adjustment has not been agreed.

•

If a design change or other change makes parts obsolete and unacceptable to MBUSI, Supplier may submit an obsolescence claim. Claim must be submitted within 30 days of MBUSI’s acknowledgement of obsolescence. Supplier may not claim obsolescence if obsolescence is included in the Supplier’s piece price for Product or Service Parts.

•

Supplier must comply with MBUSI logistics, packing and marking requirements which are described on the Supplier Portal and may be amended from time to time. Any cost impact will be addressed through change management process.

•

Supplier must comply with changes in MBUSI quality manual.

•

Except as permitted by Agreement, all amendments must be in writing signed by the parties.

14. Nissan (Sections 8 and 29): •

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Nissan reserves right to make unilateral changes to specifications, quantity in accordance with Nissan’s requirements, or methods of packaging or shipment at any time. Nissan

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

may also make a reasonable adjustment to the price or other terms as a result of any such change.  The open-ended “may” may mean that the Supplier has no remedy if Nissan refuses to adjust prices, provided its refusal is in good faith. •

Supplier may not make changes to the design or composition of any parts without Nissan’s written consent.

•

Any other contract changes must be in writing and signed by both parties.

•

Nissan may update the Nissan Terms and Conditions occasionally, and Nissan will give general notice of material updates on the Nissan Supplier Portal.

•

In the event of any inconsistency among terms created in the Purchase Order Terms and Conditions and any Ancillary Document, an Ancillary Document takes priority.

15. Rivian (Sections 8.1 and 13): •

The purchase price is not subject to increase due to currency fluctuations, changes in raw material or component pricing, labor or overhead unless agreed in writing.

•

Rivian reserves the right at any time to direct changes, or cause Supplier to make changes, to the Products, including changes in the design, processing, packaging, shipping, date and place of delivery, inspection, testing, quality control, or any other changes.

•

Any such changes shall be deemed not to affect the time for performance or the cost under the purchase order unless Supplier provides notice of the change within 10 days after notice of the change and Rivian determines that an adjustment is appropriate.

•

Supplier may not make any change to the Products, its manufacturing processes, its materials its suppliers, or its manufacturing facility, without Rivian’s written instruction or approval.

16. Scout Motors (Sections 10 and 43): •

Scout has the right at any time, by written notice to Seller, to make changes or require Seller to make changes to drawings, specifications, sub-suppliers, subcontractors, samples or description of Suppliers.

•

Scout has the right to change the SOW, including as to inspection, testing or quality control and, at any time during the contract term, to direct the supply of raw materials from itself or from third parties.

•

The Order (contract) may only be modified (i) by a written amendment executed by authorized representatives of each party, or (ii) for changes within the scope of Section 10, by a purchase order amendment issued by Scout.

•

Scout may modify its Terms from time to time by providing revised purchase order terms and conditions to Seller or posting revised purchase order terms and conditions to Scout’s internet website or as otherwise specified on the face of the Order. Revised purchase order terms and conditions apply to all purchase order revisions/amendments and new Orders issued on or after the effective date of the new terms.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

All requests for price or schedules changes must be made in writing and within 5 days of Seller receiving notice of change. Seller must provide any requested documentation. Scout has sole discretion whether to accept the change.

•

Seller may not make any changes relating to the Supplies, including without limitation, to the Supplies’ contents, design, specifications, processing, packing, marking, shipping, price, place of manufacture, or date or place of delivery, except at Scout’s written instruction or with Scout’s written approval.

17. Toyota (2009) (Sections 1.4, 2.2(b), 3.5(b) and 4.1): •

Toyota may adjust prices after consultation with Supplier.  On its face, this suggests that Toyota may, on certain facts, unilaterally reduce prices. This (and other provisions of Toyota’s standard terms) suggests that Toyota’s terms may be subject to a non-trivial challenge on the grounds that the obligations are indefinite or are illusory.

•

Toyota may make unilateral engineering, design, or other changes at any time.

•

All changes must be reflected in the Contract Documents. The changes may be made without consultation with Supplier if reasonably necessary.  This might be read as ordinarily requiring Toyota to consult with Supplier before imposing changes.

•

If the changes result in a material increase or decrease on Supplier’s costs, any resulting difference in price or other terms will be equitably adjusted by negotiation.

18. Toyota (2021) (Sections 2.3, 3.2.4, and 5.1): •

Other than section numbering, material changes are:

•

Supplier may not make any changes to “Item Specifications” (as defined in Section 2.3) without Toyota consent.

19. Volkswagen (Sections 10 and 42): •

VW reserves the right at any time to unilaterally change specifications, drawings, and means of transport, types of packaging, the places of delivery and any part of the scope of work.

•

Within 10 days of change, Supplier may request a reasonable equitable adjustment in price or time for performance. VW may grant an equitable adjustment in its sole discretion.  Sole discretion may mean that the Supplier has no remedy if VW rejects a claim, subject to a duty of good faith.

•

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VW may unilaterally modify purchase order terms and conditions from time to time by providing revised Purchase Order terms and conditions to Seller or posting revised Purchase Order terms and conditions to Buyer’s website (or such other website as may be directed through links available on such website) (“Buyer’s Website”) at www.vwgroupsupply.com or as otherwise specified on the face of the Purchase Order.

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Such changes apply to any Purchase Order or Purchase Order revisions issued after the posting date. Buyer’s website may also contain specific additional requirements for certain items covered by the Purchase Order, including labeling, packaging, shipping, delivery and quality specifications, procedures, directions and/or instructions, and such requirements shall be deemed part of the standard terms and Purchase Order.  This means that even minor Purchase Order revisions could change the applicable terms. •

VW may direct the supply of raw materials from itself or from third parties at any time during the term. Suppliers must make any requested changes and request a reasonable difference in price, if any.

•

See Part III, § V, regarding VW right to unilaterally change price and other terms for financially distressed suppliers.

•

Supplier may not make any changes without VW’s written approval, including changes to sub-contractors, suppliers, materials, facilities, operations or production methods. Any unauthorized change is a breach of the agreement.

•

All amendments must be signed by an authorized VW representative.

20. Volvo (Section 7): •

Volvo may amend the General Purchase Agreement documents annually or upon notice by Volvo. Annual amendments will be made on or around May 1st and go into effect July 1st, or on a date chosen by Volvo but no earlier than 45 days after notice. Non-annual amendments will go into effect on a date chosen by Volvo but no earlier than forty-five (45) days after notice.

•

If Supplier determines that it cannot comply with the amendment it must give Volvo notice within two (2) weeks of notice of the amendment. Volvo then can choose to withdraw the amendment or terminate the Purchase Agreement.

•

Any amendment to the Purchase agreement outside of what is provided above will only be binding on Volvo if signed by both parties and only if approved by Volvo’s Senior Vice President of Purchasing.

•

Where the amendment involves a change to the goods, including but not limited to technical specifications, design, functionality, as well as volume changes, the Supplier will receive the change notice in writing and will have ten (10) days to submit a quotation. If Supplier does not submit a quotation, Supplier will be deemed to have accepted the change as requested by Volvo.

•

Changes that affect the cost and timing of production will be negotiated in good faith.

21. MEMA OE Suppliers (Sections 2.4 and 2.5): •

OEM reserves the right to make reasonable unilateral changes within the scope of the contract to specifications, materials, packaging, delivery, and similar requirements at any time.

•

Supplier may propose changes, and OEM may not unreasonably withhold approval.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

At Supplier’s request, the parties must agree upon appropriate adjustments to prices and time of performance as a result of the changes.

•

If a change in the Supplies results in obsolescence, then Supplier will be compensated for the obsolete Supplies, materials and work in progress.

•

All other contract changes must be in writing signed by both parties.

•

Changes to the standard terms do not apply to existing Contracts, unless agreed in writing by both parties.

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Page 55

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Equitable adjustment to schedule or other contract terms for changes in parts?

Equitable adjustment to price subject to OEM determination/discretion?

Equitable adjustment of price for changes in parts?

BMW 2022

OEM right to make unilateral changes in the parts (specifications, packaging, delivery, testing etc.…)

OEM right to make unilateral contract changes other than in parts? Specification of the form and/ or method of amendments (e.g., must be signed by particular person or reflected in particular form), other than requirement that amendment be by signed writing.

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA US 2021 N

FCA/Stellantis 2022

II. Contract Changes – Dashboard Ford 2004 Y

Ford 2021 Y

GM N

Honda Y

Hyundai N

Kia N

Lucid Y

Mazda N

MBUSI N

Nissan N

Rivian N

Scout Motors Y

Toyota 2021 Y

VW Y

Volvo

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

III. Assignment and Subcontracting – Context and Questions 1. General Rules of Law Generally, either party to a commercial contract may assign its rights and obligations under the contract unless stated otherwise in the contract. An assignment of an obligation does not generally release the obligation of the assignor but does add an assumption of the obligation by the assignee. In other words, it may be that the OEM can still hold the assignor liable for performance, leaving the assignor to seek recovery from the assignee. Under UCC § 2-210 an “assignment” of obligations is referred to as a “delegation” of obligations. However, contracts are often inconsistent disregard or blur the distinction between the two terms, so the use of the terms should be considered in context. It is unclear when a subcontract becomes a delegation, so subcontracting should be analyzed and addressed as a separate issue in Terms and Conditions. OEM Terms and Conditions typically include specific separate terms on assignment and on subcontracting. 2. Separate Treatment of Assignment Most OEMs prohibit assignments of Supplier rights (essentially, the right to collect receivables from the OEM) and obligations without OEM consent. Restrictions on assignment of obligations may be construed broadly to include subcontracting which, as one effect, arguably gives the OEM the right to approve subcontractors. 3. OEM Restrictions on Supplier Assignments and Subcontracts Restrictions on assignment by a Supplier of its accounts receivable and other payment rights owed by the OEM may not be enforceable against third party assignees (e.g., banks) under UCC § 9-406(d) and generally cannot be treated by the OEM as a breach of contract of the Supplier. OEM Terms and Conditions restricting assignment of rights (other than payment rights) and subcontracting are, however, generally enforceable. UCC § 2210. 4. Who is a Subcontractor? As mentioned above, the question remains, “When is a sub-Supplier a subcontractor and thus covered by OEM Terms and Conditions related to subcontractors?” Some OEM Terms and Conditions attempt to eliminate the purchase of normal material purchases (for example, bulk materials) from subcontracting requirements. Suppliers dealing with an OEM whose Terms and Conditions require the OEM to approve subcontractors (or restricting subcontractors) should obtain for their files a written consent for each subcontractor used. This could be included in the PPAP process. 5. Direct Rights of OEM Against Subcontractor Increasingly, OEMs include in their term provisions requiring the Supplier to require its subcontractors to grant the OEM direct rights (i.e., the right to sue). The scope of those direct rights vary among OEMs. For directed suppliers, a separate “directed supplier agreement” often achieves the same result.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

6. Risks with Assignments by OEM If the OEM is free to assign or delegate its obligations without the Supplier’s consent, the Supplier may be at risk (depending on the relevant terms) if the OEM assigns its Purchase Order to a third party who is not financially stable, leaving the Supplier to try to collect from an insolvent assignee. However, the Supplier may be able to demand adequate assurances from the assignee without releasing the OEM under UCC § 2-210(5) and general contract law. The OEM may not have the power to assign an existing Purchase Order without continuing liability, but it may achieve the same results by terminating purchases and designating a tier one as a directed supplier. 7. MEMA OE Suppliers Approach The MEMA OE Suppliers model terms require consent to an assignment by either party. They also protect the Supplier from responsibility for non-performance by an OEMdesignated (directed) subcontractor.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

III. Assignment and Subcontracting – OEM Comparative Analysis 1. BMW (2018) (Sections 1.5, 7.8, 9.6 13.7, 14.1, 18.3, 21.1 and 22.6): •

Supplier may not assign its payment rights or any other benefit or burden under the contract without the prior written consent of BMW.  See Context and Questions, ¶3

•

Supplier must flow down to subcontractors or otherwise ensure subcontractor compliance with the substance of BMW’s requirements regarding: o the use and maintenance of tooling; o the provision of service parts;

o confidentiality of business secrets, drawings and other confidential information; o social responsibilities. •

No restrictions are placed on BMW’s right to assign.

•

Supplier must promptly notify BMW of any name change, change of control or material change of ownership.

2. BMW (2022) (Sections 7.8, 13.3, 14.1, 17.7, 20.5 and 21.6): •

Supplier may not assign its payment rights or any other benefit or burden under the contract without the prior written consent of BMW.  See Context and Questions, ¶3

•

Supplier may not assign the rights or the duties of any Supply Contract and/or a Longterm Supply Contract, in whole or in part to any third party without BMW’s written consent.

•

o confidentiality of business secrets, drawings and other confidential information; o social responsibilities.

3. FCA US (2021) (Sections 11(b) and 19): •

Supplier may not assign the Purchase Order or contract, in whole or in part, without FCA US’s prior written consent (including subcontracting or transfer of Special Tooling to third parties).

•

No restrictions are placed on FCA US’s right to assign.

4. FCA US / Stellantis (2022) (FCA US Sections 11(b) and 19 and Stellantis Global Section 26): •

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No material additions or changes from FCA 2021, except:

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

o Stellantis may assigns its claims against Seller to any third party.

o Stellantis may, after notification to Seller, assign the Contracts to any company under the control of Stellantis NV. 5. Ford (2004) (Sections 20.04, 32.02, 37.02, 42.01 and 42.04): •

Supplier may assign right to payment but must notify Ford of the assignment.

•

Supplier may not assign “all or substantially all” of its duties without Ford’s written consent (including subcontracting).

•

Supplier must use its best efforts to obtain from subcontractors the same intellectual property rights and licenses granted by Supplier to Ford.  Ford has proven to be serious about this provision and Suppliers need to address it with their sub-Suppliers.

•

Supplier must use its best efforts to obtain from subcontractors the same audit rights granted by Supplier to Ford in Section 32.01.

•

Subcontractors must adhere to Ford’s Supplier Code of Conduct.

•

Ford may freely assign to another party.

6. Ford (2021) (Sections 19, 36.02, 41.01 and 41.04): •

Ford 2004 terms materially unchanged except: o Section numbering changed.

•

Supplier may not assign “all or substantially all” of its duties without Ford’s written consent (including subcontracting).

•

Suppliers must adhere to the Supplier Code of Conduct, which is based on internationally recognized standards and Ford internal policies. The Supplier Code of Conduct applies to the supply of all good and covers topics related to social and environmental responsibility, including the responsible sourcing of materials.

•

Subcontractors must adhere to the Supplier Code of Conduct.

•

Ford may freely assign to another party.

7. General Motors (Sections 11, 12, 31 and 37): •

Supplier may not assign or delegate its rights or obligations under the contract without GM’s prior written consent (including subcontracting).

•

Supplier warrants that its subcontractors have the intellectual property rights necessary to perform the work.

•

Subcontracted goods must comply with social responsibilities.

•

Supplier is responsible for subcontractor compliance with Foreign Corrupt Practices Act and other anti-corruption laws.

•

No restrictions are placed on GM’s right to assign.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

The Seller warrants and guarantees that subcontractors’ performance will satisfy all of GM’s requirements under the contract.  This should be addressed and superseded in Directed Supply Agreement if intent is that directed buyer is not responsible for some or all directed seller breaches.

•

GM must approve all subcontracts.

•

There is an express obligation to require subcontractors to conform to GM quality programs.

•

Sellers are expressly prohibited from assigning right to payment.  Generally, the prohibition of assignment of A/R is unenforceable under the Uniform Commercial Code.

8. Honda (Section 14.1): •

Supplier may not assign its rights under the Agreement.

•

A merger or change in entity structure of Supplier constitutes an assignment requiring prior written consent of Honda.

•

No restrictions are placed on Honda’s right to assign.

9. Hyundai (Section 26): •

Supplier may not assign the contract or delegate its obligations under the contract without Hyundai’s prior written consent (including subcontracting).  Suppliers should obtain Hyundai’s written approval of subcontractors.

•

Where Hyundai permits subcontracting, Supplier remains responsible for performance by its subcontractors.

•

No restrictions are placed on Hyundai’s right to assign.

10. Kia (Section 26): •

Same as Hyundai.

11. Lucid (Sections 5.5, 23.2, and 23.13): •

Supplier may not make any changes to sub-suppliers without prior written authorization from Lucid.

•

Neither Supplier or Lucid may assign the Agreement without the other party’s written consent, except that Lucid may assign the Agreement to an affiliate or to an acquiring third party in connection with a merger or sale of all or substantially all of Lucid’s assets.

•

Any consent of Lucid will not release Supplier of its obligations under the Agreement.

•

Supplier warrants and guarantees that all subcontractors’ performance will satisfy all requirements applicable to Seller.

12. Mazda (Sections 8.3, 16, 21): • Page 62

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Seller may not subcontract without Mazda’s written approval.

•

Seller must: (i) bind the subcontractor to the “same and no less strenuous” obligations as Seller has to Mazda. with respect to confidentiality, non, disclosure and IP ownership; (ii) name Mazda as an express third-party beneficiary of Seller’s contract with the subcontractor; (iii) provide the subcontract to Mazda; (iv) require subcontractor to maintain, and provide to Mazda, of all required insurance.

•

If a subcontracting has been approved by Mazda, Seller must bind subcontractor to give Mazda all rights of inspection and observation.

•

Mazda may assign to an Affiliate.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 4.8, 45.3(t), 19.1 and 21.5): •

Supplier must advise subcontractor and MBUSI of problems and solutions.

•

Supplier may not change location of MBUSI owned property.

•

All subcontracts (including lower tier) must be assignable to MBUSI.

•

Supplier must have contracts with all affiliates, subsidiaries and other parties utilized by Supplier to fulfill its obligations under the Agreement that bind the other party to every obligation contained in Supplier’s Agreement with MBUSI.

•

Subcontractors must sign Lower Tier Acknowledgement obligating them to MBUSI for provisions on MBUSI property, subcontractor’s warranties, financial reporting, termination rights and remedies, IP rights and lien waivers.  MBUSI is one of the few to require such agreements.

•

MBUSI must be given right of access to Lower Tier Supplier facilities.

•

On request, Supplier must assign to MBUSI its contracts with subcontractors and to take possession of subcontractor tooling if needed for continuity of supply.

•

Supplier is responsible for performance of its Lower Tier Supplier’s, including directed suppliers.

•

Neither party may assign without the other’s consent except MBUSI may assign to affiliates, and MBUSI may assign its rights in intellectual property and MBUSI Owned Equipment to any person.

14. Nissan (Sections 21 and 30): •

Neither party may assign the contract without the consent of the other party.

•

Nissan written approval is required to subcontract “all or a substantial part” of the manufacturing of the parts to a third party.

•

Supplier must ensure that all subcontractors comply with and abide with the terms of the Nissan / Supplier contract.

•

If Nissan notifies Supplier of its objection to a particular subcontractor, Supplier must promptly terminate any subcontracts with such subcontractor.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

 Even if a Supplier agrees to remove termination for convenience from its subcontract, the Supplier should include a right to terminate if the Supplier is directed to terminate. 15. Rivian (Sections 27 and 28): •

Supplier may not assign the contract or subcontract its obligations or delegate its performance without the written consent of Rivian.

•

Consent to assignment does not relieve Supplier’s obligations of confidentiality nor waive Rivian’s right to recoupment from Supplier and/or its assigns for any claim arising out of the contract.

•

With notice to Supplier, Rivian can transfer or assign to any third party without Supplier’s consent.

16. Scout Motors (Sections 10 and 35): •

Seller may not assign or delegate its obligations under the Order without Scout’s written consent.

•

Seller may not enter into or offer to enter into a transaction that includes a sale of a substantial portion of its assets used for the production of the Supplies without Scout’s written approval.

•

Seller may not make an assignment of receivables due or to become due without Scout’s written approval.

•

Scout has the right to assign any benefit or duty under the Order to any third-party upon written notice to Seller.

•

If Seller’s assignment violates Section 35, it is void.

17. Toyota (2009) (Section 7.3): •

Supplier may not assign its rights or obligations under the contract without Toyota’s prior written consent.

•

No subcontracting is permitted without Toyota’s written consent, except for supplies normally purchased by Supplier.

•

No restrictions are placed on Toyota’s right to assign.

18. Toyota (2021) (Sections 6.9 and 8.4): •

The subcontracting provision is extensively re-written. The following supersedes the 2009 summary.

•

Toyota consent is required for assignments by operation of law, as well as by contract.

•

Any unauthorized assignment, delegation of subcontract is void.

•

If consent is obtained, Supplier is still liable for any breach by the assignee or subcontractor.

•

A change of control of Supplier is an assignment.

•

Supplier may not assign right to receivables except in ordinary course of business.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

No restrictions are placed on Toyota’s right to assign.

19. Volkswagen (Sections 16, 17 and 35): •

Supplier may not assign its rights or obligations under the contract and may not subcontract without VW’s prior written consent. As of 2008, there is no longer an exception for a Supplier to obtain its standard purchased items.

•

A change of control is prohibited without VW’s prior written consent.

•

Where the specifications require Supplier to test for compliance with legal requirements and those tests are being performed by a subcontractor, Supplier must require the subcontractor to retain the test records for 15 years and permit VW to access those records at any time.

•

Supplier must indemnify VW for acts of subcontractors.

•

VW may assign without limitation.

•

Subcontractors must comply with VW’s ethical rules.  This is another example of OEM terms that must be passed through to subcontractors.

•

VW retains right to check at any time the qualifications and performance of any personnel of Seller or its subcontractors to verify their compliance with all applicable laws, safety, and ethical standards.

20. Volvo (Sections 11 and 29.7): •

The parties cannot assign the whole or any part of the Purchase Agreement or any benefit or interest under the Purchase Agreement without the other party’s written consent.

•

All Supplier sub-contracts must include the same obligations and terms contained in Volvo’s terms and conditions and the obligations under the Purchase Agreement.

•

Supplier is responsible for all acts and omissions of its sub-contractors.

•

Supplier must use all directed suppliers as directed in writing by Volvo. Supplier’s contract with the directed supplier must allow Volvo to bring a claim against a directed supplier for any non-conforming goods or services.

•

Subcontracts will not relieve the Supplier from any of its obligations under the Purchase Agreement.

21. MEMA OE Suppliers (Section 18): •

Assignment and subcontracting by either party requires written consent of the other party, which may not be unreasonably withheld or delayed.

•

Supplier remains responsible for performance by its subcontractors, but if Supplier is directed by OEM to subcontract to a designated subcontractor, Supplier is not liable for a breach or default caused by that subcontractor.  Suppliers should attempt to obtain such protection in separate agreements.

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Restricted Supplier assignment of benefits and obligations Restricted Subcontracting (b) Specific restricted Supplier assignment of payment (a) Restricted OEM assignment and/or subcontracting Indemnification for Acts of Subcontractor Subcontracts must obligate Subcontractor to OEM Terms and Conditions Subcontract to provide same IP rights as OEM Terms Right to audit Subcontractors Subcontractors must comply with social responsibilities Change in control is assignment

Specific Provisions Provided in Terms and Conditions

BMW 2018

BMW 2022

FCA US 2021 S

FCA/Stellantis 2022 S

Ford 2004 S

Ford 2021 S

GM S

Honda

III. Assignment and Subcontracting – Dashboard Hyundai S

Kia S

Lucid S

Mazda N

MBUSI S

S(c)

Nissan S

Rivian S

Scout Motors S

Toyota 2021 S

VW Y

Y(g)

Y(f)

Volvo

Y(e)

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

Provide list of Subcontractors Subcontractors must provide some IP rights to OEM as Supplier Subcontractors must sign Acknowledgment and Waiver giving OEM rights and waiving sub-Supplier IP and lien rights OEM specific right to approve Subcontractors although may be implied by other restrictions OEM right to compel termination of Subcontractor Supplier not responsible for directed Subcontractors (d) S

FCA US 2021

BMW 2022

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA/ Stellantis 2022 S

Ford 2004 S

Ford 2021 S

GM S

Honda S

Hyundai S

Kia S

Lucid S

Mazda N

MBUSI S

Nissan S

Rivian S

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2009 S

Toyota 2021 S

VW S

Volvo S

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MEMA OE Suppliers

Specific Notes

necessarily over-simplified, omitting limitations, exceptions and nuanced distinctions regarding the contract terms, and it should be used accordingly. For each question or statement, the response is either Yes (“Y”), No (“N”) or Silent (“S”). “Yes” indicates that there is an express provision responding affirmatively. “No” indicates that there is an express provision responding negatively. “Silent” indicates that there is no express provision and that there may be a default rule of law under the UCC or other applicable rules of law which provide for the right in the absence of an agreement to the contrary. All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

The Dashboard is intended to provide a simple, high-level comparison among the OEM and MEMA OE Suppliers Terms and Conditions on certain basic issues. It is

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(g) Buyer retains right to check at any time the qualifications and performance of any personnel of Supplier or its subcontractors to verify their compliance with all applicable laws, safety, and ethical standards.

(f) With Buyer’s prior written consent, and subject to Buyer’s rights of set-off and other rights and claims of Buyer.

(e) Consent may not be unreasonably withheld.

(d) This may be provided in separate agreements.

(b) Restriction on delegation of obligations might restrict subcontracting without using the term “subcontract”.

(a) May not be enforceable against assignees and assignors of payment rights as either an invalid action or breach.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

IV. Expiration and Termination – Context and Questions 1. Scope This Section focuses on expiration of the contract and termination for convenience. Other Sections focus on termination for cause, termination under force majeure, and other remedies for breach. As a general matter, “expiration” means that the contract’s duration term has ended, while termination means a party has ended the contract (rightfully or wrongfully) prior to its full duration. However, contracts are often inconsistent, disregard or blur the distinction between the two terms, so the use of the terms should be considered in context. 2. Duration Duration is typically addressed in the OEM’s terms or a purchase order, but sometimes also in an award letter or other commercial documents. Thus, care should be taken to determine the duration. The duration may be a fixed duration, such as one year, or a specific date, or “life of the program.” However, fixed duration terms often provide that the term automatically renews unless the Supplier gives lengthy advance notice, which often significantly extends the superficial expiration date. In addition, most OEM Terms require a Supplier to provide “transition assistance”, after expiration or termination. These provisions usually obligate the Supplier to continue supply until an orderly transition is completed. This too can significantly extend the duration of a Suppliers supply obligations. 3. Expiration When No Duration is Specified If a contract does not include an expiration date or an expiration event, it is a “contract of indefinite duration,” UCC § 2-309 allows termination by either party, subject to reasonable notice. The law regarding whether a contract is of indefinite duration and what is reasonable notice is complex, and legal counsel should be consulted before concluding that a contract is of indefinite duration. 4. Effect of Expiration Expiration dates can be a problem for Suppliers because the termination payments to Suppliers (discussed below) by their terms are only triggered by a “termination.” Because no affirmative OEM act of termination is required for expiration, the expiration of a contract arguably would not trigger these payment obligations. By the same token, expiration dates can be a problem for OEMs as well, as favorable pricing and other terms may not be locked in beyond the expiration date. 5. Termination Without Cause (for Convenience) Except for BMW, which does not address the topic, each OEM’s Terms and Conditions allow the OEM to terminate without cause at any time. As to BMW, if no expiration date is specified in the Purchase Order, BMW may be able to terminate at any time by discontinuing releases, and the Supplier may be able to terminate at any time by refusing to accept releases. Only Toyota allows a supplier to terminate for convenience.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

6. Recovery for Termination Without Cause In the event of an OEM termination for convenience, the OEM provisions are broadly similar, but do vary in details, such as whether termination payments to subcontractors are recoverable, so careful attention to each of the contract terms is needed. The details are summarized in the following analysis. A Supplier wishing to protect its investment in research and development, engineering, capital equipment, and the like will need to negotiate a separate agreement or Purchase Order clause with the OEM to cover these items. 7. Time Limits for Claims Most OEMs place a time limit on submitting termination claims measured from the effective date of termination. the Supplier’s claim will be due before termination has occurred. Because termination notice deadlines could be used by the OEM to deny any relief to the Supplier, a prudent Supplier will make sure that its claim is timely submitted even if some items must be estimated in order to meet the claim deadline. A Supplier should also make sure it gets in writing any claim filing deadline extension granted by the OEM. 8. MEMA OE Suppliers Approach The MEMA OE Suppliers model terms permit termination without cause, but also extend this right to the Supplier as well. The OEM must give at least 60 days’ notice of termination for termination for convenience. The Supplier must give notice sufficient for an orderly transition, but not less than 60 days nor more than 360 days.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

IV. Expiration and Termination – OEM Comparative Analysis 1. BMW (2018) (Section 2.8): •

No material changes from 2014 Terms.

•

No contract expiration date is specified.

•

Termination for convenience is not allowed.

•

BMW does not expressly provide for termination claims.

•

Termination does not affect any other rights or liabilities of the parties.

2. BMW (2022) (Section 2.1): •

No contract expiration date is specified. The Terms stated that the period of a Long-term Supply Contract is generally a calendar year.

•

Termination for convenience is not addressed.

•

Termination does not affect any other rights or liabilities of the parties.

3. FCA US (2021) (Sections 22, 31 and 38): •

No contract expiration date is specified but the Order is for a definite term.  The expiration dates appear on the face of the FCA US Purchase Order because FCA US uses a variety of expiration and termination clauses. They may vary greatly contract to contract.

•

FCA US may terminate the contract at any time without cause by written notice.  Suppliers who have signed FCA US bankruptcy assumption letter or Citibank finance agreement may have confirmed this right.

•

If FCA US terminates, the Supplier must stop work as directed within 15 days and submit its termination claim within 60 days after notice of the termination (regardless of when the termination becomes effective).

•

FCA US may audit information relevant to a termination claim.

•

FCA US will pay for finished parts, costs of WIP, and costs of raw materials that are not in excess of authorized levels, and FCA US has no further liability to the Supplier.

4. FCA US / Stellantis (2022) (FCA US Sections 22, 31 and 38 and Stellantis Global n/a): •

No material changes or additions from FCA US (2021) (Not addressed in Stellantis Global).

5. Ford (2004) (Sections 7, and 27-31): •

Initial term of the Production Order begins on the Effective Date (a/k/a Document Release Date) of the Purchase Order and expires on June 30 of the following year. Note: if a Purchase Order issue date is after July 1, the Initial Term will be less than 12 months.

•

Production Purchase Orders automatically renew each July 1 unless: (1) Ford gives written notice of non-renewal by May 1; or (2) the Supplier gives written notice of

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

non-renewal “sufficiently in advance of the scheduled expiration day” to allow Ford to resource the work but in no case later than May 1.  This can help a Supplier terminate an unprofitable contract, but it exposes the Supplier to a non-renewal prior to recovery of project investment costs. •

Ford may unilaterally extend the contract for up to an additional four months if the Supplier decides not to renew.

•

Ford may terminate the contract at any time without cause.

•

If Ford terminates, the Supplier must stop work as directed, transfer title to finished parts, WIP, and raw materials that the Supplier cannot use otherwise, settle claims with subcontractors, protect Ford tooling, and cooperate in resourcing.

•

Ford will pay for finished work, actual cost of WIP and raw materials that the Supplier cannot use otherwise, the Supplier’s costs to terminate contracts with subcontractors, and the Supplier’s costs in cooperating with resourcing.

•

Payment is capped at the contract price.

•

Ford has no liability for expected profit, overhead, interest, product development costs, engineering costs, tooling, and SG&A.

•

Supplier must submit its termination claim within one month after the termination effective date.

•

Ford reserves the right to audit information relevant to a termination claim.

6. Ford (2021) (Sections 7, and 27-31): •

2021 Terms materially unchanged except for: o Some Section numbering.

o Details for submitting termination claims are now in a “Claims Supplier Guide.” o Some nomenclature.

o References to “Goods” now refer to “Goods and Tech Products.” o “Buyer Owned Tooling” is now simply “Tooling.”

7. General Motors (Section 34): •

No contract expiration date is specified.

•

GM may terminate all or part of the contract without cause upon written notice.

•

If GM terminates, it will pay the contract price for parts or services completed, actual costs of WIP and raw materials incurred to the extent reasonable and allocable, less the reasonable value or cost (whichever is higher) of materials sold with GM’s written consent, and the cost of damaged parts.

•

No payment is required for finished parts, services, WIP, or raw materials procured in excess of those authorized in releases, or standard stock, or readily marketable parts.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Payment is capped at the contract price for finished goods or services that would be produced or performed by the Supplier under delivery or release schedules.

•

GM has no liability for expected profit, overhead, interest, development costs, engineering costs, or unamortized depreciation costs, or general and administrative burden changes from termination of contract.

•

Supplier must submit its termination claim with supporting data to permit audit.

•

GM reserves the right to audit information relevant to a termination claim.

•

Termination claims must be in writing and include, among other supporting information, invoices reflecting actual costs of WIP and materials and the basis for cost allocations.

•

Seller must deliver completed goods at GM’s request.

•

Termination claims are subject to setoff.

•

Payment of termination claim does not waive any GM rights.

•

Termination payment is Seller’s sole remedy for termination for convenience.

8. Honda (Section 4.7 and 13): •

Honda may cancel any Order (in whole or in part) or reject any delivery (in whole or in part) upon determination that any of the Goods are defective or nonconforming.

•

Honda may cancel any Order, in whole or in part, if Supplier defaults under the Agreement or any Order. Upon such cancellation, Honda has no further liability or responsibility with respect to such Order(s) or the cancelled portion of such Order(s).

•

Either Party may terminate the Agreement if: (i) the either party defaults in any performance, warranty or representation and it is not cured in thirty (30) days after written notice; (ii) the other Party defaults under any two (2) consecutive orders; (iii) the other Party is subject to any administrative or government action that suspends or terminates its business or the portion of the business that relates to the Order; (iv) the other Party makes an assignment for the benefit of creditors, suspends business, or commits any act amounting to a business failure; (iv) voluntary petition in bankruptcy; or (v) an Excusable Delay suspends or substantially suspends performance for longer than four (4) months.

•

Honda may terminate for convenience either the Order or the Agreement or both by giving notice of cancellation.

•

No contract expiration date is specified.

•

If Honda terminates for convenience, the Supplier must stop work as directed.

•

If Honda terminates for convenience, Honda will pay for finished work, work in process or raw materials, but not those fabricated or procured by Supplier unnecessarily in advance or in excess of Honda’s delivery requirements. Supplier must submit its termination claim within three (3) months from the effective date of cancellation.

9. Hyundai (Section 29): •

No contract expiration date is specified.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Hyundai may terminate the contract at any time without cause. If Hyundai terminates, the Supplier must stop work as directed and submit its termination claim within 30 days after notice of the termination (regardless of when the termination becomes effective).

•

Hyundai will pay for finished parts, costs of WIP, and raw materials not exceeding authorized levels, and Hyundai has no further liability to the Supplier.

•

Hyundai reserves the right to audit information relevant to a termination claim.

10. Kia (Section 29): •

Same as Hyundai.

11. Lucid (Sections 3.2, 13 and 14): •

If Agreement is for Development Goods, Lucid may terminate if Supplier does not complete a milestone or have a remedial plan in place that has been approved by Lucid.

•

Upon an Agreement for Development Goods’ termination, within 30 days Supplier will refund any monies paid by Lucid for Development Good not accepted by Lucid. A refund obligation does not apply if non-performance is excused under Section 15 (Force Majeure).

•

No contract expiration specified.

•

Supplier is acknowledging timely performance per the agreement.

•

Supplier agrees Lucid may compel specific performance.

•

Lucid may terminate if any of the following occur: (i) failure to timely perform; (ii) failure to perform and cure or make acceptable plan to cure within ten (10) days after notice from Lucid; (iii) ceasing to do business; admission of inability to meet obligations under the Agreement; (iv) making an assignment for the benefit of creditors or proceedings in bankrupt or insolvency are instituted; (v) becoming a debtor in a bankruptcy, insolvency or receivership and such action is not dismissed within 30 days; (vi) failure to provide adequate assurance of performance within 3 business days; (vii) failure to be able to timely perform as determined solely be Lucid’s reasonable judgment; (viii) is expropriated or nationalized; or (ix) Lucid may immediately terminate the Agreement if Supplier is in breach of Section 6.1(d) or 6.1(e).

•

Upon termination, and subject to the terms of the Agreement Lucid will pay (i) the purchase price for all conforming Goods delivered in accordance with Releases and Lucid’s notice of termination and (ii) any costs specified in Sections 1.6 and 1.7.

•

If Lucid terminated the Agreement for convenience or if Supplier terminates for Lucid’s uncured breach, Lucid shall pay reasonable and incremental costs of transition support requested by Lucid, but only if agreed by Lucid in advance.

•

Supplier shall stop all work on the date and to the extent specified by Lucid, provide transition support, and transfer title and deliver all Lucid Tooling and Equipment, WIP, materials and components that Supplier produced or acquired in accordance with the Agreement.

•

Supplier shall verify and settle all claims by subcontracts and submit any claims to Lucid within 30 days after receipt of termination notice. Lucid shall have the right to audit.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Supplier shall protect all property.

12. Mazda (Sections 4.2, 5.7, 17 and 18): •

The “Initial Term” of the contract is 5 years, with automatic 1-year renewals.

•

Mazda may terminate for convenience (i) during the first 2 years of the “Initial Term,” on 6 months’ notice and (ii) thereafter, without notice.

•

Mazda may terminate any Firm Order for convenience.

•

Mazda may terminate for cause as described in Part Three, Chapter V, below.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 20 and 21): •

The Agreement shall continue for the program production life of the Vehicle, including any extensions, additions, or modifications, (plus an additional fifteen (15) years with respect to service parts, unless earlier terminated as provided in section 17).

•

MBUSI reserves all legal rights to terminate.

•

MBUSI may terminate the Agreement and/or any Purchase Contract, in whole or in part, at any time without cause. The Supplier must stop work. The Supplier has 30 days to submit claims for goods, WIP and materials with released quantities. These claims are defined as the Supplier’s exclusive remedy.

•

If MBUSI cancels a project, it will pay only for tooling produced under a Tooling Purchase Contract.

14. Nissan (Sections 26 and 27): •

Each PO shall commence on the “PO Effective Date” and remain in effect for the period specified on the PO, which may be extended, at Nissan’s sole discretion, for the entirety of the applicable vehicle program life, including service parts requirements, and any other extensions.

•

Supplier agrees that a stated durational term of “life of the program,” “entirety of vehicle program,” or other similar phrases is for a definite duration and that such term is reasonable.

•

Either party may terminate the Agreement by notice in writing if the other party is in material breach of the Agreement and such breach has not been cured within 30 days of written notice.

•

Nissan may terminate the Agreement if the Supplier becomes insolvent or undergoes any change in ownership without Nissan’s prior approval.

•

Nissan may terminate any PO, in whole or in part at any time, by giving 6 months advance written notice to the Supplier.

•

If Nissan terminates, the Supplier must stop work, settle subcontractor claims, and deliver to Nissan all finished parts, reasonable quantities of WIP, and raw materials that cannot be otherwise used.

•

Supplier must submit its termination claim within 30 days from the termination effective date.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Nissan will pay the contract price for finished parts and actual reasonable costs for producing parts, including WIP and costs of discharging allocable or apportionable liabilities.

•

Payment is capped at the contract price.

•

Nissan reserves the right to audit information relevant to a termination claim.

•

Nissan has no obligation or liability to Supplier if termination under 27.6 of any PO for which no Release has been issued.

15. Rivian (Sections 2.2 and 21): •

Unless stated otherwise on the Purchase Order, the duration of each Purchase Order shall be for the period of time in which Purchaser uses the Goods.

•

Rivian may terminate the contract for convenience, the parties may mutually agree to terminate, or Rivian may terminate the contract due to Supplier’s default or change of control.

•

Upon the effective date of any notice of termination Supplier shall immediately terminate all work, transfer title and deliver all usable and merchantable finished product, WIP, and raw materials/components, reasonably protect Rivian’s property, cooperate with Rivian in resourcing, and grant Rivian all rights to the property (tooling, equipment, molds, dies, drawings, etc.…) used to manufacture the product.

•

Upon termination for default, Supplier is not entitled to any further payments by Rivian.

•

Upon termination for change of control or convenience, Rivian will pay Supplier: the purchase order price for all finished goods that conform to the product requirements and Supplier’s reasonable actual cost of the usable and merchantable WIP and raw materials/ components.

•

Rivian shall not be liable for any other alleged losses or costs of any kind.

•

No later than thirty (30) days after the effective date of the termination, Supplier shall provide Rivian its termination claim with all supporting data. All other claims are waived. Rivian has the right to audit Supplier’s records relating to the claim.

•

Upon the expiration or earlier termination, Supplier must take all necessary action to ensure transition of the supply so that there is no interruption, including providing a sufficient bank of goods, provide all tooling and all other property furnished by or belonging to Rivian, and, at Rivian’s option, assign to Rivian any or all supply contracts or purchase orders for raw materials, and sell tooling, inventory and other property necessary to perform the contract.

•

Supplier has no termination rights as to the contract or any individual purchase order.

16. Scout Motors (Section 3, 14, 19, 20, and 21): •

The Order is for the life of the vehicle program unless otherwise stated on the Order, the RFQ Documents or an authorized Prior Agreement.

•

Service Part obligation survives termination.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Scout may terminate for insolvency, filing of bankruptcy, appointment of a receiver, and failure to provide adequate assurance of financial capability to perform.

•

Scout may terminate all or any part of the Order, without liability to Scout, if Seller: (i) repudiates, breaches or threatens to breach any term of the Order; (ii) fails or threatens not to deliver or perform; (iii) fails to make progress or to meet reasonable quality requirements; (iv) enters or offers to enter into a transaction that includes a sale of a substantial portion of the assets used for the production of Supplies; or (v) fails to remain competitive with quality, technology, delivery, service or pricing.

•

Scout may terminate for convenience any and all parts of the Order. Upon written notice of termination, Seller must (a) promptly terminate all work on the effective date of the termination; (b) transfer title and deliver all finished Supplies, WIP, and materials that Seller cannot use for other customers; (c) verify and settle any claims by sub-suppliers; (d) take actions needed to protect any of Scout’s property; and (e) if requested, cooperate in the transition of supply to another supplier.

•

Seller may not suspend performance or terminate for any reason.

•

If Scout terminates for convenience, Scout has the following obligations (i) pay Seller the Order price for all finished Supplies in the quantities ordered; (ii) pay Seller reasonable and actual cost of WIP and materials transferred to Scout; (iii) pay Seller the reasonable actual costs of settling claims regarding its obligations to its sub-suppliers or subcontractors to the extent directly caused by the termination; (iv) pay Seller’s reasonable actual cost of carrying out is obligations to protect Scout property; and (v) if applicable, pay Seller amounts due in connection with transition support.

•

Within one calendar month, Seller must furnish its termination claim with supporting documentation.

•

Scout has no obligation for payment to Seller if the Order is terminated due to Seller’s default or breach.

•

Scout has no responsibility under any circumstances and Seller shall not pursue any claim for loss of profits or consequential damages.

17. Toyota (2009) (Section 5.8): •

No contract expiration date is specified.

•

Toyota may immediately terminate all or any part of any contract documents without cause by giving written notice to the Supplier.

•

Either party may terminate the Terms and Conditions at any time without cause by giving not less than six months’ prior written notice to the other party.  The right to “terminate the Terms and Conditions,” is superficially different than the right to terminate the contract. However, it is unlikely that a court would conclude that terminating the Terms and Conditions was not the equivalent of terminating the contract, as it is difficult to give a sensible meaning to terminating the Terms and Conditions alone.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Upon termination, the Supplier must stop work, transfer to Toyota raw materials and inventory, and protect Toyota property.

•

Toyota will pay the prevailing Toyota price for finished parts, the actual cost for WIP and raw materials (to the extent authorized in releases or other contract documents), and the actual cost of protecting Toyota property.

•

Supplier must submit its termination claim within one month after the termination effective date.

•

Toyota reserves the right to audit information relevant to a termination claim.

•

Toyota will pay within 60 days after claim submission.

•

Unless otherwise agreed by the parties, Toyota is not liable to pay the Supplier any amount for claims arising out of subcontractor claims, labor or employee benefit charges, loss of anticipated profit, product development or engineering and design costs related to the termination of the Terms and Conditions. Toyota has no liability for a termination claim if the Supplier is in default.  The Toyota terms are not clear as to Toyota’s liability if Supplier terminates the contract and counsel should be consulted.

18. Toyota (2021) (Section 6.9): •

Other than section numbering, material changes are:

•

Section now refers to “Agreement” instead of 2009 terms reference to “Terms and Conditions”.

•

Supplier must assist in an orderly termination and transfer of all aspects of the Agreement, including all property.

•

Toyota may offset from payments to Supplier by any Toyota Party.

•

Supplier must provide support to address the impact of its breach. This includes all of Toyota’s Losses that arise from the breach.

19. Volkswagen (Sections 3, 14 and 21): •

The contract expires with the program expiration unless otherwise stated in the Purchase Order, RFQ Documents, or Prior Agreement (e.g., NDA, etc.), but it continues as to service and repair parts unless otherwise agreed in a writing signed by an authorized VW representative, or unless VW removes Tooling from Seller necessary for the production of service parts.

•

VW may terminate the contract without cause (for convenience).

•

Upon termination Supplier must (a) terminate all work; (b) deliver the finished Parts, the WIP, and the parts and materials produced or acquired according to quantities ordered by VW and Supplier cannot use them for itself or for others; (c) settle any claims by subcontractors; (d) protect VW’s property; and (e) cooperate with VW in transferring the production of Parts to a different Supplier.

•

Supplier must provide timely notice, within one calendar month after termination, of all of its termination claims. If there is timely notice, VW will pay only for: (i) all finished Parts in the quantities ordered; (ii) reasonable cost of merchantable and useable

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

work-in-process and the parts and materials; (iii) actual costs of settling claims regarding obligations to subcontractors; (iv) reasonable cost of carrying out its obligation under subsection (d); and (v) amounts due in connection with transition support under Section 22(b). •

VW will not pay for loss of profit, lost fees, lost business, loss of use, costs associated with business interruptions, unabsorbed overhead, interest on claims, product development and engineering costs, tooling, facilities and equipment rearrangement costs or rental, unamortized capital or depreciation costs, or other consequential damages.

20. Volvo (Sections 7.1.2, 12.1, 13.3, 13.7, 15.1.3, 15.2.3, 22.5, 25, 27.4, and 29.7): •

Volvo may terminate the Purchase Agreement, in whole or in part, upon written notice if: (i) Supplier fails to comply with any requirements. In situations where a cure is possible, termination may occur after Supplier has failed to timely cure; (ii) where there is a change in control. Volvo has sixty (60) days to notify Supplier after receipt of written notice of change in control of its decision to terminate; (iii) if Supplier becomes insolvent, files for voluntary bankruptcy or has an involuntary bankruptcy petition filed against it, has a receiver or administrator appointed, or executes an assignment for the benefit of its creditors.

•

Volvo may also terminate a Purchase Agreement if (i) Supplier provides notice that it cannot comply with any amendment to the agreement, (ii) upon sixty (60) day notice of another supplier offering Volvo equivalent goods at a total lower cost, (iii) if a delay in supply occurs, (iv) if Supplier is unable to perform or deliver substitute conforming goods, (v) any breach of the agreement concerning compliance with laws, including but not limited to export and custom controls, protection of personal data, and anti-trust. Each are deemed a material breach, and (vi) a failure to supply due to a force majeure event that lasts longer than thirty (30) days.

•

Termination is effective on the date stated by Volvo in the written notice of termination so long as it is not later than fifteen (15) months after the date of the notice, unless otherwise agreed by the parties.

•

No termination will relieve the Supplier of any liability accrued under the Purchase Agreement. The Supplier may terminate the Purchase Agreement for cause upon written notice to the Buyer if the Buyer: (i) fails to perform for more than thirty (30) days after a force majeure event; (ii) failure to pay invoices and the breach causes a significant financial impact on the Supplier; (iii) if there is a breach of the confidential non-disclosure provision that is of significant importance to the Supplier; and (iv) if Volvo becomes insolvent, files for voluntary bankruptcy or has an involuntary bankruptcy petition filed against it, has a receiver or administrator appointed, or executes an assignment for the benefit of its creditors. Notwithstanding Supplier’s right to terminate, Volvo shall have ninety (90) days to cure and if able to cure, there shall be no termination.

•

Either party may terminate a Purchase Agreement, in whole or in part, at any time for any reason, based on a Blanket Purchase Order, with fifteen (15) months written notice. However, if terminated by Supplier, Supplier must give sufficient notice in advance to allow Volvo to secure an alternative acceptable replacement supplier. This may require notice to be provided greater than fifteen (15) months.

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•

Only Volvo may terminate a Purchase Agreement in whole or in part, at any time for any reason, based on a Lump-Sum Purchase Order. The Supplier may only terminate for cause, as stated above.

•

If Volvo terminates a Purchase Agreement for cause it will not result in the termination of the Framework Agreement, unless other stated. Subject to set-off, Volvo will pay Supplier for any unpaid goods that conform to the product requirements, outstanding tooling receivables, and actual costs incurred by Supplier before the termination date for WIP and raw materials that cannot be purchased by a third party and cannot be used by Supplier that were purchased in accordance with Volvo delivery or Call-Off schedules, for actual costs incurred by Supplier for protecting Volvo’s property, and any other costs stated in Volvo Car Instruction.

21. MEMA OE Suppliers (Sections 14.1 and 15): •

The duration is set forth in the Purchase Order or, if not set, for the life of the program.

•

The Buyer may terminate the contract without cause on not less than 60 days’ notice.

•

The Supplier may terminate the contract at any time without cause with notice sufficient for the Buyer to make an orderly transition, but not less than 60 days or more than 360 days.

•

Either party may terminate the Contract for material default that is not cured within 15 days. The cure period may be shortened to prevent irreparable harm.

•

Supplier must assist the OEM in locating an alternate source and relocating the work and supplying Buyer’s requirements. If Supplier terminates for Buyer’s breach, the support period is not more than 30 days. Otherwise, the support will be provided for a period sufficient for the Buyer to make an orderly transition, but not more than 360 days unless terminated by Buyer for breach, during the Transition Support period the Contract Price will be adjusted to reflect changes in Supplier’s costs.

•

On termination, Buyer must: o Purchase from Supplier finished goods, work in progress, components and materials, unless unreasonable in amount. o Reimburse Seller for amounts paid to third parties as a result of prior commitments. o Pay for transition support.

•

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If termination is by Buyer for convenience or Seller for default, Buyer must also pay for unreimbursed or unamortized research and development and dedicated equipment.

FCA US 2021 N

FCA/Stellantis 2022

OEM’s option to extend on expiration or termination Post-expiration Supplier cooperation Some payment for tooling on cancelled programs

TFC claims limited to released Goods and Materials

Automatic Renewal Unless Notice of Non-Renewal

BMW 2022

Initial Term

Prior days’ notice to avoid renewal Termination for Convenience (“TFC”)(d) Claims for TFC must be submitted in days

BMW 2018

Specific Provisions Provided in Terms and Conditions

Ford 2004 N

4 mos.

1 yr.

Ford 2021 N

4 mos.

1 yr.

GM S

Honda

IV. Expiration and Termination – Dashboard Hyundai N

Kia N

Lucid Y

Mazda N

n/a

5 yrs.

MBUSI Y(b)

Nissan S

Y(c)

6 mos.

Per PO

Rivian S

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2009 Y

Toyota 2021 Y

VW N

Volvo Y

450

Page 81

S(a)

MEMA OE Suppliers

Page 82

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

(g) Nissan has the discretion to extend the PO term to “life of the program.”

(f) Supplier rights of non-renewal may have been waived if the FCA US bankruptcy assumption letter.

(e) Expiration and termination of a contract may be affected if a Supplier has signed the GM Bankruptcy Trade Agreement or Citibank finance agreement.

(d) Notice of TFC varies from immediate to 30 days.

(b) Limited to amounts in tooling Purchase Orders.

(a) Terminable upon reasonable (not less than 60 days’) notice.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

PART TWO I.

Releases and Delivery

II.

Packing, Marking, and Shipping

III. Inspections and Non-Conforming Parts

105

IV.

Supplier Quality 114

Service Parts 123

VI. Invoices and Payment 132 VII. Taxes 139 VIII. Setoff 144

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

I. Releases and Delivery – Context and Questions 1. Releases and Delivery Terms Stringently Enforced Given the industry’s longtime focus on carefully managing inventory and just-in-time delivery practices, the releases and delivery portions of the OEM Terms and Conditions are among the most stringently enforced terms. 2. Time Is of the Essence Each of the OEM Terms and Conditions contain provisions that the time of delivery and the quantity to be delivered are of the essence to the Contract. Courts have interpreted these sorts of provision strictly, ruling, for example, that reasonable lead time is not a pre-requisite to a 100 percent on time delivery obligation. “Time is of the essence” may be interpreted to mean that any delivery failure is a material breach, which may impact the application of UCC 2-612 (regarding breach of installment contracts) and other code provisions. To preserve the right to seek damages for untimely delivery, reasonable notice must be provided. Whether the content and timing of notice are sufficient is usually a question of fact. 3. Extraordinary Shipping Costs Borne by Supplier The OEM Terms and Conditions uniformly provide that payment of premium shipping costs resulting from failure to timely deliver sufficient quantities of parts released are to be borne by the Supplier unless the OEM is solely responsible for the extraordinary costs. 4. OEM Changes in Delivery Time, Place, Means and Location The OEM Terms and Conditions vary in their treatment of changes in the delivery time, place, means and location. Some OEMs, such as BMW, allow for reasonable adjustment of the amounts paid to Supplier if such changes occur. Others, such as General Motors and Hyundai, specifically reserve the right to change delivery schedules without cost to themselves. 5. Transfer of Title and Risk of Loss The time of transfer of title and risk of loss varies widely among OEMs. It is important to note, however, that these boiler-plate rules are often changed on the face of the Purchase Order. For Toyota, the result depends on the type of goods shipped. When title and risk of loss pass at the point of destination, then, as between the OEM and the Supplier, the Supplier is responsible for loss or damage in transit and must pursue any claims against the freight carrier. When title and risk of loss pass at the point of destination, the Supplier may also be responsible for customs clearance and duties on international shipments. See Part Six, § IV.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

6. Resources Defining Delivery Terms Some of the OEM terms, as well as the MEMA model terms, refer to “Incoterms 20XX” (such as F.O.B., F.C.A. and D.D.P.), which are standard delivery terms published by the International Chamber of Commerce. Revised Incoterms are issued from time to time, but a reference to a prior edition is still valid. The ICC publishes a book explaining Incoterms in detail, available at www.iccwbo.org/incoterms. Standard delivery terms which may be similar to some Incoterms such as F.O.B., are also defined in Sections 2-319 through 2-322 of the Uniform Commercial Code. The UCC definitions would apply in contracts governed by the UCC unless the Incoterms are adopted by the contract.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

I. Releases and Delivery – OEM Comparative Analysis 1. BMW (2018) (Sections 2.4, 3.1-3.5, and 5): •

2018 Terms had significant changes from 2014.

•

BMW can request changes to date and place of delivery quantities, means of transportation, etc. If a change results in a delay in delivery, Supplier must notify BMW, and the parties agree in writing on reasonable adjustment of Supplier’s remuneration. BMW will pay costs to balance out.

•

Time and quantity are of the essence.

•

Supplier must deliver “just in time” and “just in sequence” as specified in the release.

•

Supplier must comply with a release unless it objects in writing within specific time periods listed (generally 24 hours to two weeks, depending on the time between release and delivery dates).

•

Once a release has been accepted, Supplier must deliver exactly as specified in the release.

•

Adds new defined term: “Critical Supply Situation,” which means “concrete circumstances or events . . . which could lead to . . .” inability to meet supply obligations.

•

Supplier must inform BMW of any Critical Supply Situation and take all necessary steps to maintain supply.

•

If BMW requests, Supplier must inform BMW of “of abstract risks which could lead to a Critical Supply Situation and demonstrate protective and contingency plans.”

•

Supplier is responsible for damages if it fails to deliver on time, but is not liable for BMW’s profits unless delivery is more than 10 days late, or Supplier fails to fulfill its responsibilities regarding Critical Supply Situations.

•

Title and risk of loss to the parts pass to BMW as specified in the Purchase Order or, if not specified, then F.C.A. Supplier’s shipping location (Incoterms agreed in the Supply Contract).

2. BMW (2022) (Sections 2.4, 3.1, 3.2, 3.3, 3.4, 3.5 and 5): •

•

Delivery dates are determined by the agreements in the Supply Contract, in the Purchase Order and/or Delivery Schedules.

•

Time and quantity are of the essence.

•

Supplier must deliver “just in time” and “just in sequence” as specified in the release.

•

Supplier must comply with a release or any change to a release unless it objects in writing within specific time periods listed (generally 24 hours to two weeks, depending on the time between release and delivery dates).

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Once a release has been accepted, Supplier must deliver exactly as specified in the release.

•

Adds new defined term: “Critical Supply Situation,” which means “concrete circumstances or events . . . which could lead to . . .” inability to meet supply obligations.

•

Supplier must inform BMW of any Critical Supply Situation and take all necessary steps to maintain supply.

•

If BMW requests, Supplier must inform BMW of “of abstract risks which could lead to a Critical Supply Situation and demonstrate protective and contingency plans.”

•

Title and risk of loss to the parts pass to BMW as specified in the Purchase Order or, if not specified, then F.C.A. Supplier’s shipping location (Incoterms agreed in the Supply Contract).

3. FCA US (2021) (Sections 3-5): •

Time is of the essence.

•

Parts must be delivered per FCA US written releases unless the Purchase Order specifies minimum fabrication or delivery quantities.

•

Supplier is responsible for all damages suffered by FCA US as a result of Supplier’s failure to deliver on time, including premium shipments.

•

Title and risk of loss to the parts pass to FCA US when the parts arrive F.O.B. at the FCA US plant.

•

Supplier may not produce, assemble, ship, buy raw materials, or anything else unless authorized by a written release or a minimum fabrication or delivery Purchase Order.

4. FCA US / Stellantis (2022) (FCA US Sections 3-5 and Stellantis Global Section 29): •

No material additions or changes from FCA 2021, except Supplier is non-exclusive and FCA may purchase Goods from other suppliers. P Unless the Stellantis Purchase Orders contain a requirement promise, this may raise potentially significant legal and commercial issues.

5. Ford (2004) (Sections 6 and 13): •

Time and quantity are of the essence.

•

Supplier must comply with Ford delivery requirements specified in its Web-Guides (separate documents).

•

Supplier must ship only the quantity of parts specified in the Purchase Order or release.

•

Title and risk of loss to the parts pass to Ford at the time and place of delivery.

6. Ford (2021) (Sections 5 and 12): •

2004 Terms materially unchanged except:

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

o “Web Guides” are now “Supplier Guides”

o 2021 Terms no longer expressly requires that “Supplier must ship only the quantity of parts specified in the Purchase Order or release.”  The deleted requirement is implicit in other provisions. 7. General Motors (Sections 3, 7, 8 and 14): •

Time is of the essence.

•

Parts must be as ordered.

•

Supplier must pay for premium shipments for late deliveries.

•

No provision regarding when title and risk of loss to the parts pass to GM.

•

Seller must comply with delivery and logistics requirements as modified from time to time.

•

Title transfers where the risk of loss transfers per the contractual delivery terms.

•

Seller must notify GM of any delay in delivery.

•

Supplier is obligated to establish a 30-day part bank in response to “any foreseeable or anticipated event or circumstance, the occurrence of which could interrupt or delay Buyer’s production or Seller’s performance under this Contract.”

8. Honda (Sections 2.4, 3.2, and 4): •

Honda may change delivery requirements at any time.

•

F.O.B. Honda’s plant or other designated place of delivery specified by Honda or otherwise in writing.

•

Time, quantity and quality are of the essence. Honda may cancel the Order or reject the Goods and/or return at Supplier’s expense (in whole or part) of Goods not in conformity with time, quantity and quality.

•

Supplier must inform Honda promptly of any circumstance that is expected to result in any delivery time, quantity and quality that will not be as specified by Honda and also state corrective measures that Supplier is taking to minimize the effect.

•

In the event of tendered delivery not in compliance with time, quantity and quality requirement, unless Honda has Supplier rejected or cancelled the Order, Supplier must ship conforming Goods at the earlies possible moment and by fasted practicable and available means at Supplier’s cost.

•

Goods must be delivered at the time and place specified by Honda.

•

Delivery times specified refer to delivery at Honda’s designated place of delivery or destination.

•

All Goods are subject, at Honda’s option, to inspection by Honda within a reasonable time of delivery. Notwithstanding, Supplier acknowledges that final inspection may not occur until the Goods are delivered to Honda’s plants.

•

Honda may cancel any Order or reject any delivery upon Honda or its designee’s determination that any of the Goods are defective or nonconforming or that delivery did

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

not conform with the terms of the Order. Honda may instruct Supplier as to the means and method(s) of cure or cover and, if such instructions are given, Supplier must deliver at the earliest possible moment and by the fastest practicable and available means but without any increase in any costs to Honda. 9. Hyundai (Sections 3-6): •

Time and quantity are of the essence.

•

Parts must be delivered per Hyundai written releases unless the Purchase Order specifies minimum fabrication or delivery quantities.

•

Hyundai is not required to accept or pay for over-shipments.

•

Hyundai may change delivery schedules at any time without compensation to Supplier.

•

Supplier must pay for premium shipments required as a result of Supplier’s acts or omission or its failure to meet Hyundai delivery schedules.

•

Title and risk of loss to the parts pass to Hyundai when the parts have been inspected and accepted into Hyundai’s inventory with delivery D.D.P. the named destination.

10. Kia (Sections 3-6): •

Same as Hyundai.

11. Lucid (Sections 2.3, 2.4 and 2.5): •

Lucid’s Production Order Release will be issued two (2) weeks before goods must be shipped.

•

Release is accepted if no response to the Production Order Release is received within two (2) business days.

•

Time and quantity are of the essence.

•

Unless otherwise stated in a Release or Order, Goods will be delivered FCA, INCOTERMS 2010.

12. Mazda (Sections 1.2, 1.3, 5.1, 5.5, and 5.6): •

Mazda may purchase the Products from other suppliers.

•

Seller may not supply the Product to other purchasers if Mazda developed or paid the development or tooling costs of the Product.

•

Delivery terms are specified in the Purchase Order, with title and risk of loss transferring at the delivery point.

•

Delivery times and quantities are specified in Firm Orders. Time is of the essence.

•

If Seller misses the delivery date in a Firm Order, Seller shall (i) promptly make alternative arrangements for delivery; and (ii) compensate Mazda for all resulting damages.

•

If Seller fails to deliver or delivers non-conforming goods, Mazda may terminate the Purchase Order, purchase substitute good and recover associated costs and require the refund of any amounts already paid for the non-conforming goods. (iii) promptly notify

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Mazda of the circumstances of the delay, the expected date and “all other circumstances; and (iv) if directed by Mazda, provide expedited delivery, at Seller’s expense. 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 3.2, 7.2, 11.1, and 11.2): •

Time and quantity are of the essence.

•

Supplier shall comply with all MBUSI’s requirements as to the shipping, transportation, packing, and marking. Supplier shall comply with the Logistics Directives, which are located on the Supplier Portal and as may be amended from time to time.

•

Supplier shall supply to MBUSI 100% of its orders for Product and related Service Parts, as set forth in Purchase Orders, electronic data interchange messages, and/or releases.

•

Title and risk of loss shall transfer from Supplier to Buyer as described in the Title/Risk of Loss Directive located on the Supplier Portal, regardless of conflicting shipping or price terms.

14. Nissan (Sections 1.1, 4 and 5): •

Nissan may change delivery schedules or place emergency orders at any time.

•

Over-shipments may be returned by Nissan at Supplier’s cost.

•

“Delivery” occurs when delivery is validly accomplished under the INCOTERMS® 2020 set forth in the Purchase Order, provided that those INCOTERMS shall be either (1) FCA, in which case delivery occurs when the Parts are loaded onto a truck or other vehicle scheduled by and under the control of Nissan; or (2) DDP, in which case delivery occurs when the Parts are delivered by Supplier to a Nissan dock or other location under Nissan’s control.

•

Nissan will communicate its delivery date and quantity requirements to Supplier through periodic written releases (each a Release). Nissan may identify the quantity or date requirement for each specific Release with a Receipt Authorization Number (“RAN”). If no RAN is issued for Parts, supplies, materials, or work in progress, Nissan is not responsible.

•

Nissan may provide Supplier with forecasts or estimates of delivery times and quantities, estimated program length, or similar information for periods beyond the firm release period, whether in Releases or other documents. All such information constitutes estimates provided for planning purposes only, is subject to change from time to time, and will not be binding upon Nissan.

•

Upon late delivery, Nissan may at its option approve or revise the delivery schedule or terminate the contract, with the right to reject parts or services as well as any other remedies.

•

Supplier is responsible for all damages, including consequential damages, suffered by Nissan for delayed delivery, including premium shipments.

•

Title and risk of loss to the parts pass at the time of delivery “to Nissan,” except risk of loss as to rejected parts is deemed to never have passed.

•

Supplier shall timely and accurately fulfill all requests by Nissan, or its designated agents, for country of origin certification for all Parts supplied to Nissan whether or not preferential origin or tariff treatment applies. This includes, for example, national

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

or international certifications of content data for various and applicable Free Trade Agreements, including the United States-Mexico-Canada Agreement, Generalized System of Preferences, Average Fuel Economy and Labeling and export compliance. •

Nissan or its designated agents shall provide supplier will all information, documents, and/or support being necessary for supplier to fulfil its obligations under article 4.5. If supplier is not able to obtain any certificate due to circumstances beyond supplier’s control, supplier will immediately inform Nissan or its designated agents. In this case, supplier shall not be liable for not being able to fulfill its obligations.

15. Rivian (Sections 1.3, 2, 2.5, and 6): •

Seller must accept and not reject a release, so long as it conforms to the Purchase Order.

•

Seller must object to any release within two (2) business days or it is deemed accepted.

•

Purchaser may reschedule or cancel any release upon written notice. Purchasers only liability shall be to pay for Products delivered under the release within the initial four weeks covered by the release.

•

If the quantity is not stated on the Purchase Order, the quantity is for 100% of Purchaser’s requirements.

•

Rivian makes no warranty regarding the quantity of products that it will order, if any and is not required to issue any purchase orders or releases.

•

Rivian may change shipping schedules or temporary suspension of shipments. It may also change the rate of scheduled shipments or direct temporary suspension, neither of which shall entitle Supplier to a price change.

•

Premium shipping and other expenses necessary to meet delivery schedules shall be the Supplier’s sole responsibility.

•

Rivian is not required to make payment for products delivered in excess of firm quantities or outside of delivery schedule.

•

Supplier must provide packing slips, bills of lading, or other shipping documents with each shipment of parts. Supplier shall indemnify Rivian for any damages.

•

Time of delivery is of the essence. Quantity delivered is of the essence. Supplier will be in default if it fails to meet either.

16. Scout Motors (Section 4 and 5): •

Unless noted as “firm” or words of similar meanings, the quantities listed in each Order are only estimates and not binding on Scout. Scout makes no representation, warranty, guaranty, or commitment of any kind to Seller with respect of Scout’s quantitative requirements for the Supplies or the term of supply of the Supplies.

•

If no quantity is provided on the Order, or if the Order states that it is “blanket,” “see release,” “as scheduled,” “as directed,” “subject to Buyer’s production releases” or similar terms, then Seller must supply Scout’s requirements in such quantities as identified in firm orders or releases, provided that Buyer will purchase no less than one piece or unit of each of the goods and no more than 100% of Buyers requirements for the goods.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Scout is not required to issue any purchase orders, and Scout is not obligated to issue any release under a purchase order.

•

Material Releases are part of the Order, are governed by the Terms and are not independent contracts.  See comment above. If no quantity term exists beyond the individual releases, the contract is likely not enforceable beyond each individual release. A review of all contract documents is warranted. UCC § 2-201.

•

Estimates and forecasts are subject to change.

•

Time and quantities are of the essence.

•

Scout may change the rate of or direct temporary suspension of scheduled shipments.

•

Scout has no obligation to accept early, late, partial or excess deliveries.

•

When requested, Supplier will manufacture and deliver excess quantities to insure timely delivery. Until such reserve Suppliers are purchased by Scout, they remain the property of Supplier.

•

Title and risk of loss passes from Supplier to Scout upon Scout’s acceptance of delivery in accordance with Incoterms stated in Section 5.

17. Toyota (2009) (Sections 2.1(a), 2.4 and 2.7): •

Time is of the essence. Contract documents, even where they set forth target quantities or volumes, are not intended to guarantee that Toyota will purchase a certain quantity or volume.

•

Supplier must pack, mark and ship items in strict conformity with Toyota’s packaging and delivery requirements, as well as those of any applicable carrier.

•

Supplier must route deliveries of parts in strict conformity with Toyota’s routing requirements.

•

Supplier must deliver items in quantities and at the time and place specified in Toyota’s delivery schedules.

•

Supplier responsible for costs of handling, packaging, storage and transportation of parts.

•

Supplier must provide packing slips, bills of lading, or other shipping documents with each shipment of parts. Toyota may suspend or change delivery schedules at its discretion.

•

Toyota will reimburse Supplier for reasonable additional costs of changes in delivery schedules or instructions made by Toyota or emergency shipments required by Toyota, with the amounts of reimbursement to be set forth in a separate Contract Document.

•

If Supplier is responsible for a delay or inability to meet delivery requirements, Supplier must select and pay for premium freight.

•

Toyota is not liable for over-shipments or under-shipments.

•

Supplier is responsible for costs resulting from delayed shipments.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Supplier must immediately notify Toyota of any anticipated delay in delivery and the cause of such anticipated delay, and notification must be confirmed in writing.

18. Toyota (2021) (Sections 3.1.1, 3.6 and 3.8): •

Except for section numbering, changes are:

•

Supplier has custody and control of Items until loaded onto carrier and bill of lading delivered.

•

On request, the parties will discuss and correct discrepancies in the active parts list. Supplier also may request an active parts list, but not more than one time per calendar year.”

•

“Additional costs” are limited to “out of pocket” expenses related to Expedited Shipments.

•

If Toyota consents to a substitute Supplier providing delayed Items, Supplier remains liable for any breach by the substitute supplier.

•

Software to be delivered by EDT in the form specified by Toyota.

19. Volkswagen (Section 4): •

Time and quantity are of the essence.

•

VW is not required to purchase parts exclusively from Supplier unless otherwise specified in the Order.  If an Order is not a requirements contract and does not provide for a definite quantity, then it may not be enforceable beyond specific quantities ordered, per the UCC Statute of Frauds (UCC § 2-201). This may give a supplier substantial leverage in a dispute with Volkswagen.

•

Unless otherwise specifically stated on the face of the Purchase Order (or other Agreement), if no quantity is stated on the face of the Purchase Order or the quantity is stated as “zero,” “blanket,” “see Release,” “as scheduled,” “as directed,” or “subject to VW’s production releases,” Supplier will provide VW’s requirements of the Parts as determined by “firm” orders set by material authorization releases, manifests, broadcasts or similar releases.  Volkswagen’s language suggests that terms that are commonly used in the industry as part of exclusive requirements contracts do not create an exclusive requirements contract and do not commit Volkswagen to purchase any specific quantity. However, if an Order is not a requirements contract and does not provide for a definite quantity, then it may not be enforceable beyond specific quantities ordered, per the UCC Statute of Frauds (UCC 2-201). This may give a supplier substantial leverage in a dispute with Volkswagen.

•

Material releases are a part of the Purchase Order, are governed by the VW Terms and Conditions and are not independent contracts.  This statement was likely added in order to prevent Suppliers from

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

arguing that each Release creates an independent contract, a relatively common argument in pricing disputes. •

VW reserves the right to adjust quantities and rates of shipment, or to temporarily suspend scheduled shipments, with no change to the price.

•

Title and the risk of loss pass from Supplier to VW upon delivery to VW’s transportation carrier or, if the shipment is to a VW facility, upon delivery to that facility.

•

Supplier shall at all times maintain sufficient capacity to ensure the timely delivery of Supplies ordered by VW. Changes in quantity including, but not limited to, variances from Buyer’s estimates shall not entitle Supplier to modify the price for Supplies.

•

VW reserves to itself the right to order sufficient parts in addition to its requirements to create a reserve (bank) for shipment.  This provision could come into play should there be a pricing or similar dispute and VW wishes to create a bank build in order to avoid an interruption in supply and/or seek an alternate source.

20. Volvo (Sections 1.1, 8 and 15): •

Goods must be delivered in the quantity, and at the time, date and location, stated in the Purchase Order or Call-Off. Goods are to be delivered at the specified time and in the specified sequence consistent with Volvo’s “just-in-time” and “just-in-sequence” manufacturing principles.

•

Title to goods passes to Volvo at the same time the risk passes to Volvo.

•

Supplier must promptly notify Volvo is there will be a delay or failure to fulfill the quantity requirements stated in the Purchase Order or Call-Off. Supplier must inform Volvo how it intends on minimize the effect.

•

Volvo may reject and/or return all or part of any late or inadequate quantity shipments at Supplier’s expense.

•

If Supplier fails to deliver on the date and time required, Volvo may terminate, in whole or part, the Purchase Agreement and any other agreement with the Supplier that Volvo does not need because of the delay. Volvo may substitute purchases from another supplier.

•

Supplier must defend and indemnify Volvo and its affiliates against all liabilities, costs, damages, losses, claims and expenses (including but not limited to actual fees for attorneys) arising from any failure to ship at the time and date required.

•

If Supplier is responsible for a failure to deliver on the date and time required ordered under a Lump-Sum Purchase Order, Supplier must pay Volvo liquidated damages equal to the amount of 2% for each complete week of delay up to a maximum of 15% in the aggregate.

•

If Supplier, or any of its sub-suppliers, is responsible for a failure to deliver on the date and time required ordered under a Blanket Purchase Order, Supplier must pay Volvo liquidated damages equal to an amount stated in Volvo Car Instruction.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

21. MEMA OE Suppliers (Sections 3.1 – 3.4; 4.2): •

The Buyer’s releases must be reasonably determined, taking into account agreed capacity limitations, lead times and unusual volume fluctuations. Supplier will use best efforts to satisfy unreasonable releases but will be reimbursed for incremental expenses.

•

Releases are 4 weeks firm. Beyond 4 weeks, information is a non-binding forecast.

•

Unless otherwise specified in the Purchase Order, title and risk of loss transfer at Supplier’s dock, with delivery F.C.A. Supplier’s dock (Incoterms 2010).

•

Supplier is responsible for maintaining all materials and other resources needed to satisfy reasonable releases.

•

The party causing a delay is responsible for any necessary premium freight.

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Supplier responsible for costs associated with changes in time and place of delivery

Supplier responsible for changes in quantity

Supplier responsible for delay

Page 96

N(d)

Title and risk of loss

BMW 2022

FCA US 2021

Nissan Y

Y(f)

Y(h)

Y(e)

Volvo

Y(f)

Y Y

MEMA OE Suppliers Y

Y Y

Rivian

Y(b)

BMW 018

F.C.A. Supplier Shipping Location

F.C.A. Supplier Shipping

F.O.B. FCA US Plant

Time and place of delivery

F.O.B. at the Honda Plant

D.D.P. the named destination

FCA/Stellantis 2022

D.D.P. the named destination

Ford 2004

F.C.A. named destination

Ford 2021

Per Incoterms

Honda

See Note h

Hyundai

Time of delivery

Kia

F.C.A. named destination

Lucid

Time and place of delivery

Mazda

Supplier quantity is of the essence

MBUSI

Y(a)

Scout Motors

See Note (c)

Time is of the essence

Toyota 2009

As stated

Specific Provisions Provided in Terms and Conditions GM

I. Releases and Delivery – Dashboard Toyota 2021

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

F.C.A. Supplier dock

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

(g) VW may change the rate of scheduled shipments or direct temporary suspension of scheduled shipments, and Supplier shall have no right to a price modification as a result. Changes to delivery location are addressed separately in Section 10 and may not occur without VW’s written approval.

(f) Toyota will reimburse Supplier for reasonable additional costs of changes in delivery schedules or instructions made by Toyota or emergency shipments required by Toyota with the amounts of reimbursement to be set forth in a separate Contract Document. In 2021, reimbursement limited to out of pocket expenses.

(e) Party causing the delay bears cost under the MEMA Model Terms.

(d) Upon change, Supplier is to notify BMW and the parties are to agree in writing on reasonable adjustment.

(c) VW provides that title and risk of loss pass to VW upon delivery of parts to VW’s transportation carrier or if shipment is by Supplier to a VW facility upon delivery to that facility.

(b) Nissan reserves the right to terminate the relevant Purchase Order in whole or in part if the parts are not delivered at the time specified.

(a) BMW also requires that parts be delivered “just in sequence.”

Specific Notes

The Dashboard is intended to provide a simple, high-level comparison among the OEM and Terms MEMA OE Suppliers and Conditions on certain basic issues. It is necessarily over-simplified, omitting limitations, exceptions and nuanced distinctions regarding the contract terms, and it should be used accordingly.

General Notes

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II. Packing, Marking, and Shipping – Context and Questions 1. Unique Requirements for Each OEM Each OEM has packing, marking, labeling and shipping requirements which are unique and which are often referred to in separate documents or locations, such as Ford Supplier Guide (formerly known as Web Guides) or BMW’s Packaging Manual. 2. No Accommodation for Compliance Costs The OEMs do not make accommodations for costs associated with complying with these requirements.

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II. Packing, Marking, and Shipping – OEM Comparative Analysis 1. BMW (2018) (Section 4): •

The 2018 Terms had significant changes from 2014.

•

Supplier must ship parts in accordance with BMW’s Packaging Manual and EDI Guidelines and the instructions of BMW’s packaging department.

•

Shipping notifications with comply with VDA 4933 and EDI Guidelines.

•

Supplier responsible for any costs from inaccurate or incomplete information.

•

Special notification obligations if shipping terms other than Incoterms FCA.

•

If FCA or EXW, then BMW will contract with the carrier.

•

Supplier must provide specific listed information in writing to the outbound freight carrier.

•

Supplier responsible for any costs from inaccurate or incomplete information.

•

Supplier must notify the carrier when a shipment is ready for pickup in due time to ensure compliance with the agreed delivery dates.

•

BMW shall return empty containers and pallets at its own expense unless otherwise agreed.

2. BMW (2022) (Section 4): •

Terms are generally the same as the 2018 Terms with the following additions: o All shipments are to be handled by a carrier contracted by BMW and specified to Supplier. Domestic German shipments, courier, express and parcel shipments shall be carried out by CEP-service providers contracted by BMW. o Supplier must notify the carrier of the Goods’ readiness for dispatch by 12 noon at the latest on the day before the planned pick-up of the Goods. Notification shall be made in writing and contain the required information in section 4.5(b).

3. FCA US (2021) (Section 4): •

Supplier must ship parts as indicated by FCA US and in accordance with the freight carrier’s requirements.

•

Each shipment requires two or four packing slips (depending on type).

•

FCA US may specify the carrier.

•

FCA US is not responsible for invoice delays if its shipping instructions are not followed.

4. FCA US / Stellantis (2022) (FCA US Section 4 and Stellantis Global Section 3): •

No material additions or changes from FCA 2021, except that the Global Terms specify Supplier’s obligation to comply with relevant packaging and shipping Laws and provide various shipping related details, such as including the correct product classification on the bill of lading.

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 The additional details may be covered by prior practice and policy, even though not spelled out in the terms. 5. Ford (2004) (Sections 10.03 and 13): •

Supplier must comply with Ford’s packing, marking, labeling, and shipping requirements specified in its Web-Guides (a separate document).

•

Supplier must provide an advanced shipping notice (ASN) to Ford and otherwise comply with the Payment Web-Guide (a separate document).

6. Ford (2021) (Sections 9.02, 12.01, 12.03): •

Ford 2004 Terms unchanged except:

•

Web Guides are now Supplier Guides.

•

New Section 12.03 addresses responsibility for Returnable Containers: o Supplier is responsible to maintain, repair and replacement of all Returnable Containers (excluding normal wear and tear) and must insure them against loss or damage. o Supplier prohibited from commingling Ford’s Returnables with other Supplier property. o Supplier is responsible for returning Returnables and all associated labor and other costs of dismantling, staging, and loading Returnable Containers to Buyer.

7. General Motors (Sections 4 and 14): •

Supplier must ship parts in accordance with the requirements of GM, as modified from time to time, the involved freight carriers and (if applicable) the country of destination.

•

Supplier may not change the form of packaging or shipping documents without GM’s approval.

•

Supplier must provide a packing slip with each shipment.

•

Supplier must mark shipment packages according to GM’s instructions.

•

Marking and shipping laws include those “governing the handling and transportation of dangerous goods or hazardous materials.”

•

Supplier must promptly forward original bill of lading or shipping receipt for each shipment according to GM’s instructions.

•

Supplier is responsible for premium freight costs if its acts or omissions result in a failure to meet GM delivery requirements.

•

Supplier must include a written notice with all shipments that contain hazardous materials, including any special handling instructions.

•

Supplier may not charge for handling, packaging, storage, or shipment unless provided for in the contract.

•

Supplier must adhere to marketing and shipping laws of both the country of manufacture and all intermediate countries of transport.

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8. Honda (Sections 2.4 and 4): •

Supplier must ship parts in a commercially reasonable manner approved by Honda.

•

Honda may change packaging and means of shipment at its discretion.

•

All shipments shall be F.O.B. Honda’s plant or other designated place of delivery specified by Honda in the Order or otherwise in writing.

9. Hyundai (Section 5): •

Supplier must pack, label and ship parts per Hyundai instructions, Automotive Industry Action Group standards, and the freight carrier’s requirements.

•

Hyundai may specify the method of transportation and the carrier.

•

Supplier is responsible for all costs resulting from its failure to follow shipping instructions.

10. Kia (Section 5): •

Same as Hyundai.

11. Lucid (Section 2.7): •

Supplier will pack, label, and ship goods safely per the agreement and in compliance with Automotive Industry Action Group standards.

•

Supplier will provide Lucid with appropriate shipping and customs documents.

12. Mazda (Sections 5.2 and 5.4): •

Packaging per Mazda “Packaging Guide.” Seller will inform Mazda if changes to the Guide are needed.

•

Seller to provide delivery information per Exhibit C.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 11): •

Supplier shall pack and mark the parts and mark shipments in accordance with MBUSI Logistics Directives, which are located on the Supplier Portal and may be amended from time to time.

14. Nissan (Sections 4.1.1 and 6): •

Supplier must package, label, mark, and ship parts as indicated, in accordance with the agreed upon delivery terms as specified in the applicable PO.

•

Supplier must invoice separately if Nissan is responsible for transportation.

•

Unless otherwise agreed, no separate charge may be made for transportation or packaging.

•

Nissan will specify information required on packing slips, bills of lading, and other shipping documents.

•

At the time of each shipment, Supplier must transmit an ASN to Nissan, which must include the part number, Release Authorization Number (“RAN”), date of shipment, quantity shipped, forwarding information, and other information specified by Nissan.

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•

Suppliers must adopt the best Customs-Trade Partnership Against Terrorism (C-TPAT) security standards.

•

Suppliers shall inform Nissan of supplier’s C-TPAT program status. If supplier is not a C-TPAT or other security program participant, then supplier shall take such reasonable measures as to ensure the physical integrity and security of all shipments to or on behalf of NNA against the unauthorized introduction of harmful or dangerous materials, drugs, contraband, weapons, weapons of mass destruction or unauthorized personnel in transportation conveyances or containers.

•

Suppliers shall take such reasonable measures as necessary to cooperate with any Nissan supply chain security assessments and to ensure that pertinent security measures are in place and followed throughout the supply chain.

15. Rivian (Sections 6.2 and 6.3): •

•

Premium shipping and other expenses necessary to meet delivery schedules shall be the Supplier’s sole responsibility.

•

Supplier must provide packing slips, bills of lading, or other shipping documents with each shipment of parts. Supplier shall indemnify Rivian for any damages.

•

The Products must be properly packed, marked, loaded and shipped as required by the Purchase Order and by the transporting carrier. For international shipments, all wooden packaging will be properly heat treated with IPPC stamp applied, and certificate delivered to Purchaser upon request.

•

Supplier must comply with shipping instructions and process as provided by Rivian, however, if Rivian has not provided packing or shipping instructions, Supplier must pack and ship Products in accordance with industry standards.

•

Supplier must reimburse Rivian for all expenses, including damage to the Products, incurred due to improper packing, marking, or loading.

•

Unless otherwise provided in the Purchase Order, any charges or costs related to the handling, packaging, storage or transportation of the Products are the responsibility of the Seller and have been included in the price of the Products.

16. Scout Motors (Sections 6 and 7): •

Supplies shall be packed, marked, shipped and delivered pursuant to Scout’s instructions and requirements.

•

Proper warning labels must be used for any hazardous or restricted materials that are an ingredient or part of the Supplies.

•

Supplier must immediately provide Scout written notice if it becomes aware of component, design, or general defects in the goods that is or may be harmful to persons or property.

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•

Credits or benefits resulting from the Order (including trade credits and export credits, or refunds of duties, taxes, or fees) belong to Scout, and Supplier must provide the necessary information and certificates in this regard.

•

Supplier agrees to fulfill any customs or FTA related obligations, origin marking or labeling requirements, and local content origin requirements.

•

Supplier is responsible for obtaining export licenses or authorizations necessary for exporting goods, unless stated otherwise.

•

Supplier must notify Scout in writing if it uses materials or components that it purchases in a country different from the country the goods are delivered in. Supplier must also provide documentation and information necessary to comply with the applicable country’s rule of origin requirements.

•

Supplier must mark goods made in different country of origin as “Made in [country of origin].”

•

Supplier warrants that any information provided to Scout about the import or export of goods is accurate.

•

Supplier will comply with recommendations or requirements of the Bureau of Customs and Border Protection’s Customs-Trade Partnership Against Terrorism (“C-TPAT”) initiative.

•

If requested, Supplier must certify its C-TPAT compliance in writing.

17. Toyota (2009) (Sections 3.6.1 through 3.6.5): •

Supplier must ship parts as indicated and must comply with all freight carrier requirements.

•

Toyota may change delivery schedules at its discretion and pay Supplier its reasonable costs.

•

If returnable packaging is selected by Toyota, Toyota will reimburse Supplier for reasonable costs of such returnable packaging, and the cost of such returnable packaging shall be set forth in a separate Contract Document.

•

Returnable packaging is property of Supplier unless otherwise designated by Toyota, but Supplier gives Toyota an exclusive option, exercisable by Toyota at its sole discretion, to purchase the returnable packaging at cost equal to the value of packaging, less amounts paid by Toyota for such packaging.

•

Supplier is responsible for cleaning, replacing, and repairing lost or damaged returnable packaging.

•

Supplier may not allow any other party to use or destroy the returnable packaging without Toyota written approval.

•

Supplier must use returnable packaging strictly for Toyota and not for internal transportation or any other purpose.

•

Toyota may select third party Supplier to design and manufacture returnable packaging.

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18. Toyota (2021) (Sections 3.6.1 through 3.6.5): •

Other than changes in section numbering, material changes are:

•

Supplier must comply with legal requirements, as well as those of Toyota, and the carrier.

•

Supplier may not modify packaging specification without Toyota consent.

•

Suppliers must manage returnable packaging in conformance with Toyota Supplier Logistics Instruction Manual.

19. Volkswagen (Section 6): •

Parts must be packed, marked and shipped as specified by VW, in packaging approved by VW and otherwise according to the instructions and requirements of Buyer, the involved transport carriers and the country of destination.

•

All applicable documents for logistics processes archived on the B2B Platform/LISON shall apply and be complied with by Seller.

•

Supplier will reimburse VW for additional freight or other costs, including express, air, or other special shipping if Supplier fails to observe these requirements.

•

Supplier will notify VW, in writing and prior to shipment, of any hazardous materials included in the Parts, and any associated special handling instructions.

•

Supplier must comply with applicable laws and regulations pertaining to labeling and warnings.

•

Supplier will mark all replacement or service parts with the appropriate brand and/or logo and country of origin, in accordance with VW’s instructions.

•

Seller shall promptly respond to requests from VW relating to content, origin of content, or otherwise relating to the Supplies or any information relating to conflicts minerals.

20. Volvo (Section 8): •

Supplier must comply with Volvo’s requirements for packing, marking, labeling and shipping as stated in the relevant Volvo Car Instruction.

21. MEMA OE Suppliers (Section 4): •

Supplier must ship parts as indicated by OEM or sound commercial practices.

•

Shipping is FCA (Incoterms 2020).

•

If returnable packaging is needed but unavailable, OEM must reimburse Supplier for the costs of expendable packaging.

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III. Inspections and Non-Conforming Parts – Context and Questions 1. Reservation of Right to Inspect Most OEMs reserve the right to inspect but are not required to do so. 2. Supplier Responsibility for Non-Conforming Parts and Resulting Damages Most OEMs expressly hold the Supplier responsible for non-conforming parts, regardless of whether they have previously been inspected by the OEM. Most OEMs also reserve the right to recover consequential and incidental damages in addition to damages for simple repair or replacement of parts. 3. Supplier Default for Non-Approved Substitutions FCA US and Hyundai expressly reserve to themselves the right to hold the Supplier in default if there is a substitution of materials without notice and prior approval. The other OEMs are likely to argue this is implied by the specifications and warranties. 4. Toyota’s Additional Terms and Conditions Toyota’s Terms and Conditions regarding inspection and non-conforming parts are significantly more detailed than other OEMs. Among the more unique provisions in Toyota’s Terms and Conditions are longer inspection period, measured by a “reasonable period of time” after delivery. Toyota reserves to itself the right to make final inspection of the part within the complete vehicle up to the time it is actually released for delivery.

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III. Inspections and Non-Conforming Parts – OEM Comparative Analysis 1. BMW (2018) (Sections 6, 10.3-10.5 and 22.5): •

The 2018 Terms had significant changes from 2014.

•

BMW will inspect Goods only for visible transportation damage, number of containers, “identity deviations” of goods received from goods on shipping documents, and as required by IATF 16949. BMW will notify Supplier of non-conformities discovered thorough the above inspections.  Express obligation to inspect and notify of defects (as opposed to right to do so) is unique to BMW. This could affect liability if proper inspection and notice could have avoided a problem.

•

If a defect is discovered after they are released for production, Supplier must indemnify for all resulting costs.

•

If a defect is discovered before the parts have been used in production:

•

Supplier has the right to repair or replace non-conforming parts if doing so does not disrupt BMW’s production.  BMW is the only OEM that does not give itself complete discretion as to whether to allow the Supplier to repair and replace.

•

Otherwise, BMW may perform the repair or replacement itself or use a third party, all at Supplier’s cost.

•

Non-conforming goods will be scrapped unless Supplier requests return within time specified in BMW Standard GS 95015. Supplier must indemnify BMW against all damages and losses to BMW resulting from delivery of defective goods.

•

BMW may terminate the contract if non-conforming parts are repeatedly shipped to BMW.

•

If BMW and Supplier have entered into a “Warranty Agreement” regarding the goods, that agreement applies instead of the provisions of Section 10 of the standard terms.

•

On 48 hours’ notice, BMW may access Supplier’s premises during normal business hours to inspect, subject to third-party confidentiality obligations.

2. BMW (2022) (Sections 6, 10.3-10.5): •

•

If a defect is discovered after they are released for production, Supplier must indemnify for all resulting costs.

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•

If a defect is discovered before the parts have been used in production:

•

Otherwise, BMW may perform the repair or replacement itself, use a third party, or return or scrap the defective Goods—all at Supplier’s cost.

•

BMW may terminate the contract if non-conforming parts are repeatedly shipped to BMW.

•

In each case above, Supplier shall indemnify BMW against all damages and losses incurred resulting from the delivery of defective Goods. Supplier shall also indemnify BMW for all damages and losses when the defect is discovered after the Goods left BMW’s production site.

•

Where possible, on Supplier’s request, the defective Goods will be made available to Supplier at Supplier’s cost.

3. FCA US (2021) (Section 6): •

FCA US may inspect and evaluate all parts and tooling at times and places designated by FCA US.

•

Notwithstanding payment or any prior inspection, FCA US may revoke acceptance, require correction, or return non-conforming parts at Supplier’s expense and risk of loss.

•

Substitution of material without FCA US prior approval is a default.

•

If Supplier ships non-conforming parts, FCA US may (1) replace or correct the nonconforming parts at Supplier’s expense, (2) terminate the Purchase Order for default, (3) commence arbitration or legal action, or (4) remove Supplier from the FCA US approved Supplier list.

4. FCA US / Stellantis (2022) (FCA US Section 6 and Stellantis Global Section 5): •

No material additions or changes from FCA 2021.

5. Ford (2004) (Section 14): •

Ford is not required to inspect any incoming parts.

•

Supplier may rework or replace non-conforming parts if discovered before the parts are used by Ford and if the work can be done without disruption to Ford’s operations.

•

If rework is not or cannot be done, Ford may at Supplier’s risk and expense either reject and return or retain and correct the non-conforming parts.

•

Supplier is liable for all damages and expenses resulting from failure to deliver conforming parts, including indirect and consequential damages.

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6. Ford (2021) (Section 13): •

No material changes other than section numbering.

7. General Motors (Sections 6 and 15): •

GM has the right to inspect Supplier’s facilities at reasonable times.

•

Inspection does not constitute acceptance of any work in progress or finished parts.

•

GM is not required to inspect any incoming parts.

•

If Supplier or its subcontractors hold non-conforming parts, (or obsolete or surplus parts) they must be rendered unusable and not sold as service or replacement parts.

•

Supplier must notify GM of any defects, quality problems or deficiencies in GM’s specifications.

8. Honda (Sections 1.1(b), 4.6, 4.7 and 4.10): •

All parts are subject to inspection by Honda or its designee upon arrival in accordance with the Order.

•

Honda may inspect parts on Supplier’s premises during normal business hours.

•

Neither payment nor inspection will relieve Supplier of its responsibility to deliver conforming parts.

•

Honda may cancel an Order as to defective or non-conforming parts and instruct Supplier as to the means for cure.

•

All non-conforming parts will be returned at Supplier’s request and expense.

9. Hyundai (Sections 8 and 11): •

Hyundai may inspect all parts and processes, conduct tests, and reject non-conforming parts, regardless of where located.

•

Any inspection by Hyundai does not relieve Supplier of its obligation to provide conforming parts.

•

Substitution of materials without Hyundai prior approval is a default.

•

Hyundai may require Supplier to repair or replace non-conforming parts, or may reject non-conforming parts, in addition to all other available remedies.

•

Hyundai may require Supplier to perform rework on Hyundai’s premises.

•

Supplier must remove rejected non-conforming parts at Supplier’s expense.

•

Supplier will develop an inspection agreement including inspection standards, subject to Hyundai’s approval.

•

Even after payment and prior to inspection, Hyundai may revoke acceptance, reject, or require correction and return to Supplier at Supplier’s expense and risk of loss any goods delivered or services rendered that do not conform to applicable requirements.

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•

Supplier may hire temporary workers to perform rework if authorized by Hyundai, but such employees are treated like permanent employees or independent contractors of Supplier rather than Hyundai for purposes of the agreement.

10. Kia (Sections 8 and 11): •

Same as Hyundai.

11. Lucid (Sections 5.1, and 5.4-5.7): •

Lucid may, but is not required to, test and inspect or require Supplier to test and inspect Goods. Neither test, inspection nor payment will be deemed acceptance of Goods.

•

Lucid will notify Supplier of any nonconformity as soon as practicable.

•

Lucid may choose to instigate additional inspection or containment actions or use a thirdparty inspector.

•

Supplier will be permitted to rework non-conforming Goods provided the rework is captured in most recent PPAP control plan and process flow or, Supplier receives permission from Lucid.

12. Mazda (Section 5.6): •

All Products are subject to inspection.

•

Mazda may issue a rejection notice for non-conforming Products, upon which Seller has 10 days to cure.

•

Mazda’s acceptance does not mean that the Products are conforming or waive Mazda’s rights with respect to non-conforming Products.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 12): •

MBUSI may inspect and evaluate, including at lower tier facilities, all parts at its option.

•

Payment for parts does not constitute acceptance.

•

Notwithstanding MBUSI payment for the parts or prior inspection of parts, MBUSI reserves the right to revoke acceptance and reject parts or to require the Supplier to correct parts if the parts do not conform to applicable requirements and specifications.

•

Neither inspection nor payment shall release Supplier of its obligation to furnish conforming goods to MBUSI.

•

The Supplier is required to adopt a Quality Assurance System in compliance with MBUSI Quality Manual and Source Package.

•

The Supplier shall make its inspection systems, procedures and records available to MBUSI upon MBUSI’s request.

•

If parts are non-conforming, defective or require correction, MBUSI reserves the right to instruct the Supplier as to the means and methods of curing defect or procuring replacement parts.

•

Defective or non-conforming parts will be returned to Supplier pursuant to Supplier’s instruction at Supplier’s expense with MBUSI reserving the right to dispose of the parts in the absence of specific instructions within a reasonable time.

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•

After notice of non-conformance, MBUSI may: (i) replace or correct parts and charge costs, (ii) cancel the Purchase Order for default, (iii) subject the Supplier’s account to a debit for damages suffered by MBUSI, and/or (iv) cause removal of the Supplier as an approved MBUSI supplier.

•

If “foreign personnel” are needed to address quality or other problems, Supplier must provide support, including obtaining all needed immigration approvals and papers.

14. Nissan (Section 5): •

The title to and risk of loss or damage to the parts shall pass from supplier to Nissan at the time of Delivery of the parts to Nissan.

•

Nissan may inspect all parts and reject non-conforming parts at any time before resale by Nissan.

•

Nissan assumes no duty to inspect, and any inspection does not relieve Supplier of its obligation to provide conforming parts.

•

Nissan may reject any parts that are defective, damaged (by supplier prior to delivery), or non-confirming or in breach of supplier’s warranties at any time before sale of the parts or vehicles equipped with parts.

•

If Nissan rejects parts as non-conforming, Supplier must promptly provide substitute parts at Nissan’s request.

15. Rivian (Section 5.3): •

Rivian has the right, but no obligation, to inspect, to review work, and to test all Products, tooling and materials to the extent practicable at all times and places.

•

Rivian’s inspection shall not constitute acceptance of any work in process or finished Products.

•

Rivian has the right to enter Supplier’s facility to conduct an inspection during normal business hours without the necessity of a court order inspect.

16. Scout Motors (Section 8): •

Scout or its representative, upon notice to Supplier, may enter Supplier’s facility to inspect the facility, Supplies, materials, and any of Scout’s property related to the Order.

•

Scout may conduct audits at Supplier’s production facility for quality, cost or delivery verification. Seller’s sub-suppliers and subcontracts must provide Scout with the same right.

•

If defective Suppliers are shipped to and rejected by Scout, the quantities on the Order are reduced unless Scout notifies Supplier. Supplier may not replace the reduced quantities without a new Material Release.

•

Scout’s remedies for Supplier’s shipping defective goods includes: (i) Seller accepts the returned goods at Supplier’s expense; and (ii) Supplier pays Scouts associated reasonable expenses.

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17. Toyota (2009) (Sections 1.7(a) and (b), 2.5, 2.6 and 3.6): •

Toyota or its agents may inspect parts or services provided to Toyota.

•

Toyota may inspect the premises of Supplier and any toolmakers, and Supplier must give Toyota access to its premises and financial information on reasonable notice.

•

During inspections, Toyota will keep confidential information relating to Supplier’s other customers.

•

Toyota’s right to inspect tooling extends to final approval of the tooling, and the issuance of any provisional approval or part payment will not be deemed an acceptance.

•

All parts are subject to Toyota’s acceptance before the end of the inspection period.

•

Payment for parts before the end of the inspection period does not constitute acceptance or relieve Supplier of responsibility for non-conforming parts.

•

The inspection period means a reasonable period of time after delivery or the time at which Toyota completes both its final inspection of vehicle and written release of vehicle for delivery, whichever is applicable as determined by Toyota.

•

Toyota may require Supplier to replace non-conforming parts, or may elect to reduce quantities under Contract Documents reduced, but Supplier may not repair or replace without written authorization from Toyota.

•

If Toyota rejects parts, Toyota has no obligation to pay Supplier and may require Supplier to pay Toyota for storage, handling, and disposal of rejected parts if Supplier does not provide other instructions to Toyota within 10 days or other commercially reasonable time after Toyota provides notice of rejection.

•

Toyota may also perform remedial work on non-conforming parts, either itself, through a third-party, or through Supplier.

•

If Toyota or a third party perform remedial work, Supplier is responsible for costs.

•

Toyota’s remedies are not limited to repair or replacement.

18. Toyota (2021) (Sections 1.6.1, and 3.6.6 and 3.7): •

The 2021 Terms extensively modify the 2009 Terms. The following supersedes the 2009 summary.

•

Supplier is responsible for inspection and other quality control before shipment.

•

Toyota or its agents may inspect parts or services provided to Toyota. All parts are subject to Toyota’s acceptance before the end of the inspection period.

•

Toyota’s payment for, testing or other operation of an Item ≠ acceptance or relieve Supplier of responsibility for non-conforming parts.

•

If payment precedes rejection, Supplier will refund shipping and other expenses, in addition to payment.

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•

Toyota may inspect the premises of Supplier and any toolmakers, and Supplier must give Toyota access to its premises and financial information on reasonable notice. During inspections, Toyota will keep confidential information relating to Supplier’s other customers.

•

Toyota’s right to inspect tooling extends to final approval of the tooling, and the issuance of any provisional approval or part payment will not be deemed an acceptance.

•

Supplier must notify Toyota within 48 hours of discovery of any defect or nonconformity, together with a preliminary root cause. Supplier must provide a subsequent notice identifying the actual root cause and advising whether and when the problem can be remedied.

•

Toyota may require Supplier to replace non-conforming parts or may elect to reduce quantities under Contract Documents reduced, but Supplier may not repair or replace without written authorization from Toyota.

•

If Toyota directs repair, the Item is not deemed accepted until Toyota expressly agrees in writing.

•

Toyota may also perform remedial work on non-conforming parts, either itself, through a third-party, or through Supplier, at Supplier’s expense.

•

If Toyota rejects software, Supplier must refund all amounts paid, unless Toyota directs Supplier to repair the software. If correction is directed, Supplier has not more than 5 days to do so.

•

Toyota’s remedies are not limited to repair or replacement.

19. Volkswagen (Section 8): •

VW, or its representative, reserves the right to enter a Supplier’s facility, to inspect the facility, supplies and materials and any of VW’s property related to its orders, and to audit Supplier’s production facilities to verify quality, cost or delivery. VW may, but is not required to, inspect supplies.  VW’s inspection rights, especially the right to audit with respect to quality, cost, or delivery, are among the broadest of any OEM.

•

Upon reasonable written notice to Supplier, VW may conduct audits at Supplier’s production facility for the purpose of quality, cost or delivery verification.

•

VW’s inspection of the parts does not constitute acceptance of any work-in-process or finished goods.

•

VW’s acceptance, inspection or failure to inspect does not release Supplier of any of its responsibilities or warranties.

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•

Section 8 of the VW Terms and Conditions contain extensive specific instructions with regard to returns, rejections or corrections of defective parts, and documentation to VW of Supplier’s corrective actions.

•

Payments for non-conforming Supplies does not constitute an acceptance, is not intended to limit VW’s right to assert any legal or equitable remedy, and does not relieve Supplier of responsibility for latent or other defects.

•

Supplier shall ensure that its contracts with its sub-suppliers and subcontractors provide VW with all of the above rights specified in Section 8.

20. Volvo (Sections 8.5 and 15.2): •

Volvo is not required to inspect or test the goods upon delivery or before use of the goods.

•

Supplier must immediately notify Volvo of any Non-Confirming Goods along with notice of how it will or how it proposes to remedy or minimize the effects.

•

If Non-Conforming Goods are delivered Volvo may demand that Supplier either immediately rectify the non-conformity on the goods or provide substitute. If Supplier is unable to do either, Volvo may at Supplier’s expense (i) repair the goods or (ii) reject, in whole or in part, the delivery and/or terminate, in whole or in part, the Purchase Agreement.

•

Supplier has the right to correct the Non-Conforming Goods only if Supplier can do so (i) at its premises, or if Volvo agrees, at Volvo’s premises, (ii) without disruption or delay to Volvo’s processes, and (iii) within the deadline set by Volvo.

21. MEMA OE Suppliers (Section 5): •

Buyer may inspect production processes and tooling and other property of Buyer upon reasonable advance notice to Supplier.

•

Supplier may limit access based on confidentiality or safety.

•

Buyer is not required to inspect parts, and any inspection or failure to inspect does not lessen Supplier’s obligations.

•

Buyer must include Supplier in any root-cause analysis of non-conforming parts.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

IV. Supplier Quality – Context and Questions 1. Supplier Quality Obligations Set Forth in Separate Manuals The Supplier’s quality obligations are among the most complex to track and are only partly covered by the language of the Terms and Conditions. As noted in the following comparative analysis, many OEMs have detailed Supplier Quality Manuals which set forth, often in very lengthy documents subject to change without notice, the Supplier’s quality obligations. Many of these manuals are made accessible to Suppliers through the OEMs’ electronic Supplier portal. 2. Incorporation of Third-Party Quality Standards In addition to compliance with their own unique Supplier Quality Manuals, numerous OEMs, specifically reference independent or third-party quality standards, such as TS16949 (specifically applicable to automotive), QS-9000, ISO-14001 (all propounded by the International Standards Organization) and, in the case of BMW, specific VDA quality assurance procedures propounded by the German Association of Automotive Manufacturers. These quality standards may impose certain warranties as to quality and performance.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

IV. Supplier Quality – OEM Comparative Analysis 1. BMW (2018) (Sections 9 and 22.8): •

The 2018 Terms had significant changes from 2014.

•

Supplier must be certified in and compliant with IATF 16949.

•

PPAP shall be completed per the VDA (German Association of Automotive Manufacturers) publication “Quality Management in the Automotive Industry, Volume 2: Quality Assurance of Supplies” and BMW policy GS 90018.

•

Must comply with BMW re-qualification policies GS 90018-1 and 90018-2. Requalification required every 12 months.

•

Upon request by BMW, Supplier must cooperate with any governmental authority responsible for vehicle safety standards.

•

Supplier must comply with BMW policies for parts that effect safety or are subject to government regulations safety components, as described in IATF 16949 and BMW policies GS 90000-1, 900005-1 and 91011.

•

BMW is entitled to take “supportive action” at Supplier’s expense if Supplier “repeatedly or grossly” violates quantity or quality requirements and support is “absolutely necessary” due to capacity reasons. (Section 9.7)  This is an exceptionally awkward translation, and it is difficult to discern the exact intent.

•

Supportive action may include third-party assistance, unless third-party is a competitor.

•

Supplier must cause its subcontractors to comply with quality obligations.

•

Every Supplier must “qualify a product safety officer” for each production location.

•

Supplier must have a “certified occupational health and safety system” per OHSAS 18001 or ISO 45001.

2. BMW (2022) (Section 9): •

There are no significant changes from the 2018 Terms.

3. FCA US (2021) (Section 6): •

Supplier must provide and maintain a Supplier Quality Assurance System approved by FCA US and that meets FCA US requirements including ISO/TS 16949 and ISO 14001.

•

The plan must comply with the FCA US’s Quality Management System.

4. FCA US / Stellantis (2022) (FCA US Section 6 and Stellantis Global Sections 9 and 22): •

No material additions or changes from FCA 2021, except Supplier must comply with “best international [risk prevention] standards” at its manufacturing facilities.

5. Ford (2004) (Section 12): •

Supplier must promote continuous quality improvement in the manufacture, production, and distribution of parts.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Supplier must comply with Ford’s quality assurance programs, including its Q1 quality program and the TS 16949, QS-9000 and ISO 14001 quality standards.

6. Ford (2021) (Section 11): •

Significant changes from Ford 2004 Terms. Below summary supersedes 2004 summary.

•

Supplier must promote continuous quality improvement in the manufacture, production, and distribution of parts.

•

Supplier must deliver continuous quality improvement in the manufacture, production, and distribution of parts.

•

Supplier must comply with Ford’s specific quality assurance processes, including its Q1 quality program ASPICE and ASPICE assessment rating, IATF 16949 or QS-9000, ISO 14001, and the Ford Supplier Delivery Rating.

•

If Supplier fails to meet Ford’s standards, Ford may “request” that Supplier enter the CSIP process (defined in the CSIP Handbook), at Supplier’s expense.

•

Launch Supplier must comply with GPDS Supplier Engagement Process requirements.

7. General Motors (Sections 12 and 15): •

Supplier must agree to participate in GM Supplier quality and development programs and comply with all quality requirements and procedures specified by GM, as revised from time to time.

•

GM may enter Supplier’s premises and inspect the facility, parts, materials and any property of GM covered by the contract.

•

Supplier must cause all lower tier suppliers to participate in GM quality programs.

•

Supplier must promote continuous improvement in manufacturing and logistics.

•

Supplier must notify GM of any defects or quality problems.

8. Honda (Sections 4.7 and 4.10): •

Quality is “of the essence” in each Order. Honda may cancel the Order, in whole or in part, if not in conformity with the requirements.

•

Supplier warrants that the parts will be of the highest grade and quality, conform to all specifications and standards, and fit for the particular purpose(s) known by or disclosed to Supplier.

•

Honda may return the parts not in compliance or repair and replace at Supplier’s cost and expense. Honda may also terminate the contract if the quality of parts does not meet Honda requirements.

•

Supplier is responsible for all costs to Honda for failure to deliver the quality specified by Honda.

9. Hyundai (Section 11): •

Supplier must comply with Hyundai’s quality requirements, including its New Part Quality Assurance Procedure and Advanced Quality Innovation System (separate documents).

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•

Supplier must provide and maintain a quality assurance system acceptable to Hyundai, which will be subject to audit by Hyundai.

•

Supplier must correct any deficiencies noted in Hyundai’s audit.

•

Hyundai alone will decide if its quality standards are being met by Supplier.

•

Upon request by Hyundai, Supplier must provide testing, inspection, and other quality records.

10. Kia (Section 11): •

Same as Hyundai.

11. Lucid (Sections 3.3 and Section 5): •

Supplier and subcontractors will comply with Lucid’s Specifications, quality requirements, including Lucid Supplier Quality Manual, and procedures as amended or updated from time to time and as incorporated by reference per the agreement; the Global Automotive Declarable Substance List, European Union Restrictions on the use of Certain Hazardous Substances, California Transparency in Supply Chains Act, among others (see Section 5.1).

•

Supplier must meet all PPAP requirements and update PPAP upon a tooling, facility, manufacturing or engineering change (Level 3 unless interim or prototype parts).

•

Supplier will strive for zero defects and provide testing information.

•

Supplier will continuously work to improve the quality of the Goods and Supplier’s manufacturing and logistics processes.

•

A notice of nonconformity issued to Supplier by Lucid may initiate additional inspections and action.

12. Mazda (Section 8): •

Products must: meet (i) “the highest standards and best industry practices;” (ii) all applicable safety regulations; and (iii) Mazda’s Quality Requirements for Suppliers (as revised from time to time, without prior notice).

•

Seller must provide prototypes per Mazda request and obtain Mazda approval of prototypes before starting serial production.

•

Mazda may “observe and inspect” manufacturing, assembly and storage processes of Seller or its subcontractors, as reasonably necessary to maintain quality control. Observance does not mean Mazda approves or accepts the Products or processes.

•

Seller must maintain documentation of the design and manufacture of the Products for 15 years from end of production.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 11.9, 12.2 and 23): •

MBUSI’s specifications for quality are set forth in the MBUSI Quality Assurance Manual, which may be amended from time to time, and the Source Package associated with each purchase (separate documents).

•

Suppliers are required to provide MBUSI a Supplier Quality Assurance System approved by MBUSI and which meets all MBUSI’s specifications for quality.

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•

The Supplier is required to make its inspection systems, procedures and records available to MBUSI upon request.

•

If Supplier supplies MBUSI with defective or deficient part or has supply difficulties, Supplier may be required to participate in Q:H:ELP program, at its own expense, as described in Supplier Quality Assurance Manual.

•

Supplier shall comply with MBUSI’s Safety One Manual, which is located on the Supplier Portal and may be amended from time to time.

14. Nissan (Section 10): •

Supplier must manufacture the parts in accordance with Nissan’s quality procedures for its Suppliers.

•

Supplier shall continuously monitor the Parts and promptly report any Parts that do not comply with the Specifications.

•

Supplier shall continuously monitor the parts and promptly report to Nissan any nonconforming parts, any defects or deficiencies in design, manufacture or performance.

15. Rivian (Sections 5 and 6.4): •

Supplier must comply with the most current Specifications, the requirements set forth in Rivian’s supplier quality manual, any other applicable quality manuals, all supplier quality and development process requirements, quality control and safety standards, procedures and inspection systems, and applicable laws including but not limited to: International Material Data System submission.

•

Supplier must meet all PPAP requirements (Level 3 unless interim or prototype parts).

•

New PPAP required with move of tooling, change of facility, engineering design change or manufacturing process.

•

Supplier must make available to Rivian all records and data evidencing Supplier’s testing, inspection, and other quality assurance actions.

•

Rivian may test all Products, tooling, materials and workmanship.

•

Rivian may enter upon Supplier’s property and remove any property belonging to Rivian without the need of a court order.

•

Designation of a directed supplier does not relieve Supplier from any of its obligations under the contract.

•

Quality is of the essence. Supplier will be in default if it fails to meet quality obligations.

16. Scout Motors (Section 12): •

Supplier must conform to Scout’s quality control and other standards and inspection systems.

•

Supplier must also participate in Scout’s supplier quality and development programs.

•

Supplier must meet Scout’s qualification of new parts and provide all information regarding same to Scout upon request.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

For aftersales and service parts, Supplier must participate and comply with Scout’s programs and standards.

•

Supplier must ensure that all of its subcontractors and sub-suppliers comply with all quality control other standards and inspections systems and programs and to use VDA publication as a guideline.

17. Toyota (2009) (Sections 1.6, 5.4(b) and 5.4(c)): •

Supplier has an ongoing responsibility to perform under the contract in a manner resulting in continuous improvement.

•

Supplier must participate in all Toyota’s quality improvement and initiatives and must meet all of Toyota’s requirements and procedures.

•

Supplier warrants that all parts meet applicable quality standards, as set forth in Toyota’s Supplier Quality Assurance Manual (a separate document).

•

Toyota alone decides whether parts meet quality standards.

•

Supplier must make available to Toyota all records and data evidencing Supplier’s testing, inspection, and other quality assurance actions.

18. Toyota (2021) (Sections 1.3, 1.5, 6.4.2 and 6.4.3): •

The following supplements the 2009 summary.

•

If requested by Toyota, Supplier is responsible to “prepare detailed designs, drawings, and specifications for the Items (collectively, ‘Item Specifications’) so as to meet the Toyota Requirements.”

•

Toyota may request quality records and conduct quality tests at the premises of Supplier or its subcontractor at no expense to Toyota.

19. Volkswagen (Sections 12 and 13): •

Supplier shall conform to VW’s quality control and other standards and inspection systems, including VW’s own “Supplier Standards.”  VW cross-references an extensive Supplier Standard system, including “Formula Q” requirements, a separate Quality Master Agreement for Commissioning Suppliers for Module and Systems Assembly, and a separate Agreement on Objectives Regarding Quality Capability.

•

Supplier shall meet all Formel-Q and Qualification for New Parts (QPN) requirements as specified by VW, and Supplier shall present supporting information to VW upon request and at the level requested.

•

Supplier must also participate in and comply with VW’s programs and standards pertinent to “Development Conditions VW 99000,” the Supplier Claims Manual, Advanced Quality Planning, Supplier performance evaluations, Supplier Packaging Regulations, Standardized Expendable Packaging document (found on LISON), Code of Conduct for Business Partners, and Appendix G—Supplier Diversity Program.

•

Supplier shall ensure that all its subcontractors and sub-suppliers of goods and services comply with VW’s Section 12 quality requirements.

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•

VW has specific requirements regarding records and reporting for parts specially designated in VW’s technical specifications. The testing and inspection documentation required by this Section is to be retained by Supplier for 15 years and must be provided to VW upon request. VW’s Terms and Conditions cross-reference the VDA (German Automobile Manufacturer’s Association) publication pertaining to “Quality Evidence – Guidelines for the Documentation and Archiving of Quality Requirements” as a reference for compliance with these requirements.

•

Supplier shall conform to Buyer’s and VW Group’s requirements for sustainable development regarding relationships with business partners, which requirements define expectations in the added value of their products. The full text of the requirements is available at vwgroupsupply.com under Cooperation > Sustainability.

20. Volvo (Section 9): •

Supplier shall continuously work to improve quality in manufacture, production and distribution of goods.

•

Supplier shall comply with all of Volvo’s quality-assurance processes, inspections, and standards and quality programs in effect at any given time.

•

Volvo may initiate new quality programs at any time.

21. MEMA OE Suppliers (Section 8.2): •

If the Buyer reasonably determines that substantial quantities of non-conforming parts have been shipped, Buyer may require Supplier to implement containment, inspection, sorting or other quality assurance procedures.

•

The Buyer shall provide Supplier with an opportunity to participate in root cause analysis in warranty claims, and the Supplier and Buyer must cooperate in a root cause analysis in product liability claims.

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Incorporation of third-party quality standards by OEM?(a)

Supplier Responsible for Implementing Its Own Quality Compliance Program?

OEM Inspection Right to Ensure Quality Compliance?

OEM Discretion to Determine Quality Compliance?

Supplier Right to Participate in OEM Root Cause Analysis?

Supplier Responsible for Sub-suppliers’ Quality Assurance Systems?

BMW 2022

FCA US 2021 S

FCA/Stellantis 2022

BMW 2018

Specific Provisions Provided in Terms and Conditions

Ford 2004

IV. Supplier Quality – Dashboard Ford 2021 S

GM Y

Honda S

Hyundai S(b)

Kia S(b)

Lucid S

Mazda N

MBUSI S

Nissan Y

Rivian Y

Scout Motors Y

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2021 S

VW Y

Volvo Y

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MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(b) OEM may audit Sub-supplier, but Supplier is not expressly required to ensure that the Sub-supplier employs specific quality-control procedures.

(a) This question only addresses whether third-party quality standards are incorporated into the face of MEMAs’ Terms and Conditions. It is possible that third-party quality standards could be incorporated into other OEM documents, such as quality manuals.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

V. Service Parts – Context and Questions 1. Negotiations on Service Part Obligations The complexity and risk of the Supplier’s service part obligations to the OEMs has increased due to volatility in the market, especially as to material and other manufacturing costs. In addition, service part obligations may be associated with significant production cost increases due to volume decreases over time. Consequently, service part obligations are often a point of heavy negotiation during cost driven sourcing and re-sourcing negotiations. 2. Duration for Availability of Service Parts Most OEMs require service parts for 15 years after current model production. 3. Service Part Pricing Service part pricing varies significantly among the OEMs. The differences are summarized in the following section. 4. Warranties on Service Parts OEM Terms and Conditions seldom contain independent warranty language about service parts, implicitly relying on their base warranty provisions with respect to Supplier’s service part warranty obligations.

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V. Service Parts – OEM Comparative Analysis 1. BMW (2018) (Sections 13.7 and 14): •

Supplier must provide service parts and maintain related tooling for up to 15 years after current-model production ends and ensure that subcontractors do the same.

•

Service part prices for current-model production will be the current production part prices.

•

Service part prices for past-model production will be as negotiated by the parties.

•

At the end of year 14, Supplier must submit to BMW a proposal for continued supply of service parts beyond the 15-year obligation. Supplier’s proposal must include a proposal for “all time stocking.”

•

BMW may purchase service parts directly from Supplier’s subcontractors or from a third party.

2. BMW (2022) (Section 14): •

Same as 2018 Terms with the following additions Buyer “and its affiliates” may purchase spare parts.

•

Supply must comply with the requirements stated in the BMW Group Standard GS 90022 “Process chain spare parts and consumable.” For Goods for which a shelf life is agreed, the BMW Group Standard GS 90034 applies.

3. FCA US (2021) (Section 13): •

Supplier must provide service parts for such period of time as determined by FCA US; unless otherwise directed by FCA US in writing at any time, parts should be produced and made available to FCA US and its designees for no less than 15 years after the end of the duration of the vehicle production program.

•

Prior to 2020, period was 10 years.

•

Service part prices for current-model production will be the current production part prices plus actual special packaging.

•

Service part prices for past-model production will be no greater than the current production part prices, plus or minus (1) changes in costs of materials, (2) changes in volume, (3) set-up charges reflecting actual costs for the production run, and (4) additional costs actually incurred for special packaging.

•

Requests for price adjustments must be documented to FCA US’s reasonable satisfaction.

•

For service parts manufactured in a country other than where parts are delivered, Supplier must mark the country of origin on the parts.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

4. FCA US / Stellantis (2022) (FCA US Section 13 and Stellantis Global Section 4): •

No material additions or changes from FCA 2021, except Supplier grants FCA access to all information used to manufacture the Goods, including, bill of material, schematics, software strategies and tools, and functional validation tests, for the sole purpose of remanufacturing or repairing Goods.

5. Ford (2004) (Section 33): •

Service part prices for current-model production and past-model production may not exceed the production part prices plus any actual cost difference for unique packaging, shipping, and handling.

•

Component part prices for current-model and past-model production may not exceed Supplier’s actual production or acquisition cost, plus any actual cost difference for unique packaging, shipping, and handling, plus a service fee to be negotiated by the parties.

•

A request for price changes for Service Parts and Component Parts may be made by Supplier or Ford based on costs, quantities, etc.

•

The warranty period for service parts is the later of the warranty period established by Ford, the expiration of the Ford base consumer warranty for the parts, or the expiration of any government mandated warranty.

6. Ford (2021) (Section 33): •

2004 Terms extensively revised. The following supersedes the 2004 summary.

•

Ford may elect to utilize Authorized Third Parties to fulfill supplier obligations as defined in the FCSD Supplier Parts Guide-Global. Authorized Third Parties such as Packagers, Kitters, Re-manufacturers, Stampers or contracted procurement service providers.

•

Supplier must provide any legal and/or material compliance documentation required by Ford to sell or import the parts.

•

Ford will purchase the Service and Component Parts directly from the Supplier manufacturing site where the Goods are produced unless agreed in writing by Ford.

•

The price for Service Parts will be no greater than the price specified in the Production Purchase Order, less Production Commercial Adjustment, plus Service Commercial Adjustments. This formula applies to both current model and past model Service Parts. o “Production Commercial Adjustments” means “Production Part cost to cover supplier expenses that are unique to Production supply or amortized over an agreed-upon schedule (volume); this includes but is not limited to: ED&T, ILVS, production packaging, supplier-paid duties/taxes.” o “Service Commercial Adjustments” means adjustment to cover supplier expenses that are unique to Service Part supply. This covers the usual incremental costs, such as unique packaging, shipping and handling, and any other incremental cost of supplying service parts.

•

Price for Component Parts (Section 33.03): A “Component Part” refers to subassemblies, individual component parts, and raw materials of Service Parts. Similar to

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Service Parts, the price for Component Parts will be no greater than the price specified in the Production Purchase Order, less Production Commercial Adjustment, plus Service Commercial Adjustments. This formula applies to both current model and past model Component Parts. •

Price Change (Section 33.04): A price change for Service or Component Parts can be requested by either Ford or Supplier under certain circumstances. o Buyer Price Change Request: Buyer may request a price change if Buyer believes a change in pricing is warranted based on Buyers Efficiency Initiatives. o Supplier Price Change Request: Supplier may request a price change if Supplier believes a change in pricing (increase or decrease) is warranted based on “significant and ongoing changes in component or raw material costs, or manufacturing costs.” 

Supplier must document cost changes, including invoices, published prices, efforts to mitigate increase, and “other information to substantiate the requested change.”

Buyer and Supplier will negotiate price change in good faith and must “mutually agree” to a price change. Price change limited to actual manufacturing cost changes. o Where there is a price change for serial production goods, Ford will simultaneously change the price of the corresponding Service Parts and Component Service Parts. 

•

Service and Component Part prices also apply to those supplied to Buyer’s Approved Third Parties.

•

Supplier must provide service parts for up to 15 years after current-model production ends (or longer if legally required or if Ford requests).

•

7. General Motors (Section 5): •

Supplier must provide service parts for up to 15 years after current-model production ends.

•

If parts are systems or modules, Supplier must sell components or parts that comprise the system or module at prices that do not, in the aggregate, exceed the price of the system or module as a whole, less assembly costs.

•

Service part prices for current-model production and during the first five years of pastmodel production will be the current production part prices, plus incremental packaging and logistics costs.

•

Service part prices after the first five years of past-model production will be as negotiated by the parties.

•

When requested by GM, Supplier will make service literature and other materials available at no additional charge to support service part sales.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

8. Honda (Section 9): •

Seller will provide Buyer or Buyer’s designee(s) with all service and replacement parts for the Goods, which are required by Buyer or Buyer’s designee for a period of fifteen (15) years, or such lesser period as buyer or Buyer’s designee agrees in writing, after Buyer terminates production of any item or line of products, which production incorporates or uses the Goods. No discussion of service parts. All terms of the Agreement apply to the service parts.

9. Hyundai (Section 21): •

Supplier must provide service parts for up to 15 years after current-model production ends (or such longer time as Hyundai may require after current-model production ends).

•

Service part prices for current-model production and during the first five years of pastmodel production will be the current production part prices plus actual special packaging and freight, less any amortization.

•

Service part prices after the first five years of past-model production will be no greater than the current production part prices, plus or minus (1) changes in costs of materials, (2) changes in volume, (3) set-up charges reflecting actual costs for the production run, and (4) additional costs actually incurred for special packaging.

•

Requests for price adjustments must be documented to Hyundai’s reasonable satisfaction.

•

For service parts manufactured in a country other than where parts are delivered, Supplier must mark the country of origin on the parts.

10. Kia (Section 21): •

Same as Hyundai.

•

Additionally, for Kia, the standard warranty for service parts is 12,000 miles or 12 months from the date of purchase.

11. Lucid (Section 4.1): •

Supplier must provide service parts for 15 years after current-model production ends.

•

Prices for the initial 5 years of the Service Period will be the same as those at the end of the Production Period plus costs incurred for special packaging and freight less amortization.

•

Supplier shall support Lucid’s service part sales activities with marketing at no charge.

12. Mazda (Section 12 and Exhibit F): •

Seller must supply service parts in accordance with Exhibit F.

•

Seller must (i) sell service parts only to Mazda; supply service parts for a minimum of 15 years and maintain the capability to do so.

•

During production, service part pricing is PO price plus special packaging. Thereafter, Service part prices are a multiple of the last production price: (i) years 1-10: 1.2 X plus special packaging; (ii) years 11-15: 2 X plus special packaging; (iii) Years 16+: 10 X plus special packaging.

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•

Mazda may issue a service part RFQ. The quote must contain a complete cost breakdown.

•

Shipping FOB seller’s dock and follow Mazda Shipping and Packaging Guidelines.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 8.7 and 17): •

Supplier must provide service parts for a period of 15 years after the termination or expiration of the Agreement including any renewal term, or for such longer time as may be required by MBUSI after the final Purchase Order has been filled.

•

During vehicle production, service parts shall be priced at current model pricing, plus costs incurred for special packaging for service parts.

•

For post-production service parts, pricing shall be that contained in the applicable Purchase Order for the 3-year period after the end of production, plus any additional costs actually incurred by the Supplier for special service part packaging. At the end of the 3-year period, Supplier must fully document any request for price adjustment due to production of fewer units. Supplier will document all requests for price adjustments, including machine productivity, scrap allowance, labor inefficiencies, and excess raw materials. The parties are to negotiate service pricing following this 3-year period. Until a new price is reached, the last production price will apply.

•

Supplier must also document all requests for price adjustment.

14. Nissan (Section 19): •

Supplier must provide service parts for up to 15 years after current-model production ends.

•

Service parts will be supplied at full production assembly level, as required by MNC.

•

Service part prices will be the same as under POs for corresponding production parts while in production. Once parts are past model, service parts pricing will be established based on good faith negotiation and mutual agreement.

15. Rivian (Sections 2, 3.1, 3.2, and 3.3): •

Unless otherwise stated on the Purchase Order, Supplier shall provide service parts for ten (10) years.

•

The price for service parts for the initial three (3) years of the service period shall be the price that was in effect during the production period. The parties will negotiate in good faith the price for the remaining seven (7) years.

•

Seller shall maintain tooling and an adequate stock of materials and supplies during the service part period.

16. Scout Motors (Section 14): •

Supplier must provide service and replacement (collectively, “Service”) parts for 15 years.

•

The price for Service parts for the first five years post-production shall be the same price as the last production part price plus any actual cost differential for special packaging. For the remaining ten (10) years the price will be based on the most recent price under

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

the Order, considering actual, documented differences in the cost of materials, packaging, and costs of production as mutually and reasonably agreed by the parties. •

Scout’s Terms apply and govern all of Scout’s orders for Service parts, including without limitation quality and warranty.

17. Toyota (2009) (Sections 4.2 and 5.4(d)): •

Supplier must provide sufficient service parts as requested by Toyota.

•

Supplier must provide service parts for up to 15 years after current-model production ends, but Toyota reserves the right to shorten or lengthen the period with reasonable notice to Supplier.

•

Supplier must provide service literature and other written materials to support all service parts at no cost to Toyota unless providing such materials would cause a financial hardship to Supplier, in which case Toyota and Supplier will negotiate a good-faith allocation of costs for providing such materials.

•

Supplier is responsible for all costs to maintain equipment and tooling to produce service parts.

•

Supplier must comply with identification and labeling procedures and distribution and shipping requirements for service parts.

•

Supplier is responsible for disposal of service parts and tools at the end of the applicable period, based on instructions from Toyota.

•

Service parts will be produced, sold, and delivered to Toyota at standard production piece price, payment and delivery terms as set forth in the contract.

•

Supplier’s warranty period for service parts is the greater of 12 months or the remainder of the Toyota base consumer warranty for the parts.

18. Toyota (2021) (Sections 5.2.1 through 5.2.5 and 6.4.4): •

Unchanged except for Section numbering.

19. Volkswagen (Section 14): •

Supplier must provide service parts during current model production.

•

Unless otherwise agreed, service and replacement parts will be provided at the price set forth in the Purchase Order during current model production and for the first 5 years after current model production, plus any actual cost differential for special packaging.

•

For an additional 15 years (or such other period stated in VW’s Statement of Work or Supplier Standards), Supplier will sell the parts to VW in order to fulfill VW’s past model service and replacement parts requirements at the prices set forth on the most recent Purchase Orders with adjustments for materials, packaging and cost of production as agreed by the parties. During the 15-year period, Supplier is to comply with the requirements of the Terms and Conditions of Supply of Volkswagen Original Parts agreement. This additional 15-year requirement is meant to ensure Supplier’s compliance with the requirements of the Terms and Conditions of Supply of Volkswagen Original Parts® agreement.

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•

Unless otherwise agreed in writing by an authorized representative of VW, or unless VW removes Tooling from Seller necessary for the production of service parts, Supplier’s obligations under this Section also survive termination or expiration of the Purchase Order for any reason.

•

Supplier will provide a list of the individual components or parts in such system or modules, identify any Suppliers of such components or parts and the price paid for each and will make service literature and other materials available at no additional charge to support VW’s service part sales activities.

20. Volvo (Section 19): •

Supplier must provide service parts during current model production.

•

Supplier must provide service parts for fifteen (15) years after production and it must contractually obligate its sub-suppliers to supply parts or components for the same period.

•

Unless otherwise agreed, service goods will be provided at the price as production goods and for the first three (3) years after current model production. After the first three (3) years the price will be negotiated in good faith. If the parties are unable to reach agreement, the price will remain the same as the last production price.

21. MEMA OE Suppliers (Section 3.5): •

Supplier must provide service parts for 10 years after current-model production ends.

•

Service part prices for current-model production will be the current production part prices plus the costs of actual special packaging, shipping and handling, and other related services.

•

Service part prices for past-model production will be the last production price, plus costs of actual special packaging, shipping and handling, and other expenses specific to service parts. In addition, Service Parts pricing will be adjusted annually based on changes in the cost of materials and labor.

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Ford 2021 N

GM 5 yrs.

Honda

Hyundai N

Kia N

15 5 yrs.

Lucid

General Notes

Mazda 0 yrs.

MBUSI 3 yrs.

15 Y

Nissan 3 yrs.

10 5 yrs.

5 yrs.

3 yrs.

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

Ford 2004 15

Rivian

Scout Motors

FCA US 2021 15

Toyota 2009

Production Pricing for Past Model Service Parts

BMW 2022 15

Service Part Period

Volvo

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA/Stellantis 2022

V. Service Parts – Dashboard Toyota 2021

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VI. Invoices and Payment – Context and Questions 1. Location of Payment Terms Many OEMs, including BMW, Ford, GM, Honda and Toyota, include payment terms in their Terms and Conditions. Others, including FCA US, Hyundai and Nissan include the payment terms on the related Purchase Order. 2. Invoicing Compliance Almost all OEMs expressly require compliance with their invoicing specifications, which can be elaborate. Non-compliance is undoubtedly not tolerated by the other OEMs.

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VI. Invoices and Payment – OEM Comparative Analysis 1. BMW (2018) (Section 7): •

The 2018 Terms contained significant changes from the 2014 Terms.

•

Payments will be made through credit note-billing, and no separate invoices are required unless otherwise agreed in writing. (See Part Six, Section IV).

•

If EDI self-billing is not used, Supplier’s invoices must comply with the information requirements specified in the contract.

•

Payment terms will be specified in a purchase order.

•

BMW may pay by bank transfer or by check.

•

BMW can withhold a “proportional amount” of payment when goods are not supplied in accordance with the Supply Agreement.

•

Supplier may not assign payment without BMW’s prior consent.

•

Acceptance of payment does not constitute acceptance of the parts.

•

Amounts die from Supplier to Buyer are due immediately.

2. BMW (2022) (Section 7): •

Billing documents shall be exchanged electronically via BMW invoicing.

•

Where permitted by law, Supplier’s invoicing shall be carried out in a Self-billing Procedure. Otherwise, Supplier shall submit a commercial invoice using the invoice procedure. All commercial invoices shall contain the required information and data for both customs and payable purposes.

•

Invoices that fail to meet the requirements may be rejected by BMW. BMS will notify Supplier and Supplier will be responsible for any of BMW’s resulting costs.

•

Any change of (a) the recipient of payment, (b) the invoicing party, or (c) the Purchase Order recipient requires BMW’s prior written consent. Similarly, a change in the flow of Goods/flow of invoices must be approved in writing in advance. Costs resulting from not meeting this requirement shall be borne by Supplier.

•

Payment of Goods delivered and services performed will be made within the payment period agreed in the Supply Contract or Purchase Order.

•

Mode of payment will be at BMS’s option, either bank transfer or check.

•

If delivery is not made in accordance with the Supply Contract, BMW is entitled to withhold a proportional amount of the price until Supplier has fulfilled its obligation in full.

•

Payment does not equal acceptance for any Goods.

3. FCA US (2021) (Section 14): •

Payment terms are set forth in the Order.

•

Acceptance of payment does not constitute acceptance of the parts.

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4. FCA US / Stellantis (2022) (FCA US Section 14 and Stellantis Global Section 9): •

No material additions or changes from FCA 2021, except Supplier must provide cost breakdowns to FCA consistent with the documents issued in its quotation.  The provision is not clear on when or under what circumstances the information must be provided.

5. Ford (2004) (Sections 10, 11 and 14.7): •

Supplier must comply with the requirements of Ford’s Payment Web-Guide

•

Payment terms are “net 13th, 23rd prox., 3rd, 13th subsequent,” as described in the Payment Web-Guide.

•

Payment will be made in the local currency of Supplier’s manufacturing location.

•

Acceptance of payment does not constitute acceptance of the parts.

6. Ford (2021) (Sections 9.01, 9.02, 9.04): •

The following supersedes the 2004 summary.

•

Supplier must comply with the requirements of Ford’s Supplier-Guide.

•

Currency (Section 9.02): For products manufactured outside the US, except for Mexico, payment will be in the local currency of Supplier’s manufacturing location. o For Products manufactured in Mexico, Ford may elect to index the peso content, on the terms described in the “Auto currency Overview and Operating Policy Supplier Guide.” o For Products manufactured in Mexico that Ford does not choose to index, payment will be in pesos. o Except for the indexed Mexican content, Ford may unilaterally change current business to the currency of place of manufacture.

•

Acceptance of payment does not constitute acceptance of the parts.

•

Income Taxes (Section 9.04): If Ford is required to withhold taxes based on Supplier’s revenue or income, Ford will offset and remit the withholding.

7. General Motors (Sections 6 and 17): •

Payment will be made by electronic funds transfer.

•

GM may withhold payment if it has reasonable grounds to believe that goods are subject to a lien, pending receipt of evidence of lien removal on parts received.

•

Payment does not constitute acceptance of the parts.

•

2014 Terms specify mandatory content of invoice if invoice is required.

8. Honda (Section 3.4): •

Payment terms are net 25th prox.

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9. Hyundai (Sections 7 and 8): •

Supplier must comply with the requirements of Hyundai’s Evaluated Receipt System (a separate document).

•

Payment terms are as set forth in the Purchase Order.

•

Acceptance of payment does not constitute acceptance of the parts.

•

See Part Two § VIII, discussing Setoff.

10. Kia (Sections 7 and 8): •

Same as Hyundai.

11. Lucid (Sections 8.1 and 8.2): •

Prices are inclusive of storage, handling, packaging, labeling, consumables and all other expenses and charges otherwise agreed or stated.

•

If Suppliers reduces its price to others for the same or similar Goods or Services, Supplier will reduce the price to Lucid.

•

Lucid will pay all agreed upon costs. Charge for non-returnable packaging will be deducted from the price if Lucid elects to use returnable.

•

Undisputed invoices are due net (60) from the invoice date unless otherwise agreed upon.

•

All invoices must contain the proper information and documentation.

•

Documentation for disputed invoices must be provided with ten (10) business days.

12. Mazda (Section 3): •

Purchase Order pricing is firm and inclusive taxes, duties, packing, handling, storage, transportation and delivery.

•

Seller must continue performing if there is a pricing dispute or if invoices are unpaid.

•

Invoices must be issued within 30 days of delivery. If invoices are not issued within 90 days of delivery, Mazda not required to pay.

•

Payment will be made at the end of the month following the delivery month.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 8.6, 8.8, and 9.6): •

If products or service parts are not exclusive to MBUSI, then prices paid by MBUSI may be no higher than those paid by any other customer.

•

Payments by MBUSI are to be in accordance with its practices “as adopted from time to time.”

•

Separate invoices shall be issued by Supplier for deliveries within thirty (30) days of delivery to MBUSI. Delay in receiving invoices, errors and omissions on invoices, shall be considered just cause for withholding payment without losing cash discount privileges.

14. Nissan (Section 7): •

The invoice must include all information required by Nissan.

•

Supplier must use Nissan’s Evaluated Receipt System (ERS) if directed by Nissan.

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•

No payment terms are specified.

•

Nissan will not accept a change in price unless there is prior written consent.

•

Acceptance of payment does not constitute acceptance of the parts.

15. Rivian (Sections 8 and 10): •

Unless stated otherwise on the purchase order, payment terms for undisputed invoices are net sixty (60) end of month from the date of invoice.

•

Rivian may withhold payment for any invoice charges that it disputes in good faith.

•

Invoices may only be issued upon transfer of title to products to Rivian and Rivian’s acceptance of the products.

•

No invoice may reference any term separate from or different from Rivian’s terms and conditions or those on the purchase order. Any non-conforming invoice can be returned by Rivian. Payment terms commence only upon receipt of a conforming invoice.

•

Invoices must provide the PO number or release number, and, as applicable, the part number, quantity of parts shipped, number of cartons or containers, Supplier’s name and number and the bill of lading.

16. Scout Motors (Section 9): •

Payment terms are stated on the Order, the RFQ Documents, or a Prior Agreement (if any). If there are no payment terms on any of the documents, Scout pays for the Suppliers on the date established by Scout’s Multilateral Netting System (MNS2) (on average, Net 60 days of Scout’s receipt of Supplies or, in the case of Services, from the date Scout receives Seller’s invoice.

•

Invoices for Tooling must be issued only as approved, and as provided in the Order.

•

Scout may withhold payment pending receipt of evidence (in the detail required by Scout) of the absence of any liens, encumbrances, or claims.

•

Payment is to be made in US dollars.

17. Toyota (2009) (Sections 3.2, 3.3 and 3.4): •

Supplier must invoice Toyota for accepted parts in strict conformity with Toyota’s payment procedures, including procedures for additions to and offsets against amounts owed to Supplier in the ordinary course of dealing between the parties. Supplier must accept payment for parts at times and in amounts determined by Toyota’s payment procedures.

•

Toyota may withhold payment pending removal of liens.

•

Toyota may require Supplier to enroll and use EIPP System.

•

Payment terms for items not eligible for payment under EIPP System are net 25th proxy and otherwise subject to Toyota’s payment procedures.

•

Payment terms for items eligible for payment under EIPP System are 45 days after date of invoice from Supplier and otherwise subject to Toyota’s payment procedures.

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•

Tooling payment terms are 80% within 45 days after Toyota receives tooling invoice and copy of the part approval from Supplier, and otherwise pursuant to Toyota’s payment procedures. The remaining 20% will be paid on the same terms after Toyota receives both a tooling invoice for such 20% (which invoice may not be submitted until at least one day following the start of production) and a second copy of the part approval.

•

Toyota may suspend or withhold payment of any tooling invoice at its sole discretion until all production, operational and/or quality problems are corrected to Toyota’s satisfaction.

•

Currency is US Dollars or other currency as determined by Toyota.

18. Toyota (2021) (Sections 3.2, 3.3 and 3.4): •

The 2021 Terms substantially revise the 2009 Terms. The following supersedes the 2009 summary.

•

Supplier bears all costs of performance—i.e., the price is all inclusive.

•

Currency is US Dollars or other currency as determined by Toyota.

•

Any interim pricing will be stated in a contract document.

•

Invoices must comply with Toyota’s payment procedures, including procedures for additions to and offsets against amounts owed to Supplier in the ordinary course of dealing between the parties.

•

The payment process applies to tooling and development payables, not just Items.

•

If Toyota disputes an invoice, it will notify Supplier of the reason.

•

Payment terms for items not eligible for payment under EIPP System are net 25th prox and otherwise subject to Toyota’s payment procedures.

•

Payment terms for items eligible for payment under EIPP System are 45 days after date of invoice from Supplier and otherwise subject to Toyota’s payment procedures.

•

Re Tooling: o Charges may not include mark-up.

o Tooling will be paid in a single payment, upon acceptance.

o Toyota will not pay for Tooling unless Supplier invoices within 60 days of the later of: (i) Toyota accept an Item manufactured by the Tooling; or (ii) issuance of the Tooling PO.  Read together with 3.3.1, this appears to mean that Supplier will not be paid for Tooling unless Toyota accepts Tooling not later than 60 days from SOP. •

Reimbursable development (PDAD) Items will not be paid unless Supplier submits an invoice within 30 days of Toyota approving the production and shipment of the Item.

19. Volkswagen (Sections 5 and 9): •

Invoices must reference the Purchase Order number, amendment or release number, VW’s part number, Supplier’s part number, quantity of pieces in the shipment, number of

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cartons or containers, bill of lading number, country of origin, Seller’s name and address, consignee name and address, delivery name and address, currency and other information required by VW, with such information provided in English. •

No invoice or related documents may reference any term different than VW’s Purchase Order Terms and Conditions or those that appear on the face of the order.

•

VW will pay on the payment terms stated in the order, the RFQ Documents or a prior agreement, if any. If there is no payment term, VW will pay Supplier on the date established by VW’s Multilateral Netting System, which provides, on average, that payment shall be made on the second day of the second month following VW’s receipt of Supplies or in the case of services, VW’s receipt of Supplier’s invoices.

•

Payment will be made in the currency expressly stated in the Purchase Order or US Dollars if no currency is noted, and Seller agrees to accept payment by electronic funds transfer.

20. Volvo (Section 13): •

Prices are stated in the Purchase Order and include storage, packaging, handling, duties, if applicable, fees and taxes (except for VAT and sales tax) in the country of origin, unless otherwise stated in the relevant Volvo Car Instruction.

•

Supplier bears the risk of any foreign exchange rates, increases in raw material costs, inflation, increases in labor or other production and supply costs, any other event that affects availability of materials or supply of goods.

•

Prices remain in effect throughout the Purchase Agreement term unless agreed in writing.

•

Invoices must comply with Volvo’s Car Instruction or they will not be valid.

•

Payment terms are stated in the Purchase Order or Volvo’s Car Instruction.

•

The parties will cooperate to reduce the cost to Supplier to produce the goods, improve the quality of goods and efficiencies in manufacturing.

•

If another Supplier offers Volvo the equivalent goods at the same volumes at a total lower cost Supplier must either reduce its price to the same amount within sixty (60) days or Volvo can terminate the Purchase Agreement in whole or in party or purchase the goods from the other supplier and its obligations in a Purchase Order or Call-Off are reduced accordingly.

21. MEMA OE Suppliers (Section 7): •

Payment terms are 45 days net or as specified in the Purchase Order.

•

Supplier must promptly submit correct and complete invoices.

•

Buyer must pay in US dollars if no currency specified in the Purchase Order.

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VII. Taxes – Context and Questions 1. Inclusion of Taxes in Part Pricing Though not expressly stated in the Purchase Order Terms and Conditions of every OEM, the main theme among those subject to this analysis is that part prices include all taxes, such that the OEM is not responsible for them.

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VII. Taxes – OEM Comparative Analysis 1. BMW (2018) (Section 7.2): •

Responsibility for taxes is not specifically addressed.

•

Supplier’s invoice (if EDI self-billing does not apply) must specify various VAT identification numbers and other information.

2. BMW (2022) (Section 7.2): •

No material changes from 2018.

3. FCA US (2021) (Section 41): •

Parts are exempt from state and local sales and use taxes.

4. FCA US / Stellantis (2022) (FCA US Section 41 and Stellantis Global Section 16): •

No material additions or changes from FCA 2021, except:

•

Prices do not include transactional taxes.

•

Applicable transactional taxes should be itemized in Supplier’s quote and contract “even if the tax rate is zero,” as well as in invoices. FCA is not responsible for unidentified transactional taxes.

•

Supplier is responsible for paying the applicable tax authority.

•

Supplier will not be paid for transactional taxes it remits to its sub-suppliers unless they could not be recovered by Supplier.

•

FCA will offset any required withholding.

5. Ford (2004) (Sections 10.03 and 10.04): •

The price includes all taxes except as shown on Ford’s Tax Web-Guide (a separate document).

•

Supplier must separately list on its invoice any value-added or similar taxes.

6. Ford (2021) (Sections 9.03 and 9.04): •

No material changes except: o Web Guides are now called Supplier Guides.

o If Ford is required to withhold taxes based on Supplier’s revenue or income, Ford will offset and remit the withholding. 7. General Motors (Section 19): •

All taxes must be line-itemed in the quote and contract even if “0.”

•

Invoices must be “in line with the applicable tax laws in its country to enable GM to reclaim the transactional taxes.”

•

Supplier must remit applicable transaction taxes.

•

Supplier must use “reasonable efforts” to apply for applicable exemptions.

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•

Supplier may not pass on sub-contractor tax charges which are recoverable by supplier or could have been recoverable if structured differently (e.g., through a foreign affiliate).

8. Honda (Section 3.2.b and 3.3): •

The price includes all applicable taxes (except those based on Supplier’s net income, revenues, and the like, those exempted under Section 3.3, or as other specified by Honda), excise, duties, importation fees, and any other fees directly related to the production, sale or transportation of the Goods, except only as otherwise specified by Honda.

•

Upon request, the Parties will cooperate in obtaining and furnishing to each other certificates, direct pay permits, or other evidences of inapplicability or exemption from any tax.

•

If Supplier receives any such certificate, direct pay permit, or other evidence of inapplicability or exemption, Supplier will not include any applicable taxes or duties in the price charged to Honda.

9. Hyundai (Sections 12, 16, 22 and 30): •

Parts are purchased for resale and are exempt from most state sales and use taxes.

•

Supplier is responsible for all personal property taxes, including taxes on personal property owned by Hyundai and furnished to Supplier to perform and order and must provide evidence of payment to Hyundai.

•

See also Part Six § IV, discussing Customs.

10. Kia (Sections 12, 16, 22, 30 and 41): •

Supplier is responsible for all personal property taxes, including taxes on personal property owned by Kia and furnished to Supplier to perform and order.

•

See also Part Six § IV, discussing Customs. If Kia presents Supplier with a Georgia Certificate of Exemption for local sales and uses taxes on certain qualifying machinery, Supplier may not assess State of Georgia sales and use taxes on purchases of such machinery. To the extent the goods purchased are not exempt, taxes will be included in the price of the goods or services sold by Supplier and will be Supplier’s responsibility.

•

Supplier is also responsible for paying taxes on the Amortized Supplier Property while such property is in Supplier’s possession. Amortized Supplier Property includes goods, patterns, and specifications identified by Kia and furnished by Supplier, the cost of which is amortized as agreed upon by the parties.

11. Lucid (Section 21): •

Prior to title transfer of goods Supplier pays all taxes, duties, and import fees.

•

After title transfer Lucid will pay all related fees.

12. Mazda (Section 3.7): •

Seller must pay all taxes incident to the sale of the product, taxes on capital, revenues, income, and profits.

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13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 5.1(b), 8.8(c) and 25): •

Taxes paid by MBUSI will constitute a downward adjustment to prices.

•

Sales, Value Added, or other taxes may not be added to prices.

•

Federal excise taxes charged to Buyer shall be separately stated or indicated as included in the unit price.

•

Supplier shall pay personal property taxes and ad valorem taxes.

•

With respect to MBUSI Owned Equipment, Supplier will be responsible for all leasing, excise, property taxes and duties. In addition, Supplier shall pay sales or use taxes relating to the purchase thereof and shall not be reimbursed. No sales tax is to be charged by Supplier upon sale of such equipment to MBUSI. In addition, MBUSI will file and pay on all personal property tax returns where the equipment is located.

14. Nissan (Section 39): •

Supplier is responsible for all taxes, including sales and use taxes and personal property taxes on Nissan tooling.

15. Rivian (Section 9): •

Unless prohibited by law, Supplier pays all federal, state or local tax, transportation tax, and all other tax, including customs duties and tariffs.

•

All purchase order pricing are deemed to include all such taxes.

•

If Supplier is required by law to pay or collect from Rivian any taxes or charges, Supplier must provide a separate invoice.

16. Scout Motors (Sections 5 and 36): •

Supplier’s total price bid is deemed to include all duties and taxes including all government-imposed value added tax (VAT) imposed by a non-USA jurisdiction.

•

Scout is not responsible for any business activity taxes, payroll taxes, or taxes on Supplier’s income or assets.

•

In addition, the Supplies purchased under the Order are identified as industrial processing and may be exempt from sales taxes.

17. Toyota (2009) (Sections 5 and 7): •

Toyota is not responsible for any taxes unless separately stated in a contract document and billed as a separate item.

•

No sales or use tax may be added to the price of parts when an exemption is indicated on the face of a contract document.

18. Toyota (2021) (Section 6.8): •

No material changes other than Section numbering.

19. Volkswagen (Sections 5 and 36): •

The total price includes all duties and taxes except for any governmentally imposed value added tax (VAT) imposed by a non-USA jurisdiction, which must be shown separately on

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Supplier’s invoice or billing documentation for each shipment. VW is not responsible for any business activity taxes, payroll taxes or taxes on Supplier’s income or assets. •

The Supplies are identified as industrial processing and may be exempt from sales taxes. In such cases, the tax identification number and/or other exemption information are stated in the Purchase Order or are otherwise provided by VW.

20. Volvo (Section 13.1): •

The price for goods includes all duties, if applicable, fees and taxes (except for VAT and sales tax) in the country of origin, unless otherwise stated in the relevant Volvo Car Instruction.

21. MEMA OE Suppliers (Section 6.1): •

Supplier is responsible for all taxes, other than sales, value added, or similar turnover taxes, all of which must be separately invoiced to Buyer.

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VIII. Setoff – Context and Questions 1. Setoff Rights under the UCC UCC 2-717 provides a right of “setoff”10 as follows: “[t]he Buyer on notifying the Supplier of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.” Thus, OEMs would have a right of setoff even if the contract was silent. 2. Limitations on the UCC Setoff Rights The UCC setoff right is limited in many ways. First, it is limited to “amounts still due under the same contract.” This limitation would prevent an OEM from applying claims arising out of one Purchase Order against amounts due under a different Purchase Order, including possibly claims arising out of one Purchase Order against amounts due under a later Purchase Order for the same parts. Second, under the UCC, an OEM who sets off a disputed amount does so at its peril—if it is ultimately determined that the amount set off was owed, the OEM would be in breach of its payment obligation.11 3. Contractual Expansion of Setoff Rights Each of the OEMs has contractually expanded its common-law and UCC setoff rights by, among other things, providing a right of setoff for claims arising out of any contract between the parties and, for some OEMs, expressly allowing setoff of disputed amounts without risk of liability. 4. Setoff Rights for Claims against Affiliates Several of the OEMs also provide for a setoff right for claims against affiliates of the Supplier. The definition of affiliate can be quite expansive. Ford, for example, includes any entity in which the Supplier has a 25% interest. Suppliers who own minority, non-controlling interests in other entities should recognize that they may be subject to a setoff based on claims that the OEM has against the minority venture. 5. Setoff of Amounts Owed to OEM Affiliates Most OEMs give themselves the right to setoff amounts owed or claimed to be owed to affiliates of the OEM. This may include amounts owed to foreign subsidiaries and affiliates.

Traditionally, a distinction was drawn between the right to offset amounts owed under the same contract, called “recoupment,” and to offset amounts owed under other contracts between the parties, called “setoff.” This distinction has largely fallen into disuse with setoff commonly used to describe both rights. We follow the common practice and use setoff to describe both situations. Note that the UCC right under 2-717 is a right of recoupment, not setoff, under the traditional nomenclature. 11 Setoff may be best understood as a defense to a claim of non-payment. That is, an OEM that failed to timely pay an invoice would ordinarily be in breach; a valid right of setoff would be a defense to that breach claim. 10

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6. Impact of Setoff of Claims Given the financial significance of many of the issues that arise in connection with the supply of parts to OEMs—timely delivery, non-conformance with specifications, recalls, warranty claims, etc.—an OEM’s setoff of claims against payables can have tremendous impact upon a Supplier’s own financial situation. 7. Negotiations on Potential Setoffs Although the OEMs reserve the right to unilaterally setoff claims against payables, they run the risk of litigation upon doing so when claims against a Supplier are disputed. For this reason, setoffs are typically the subject of commercial negotiation well before any setoff action is taken. 8. Relationship to Warranty Cost-Sharing Programs As discussed in Part III, OEMs are increasingly adopting warranty cost-sharing programs in which a supplier is presumptively obligated to pay for a specified percentage of warranty costs. The amounts owed are typically recovered through a debit (setoff) against amounts owed to the supplier. Under many of the programs, the setoffs are taken automatically.

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VIII. Setoff – OEM Comparative Analysis 1. BMW (2018) (Section 7.11): •

BMW may offset claims against receivables of Supplier, including those that Supplier has assigned to a third party.

•

BMW may setoff claims of specified affiliates against amounts owed to Supplier.

2. BMW (2022) (Section 7.11): •

No material changes from 2018.

3. FCA US (2021) (Section 14): •

FCA US may without notice setoff against amounts owed to Supplier any amounts that FCA US claims are owed to FCA US by Supplier.

4. FCA US / Stellantis (2022) (FCA US Section 14 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Setoff is not addressed in the Stellantis Global Terms.

5. Ford (2004) (Section 11): •

Ford may, without notice, setoff against amounts owed to Supplier or its related companies any amounts that Ford claims in good faith are owed to Ford or its related companies by Supplier or its related companies. o “Related companies” are defined to include any affiliate or subsidiary in which a party owns at least 25% of the voting stock, partnership interest, or other ownership interest.

•

Ford may also setoff up to 50% of certain costs associated with a recall campaign—see Part Three, § II.

6. Ford (2021) (Section 10): •

No material changes except section numbering.

7. General Motors (Section 17): •

GM may set off against amounts owed to Supplier any amounts that GM claims are owed to GM or its affiliates by Supplier or its affiliates.

8. Honda (Section 3.6): •

In addition to any right of setoff or recoupment provided by law, Honda and its affiliates (the “Buyer Group”) may set off against, or recoup from, any amounts owing to Supplier or its affiliates (the “Seller Group”) any amounts owing to any member of the Buyer Group by any member of the Seller Group including, without limitation, damages (including attorney fees and costs) resulting from breaches by Supplier of its obligations to Honda under any Order.

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9. Hyundai (Sections 7 and 28(e)): •

Hyundai may without notice setoff against amounts owed to Supplier any amounts that Hyundai claims are owed to Hyundai by Supplier.

10. Kia (Sections 7 and 28(e)): •

Same as Hyundai.

11. Lucid (Section 8.3): •

Lucid may at any time and without notice setoff Supplier’s claims for money due or to become due.

•

Lucid may recoup debits and credits against any of Supplier’s accounts on a net settlement basis.

12. Mazda (Section 6.2): •

Mazda may setoff any amounts due under the Contract.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 21.10): •

MBUSI may, at any time and without notice, setoff Supplier’s claims for money due or to become due from MBUSI or any affiliate against claims that MBUSI has.

•

To the extent that MBUSI has a setoff claim against Supplier, the amount of money subject to such claim shall not be owed by MBUSI to Supplier.

14. Nissan (Section 7.5): •

Nissan may withhold payment under the Agreement, under any Purchase Order or any other agreement and apply the withheld payments as offsets against costs, damages or other payments due on any Agreement, Purchase Order or any other agreement between Supplier and Nissan.

15. Rivian (Section 11): •

Rivian or its affiliates may setoff against amounts owed or to become due to Supplier or to Supplier’s affiliates, including Rivian’s attorneys’ fees and costs.

•

In the event Rivian or any of its affiliates feels at risk, they may withhold and recoup a corresponding amount due Supplier and its affiliates.

16. Scout Motors (Section 29): •

Scout and its affiliates or subsidiaries have the right to setoff against any amounts due to Supplier from Scout or its affiliates or subsidiaries.

•

No advance notice is required. Scout will provide Supplier with a statement describing any setoff taken.

17. Toyota (2009) (Sections 2.3(a), 2.6, 3.9, 3.12 and 5.9(b)(7)): •

Toyota’s “Payment Procedures” allow Toyota to “make additions to or offsets against” amounts owed to Supplier in the ordinary course of dealing between the parties. The Payment Procedures are established by Toyota in its sole discretion and any setoff rights within them are not defined in the Terms.

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•

It is not clear whether the “Payment Procedures” merely identify the procedures for executing setoffs or define substantive setoff rights. If the latter, those substantive setoff rights are undisclosed and subject to change.

•

Toyota may setoff against amounts owed to Supplier any costs incurred by Toyota in enforcing its rights under the contract or as a result of a breach by Supplier.

•

Toyota may setoff costs incurred for repairing defective goods.

•

If a tooling Purchase Order is breached or cancelled, Toyota may setoff against amounts owed for the tooling.

•

It is unclear how this would affect tooling liens.

18. Toyota (2021) (Sections 3.3.1 and 3.5): •

The 2021 Terms revise and reorganize the setoff provisions. The following supersedes the 2009 summary.

•

Toyota may set-off, without notice, liquidated or unliquidated amounts: o Owed to a Toolmaker;

o Arising from a breach of any agreement with Toyota;

o For Toyota costs incurred in exercising its rights under the agreement; o For Indemnifiable Losses;

o Subject to set-off under the Toyota Payment Procedures.

 It is unclear whether the Payment Procedures expand substantive setoff rights or merely address process questions.

•

If Toyota has previously paid an invoice, it may retroactively dispute the payment and recover any disputed amounts, if the dispute is not resolved within 90 days.

•

Toyota’s determination of setoff amounts is “final, absent demonstrable error.”

19. Volkswagen (Sections 9 and 29): •

VW may withhold payment pending receipt of evidence in the form and detail requested by VW of the absence of any liens, encumbrances, or claims on Supplies.

•

All amounts due to Supplier will be net of indebtedness or obligations of Supplier to VW. VW will have the right to setoff against or to recoup from any payment or other obligation owed to Supplier, without advance notice, any amounts due to VW or its affiliates by Supplier or its affiliates.

•

VW will provide Supplier with a statement describing any set-off or recoupment.

20. Volvo (Section 13.5): •

Unless prohibited by law, Volvo may setoff any loss, damage, liability, or claim, without notice, that Volvo or any of its affiliates has against Supplier.

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21. MEMA OE Suppliers (Section 7): •

Buyer may setoff against amounts owed to Supplier only those amounts that the parties have agreed are owed to Buyer or that have been determined to be owed.

•

Setoff rights do not extend to Supplier’s affiliates or others who are not parties to the contract.

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OEM Right to Setoff Without Notice?

OEM Setoff Rights Expressly Cumulative Across Contracts and Purchase Orders (i.e., net settlement basis)?

Setoff Right Expressly Applicable Against Affiliates/ Subsidiaries of Supplier?

Setoff Right Expressly Applicable in Favor of Affiliates/ Subsidiaries of OEM?

Supplier Right to Negotiate Setoff Amounts?

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BMW 2018

Specific Provisions Provided in Terms and Conditions

BMW 2022

VIII. Setoff – Dashboard FCA US 2021 S

FCA/Stellantis 2022 S

Ford 2004 S

Ford 2021 S

GM S

Honda S

Hyundai S

N(a)

Kia S

N(a)

Lucid S

Mazda N

MBUSI S

Nissan S

Rivian S

Scout Motors S

Toyota 2021 Y(d)

VW S

Volvo

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

(d) Under 2021 Toyota Terms, only if Toyota seeks to recover via setoff amounts previously paid to Supplier.

(b) MBUSI’s Terms and Conditions provide that to the extent MBUSI has a setoff or recoupment claim or defense against Supplier, the amount of such claim or defense is not considered “owed” by MBUSI to Supplier.

(a) While the setoff right is only in favor of the specific OEM entity named in the Terms and Conditions, that OEM entity is deemed to include one or more other related entities in certain contexts.

Specific Notes

General Notes

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PART THREE I.

Parts Warranty 154

II.

Recall 172

III. Price Warranty 181 IV.

Indemnification and Product Liability

Default and Remedies 197

VI. Excusable Delays/Force Majeure

185 213

VII. Dispute Resolution 226

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I. Parts Warranty – Context and Questions 1. OEM and Warranty Rights Are Broad OEMs reserve to themselves broad warranty rights. Using similar language, each of the OEMs requires the Supplier to warrant that the parts provided are free from defects in materials and workmanship, conform to specifications, drawings and samples, are free from design defects (this is sometimes, but not always, limited to those circumstances in which the Supplier provides the design), are merchantable and are fit for the OEM’s intended use of the parts. 2. Warranty Cost-Sharing Programs OEMs are increasingly adopting and frequently updating warranty cost-sharing programs in which a supplier is presumptively obligated to pay a specified percentage of the OEM’s warranty costs. Some cost-sharing obligations are not tied to a finding of defect in the parts, and the OEM may hold the supplier responsible for “no trouble found,” “customer good will” and other claims not connected to supplier fault. Other policies assess percentages of fault—in some instances 100% initially—subject to potential later adjustment up or down. Warranty costs are often recovered by debit, in some cases even absent a specific agreement on root cause. Any root-cause analysis that may be performed may not provide opportunity for meaningful supplier input and may not be rigorous. Finally, the ultimate determination of responsibility is mostly left to the OEM’s discretion. The cost-sharing and other specific warranty and cost allocation programs are incorporated by reference into the Terms and Conditions but are not otherwise part of the text of those Terms and Conditions. Therefore, detailed analysis is outside the scope of this book. However, the programs can materially impact the supplier’s warranty costs and should be obtained, carefully reviewed, and thoroughly understood by all suppliers. Suppliers also should closely monitor OEM purchasing portals for updates to these programs and policies, as updates occur fairly frequently and can have a major impact on supplier cash flow and liability. 3. The Impact of Being “Design Responsible” OEMs have become increasingly sophisticated in their Terms and Conditions and associated contract and engineering documentation regarding allocation of design responsibility, and they typically argue that the Supplier was “design responsible” when a warranty claim is contested. Some OEMs have included language in their terms purporting to exonerate the OEM from liability even when the OEM has been involved in design development and/ or approved the design. It is essential for the Supplier to understand whether the OEM will attempt to allocate design responsibility to the Supplier and, if so, whether the Supplier is actually given the opportunity to provide design input on the part provided, as compared to building to extensive and rigid OEM-mandated design criteria and specifications. The proofs related to design defect claims often focus on design validation documentation and testing, such as DFMEAs, design validation plans and test reports. Not surprisingly, the Supplier’s document retention procedures and policies (including those relating to retention of electronic data, such as CAD files) are frequently implicated in these types of disputes. Thus, it is important to implement and follow document retention policies. Page 154

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4. Responsibility for Design and Process Validation Testing Because many warranty claims are litigated based upon the alleged insufficiency of Supplier validation testing, it is important that test criteria, protocols and the allocation between the OEM and Supplier of testing responsibility at the subcomponent, component and assembly levels, as well as vehicle durability testing, be well documented between the relevant engineering communities. The supplier can and should create a paper trail carefully documenting any discussions or agreements regarding where the supplier’s responsibility begins or ends. 5. Responsibility Matrices and Supplier Liability OEMs typically use some form of standardized responsibility matrix to specify responsibility for design, testing and other liability relevant activities. The matrix is usually issued and accepted by Suppliers as part of the award or early in the development process. Experience teaches that the matrix often overstates the Supplier’s responsibility and authority. The matrix is likely to be extremely important and, if not accurate and complete, harmful to the Supplier in the event of warranty and other liability claims. Simply stated, the matrix often trumps reality. It is important that the Supplier consider the accuracy and completeness of the responsibility matrix before accepting it and request and follow up on changes to protect the supplier’s positions 6. PPAP and Deviation from Samples as Basis of Claim In addition to breach of warranty claims based on an alleged failure to comply with drawings, specifications and other design criteria, OEMs frequently assert warranty claims against Suppliers based on deviation of production parts from validation samples, such as Production Part Approval Process parts, even if the production parts otherwise meet all design and performance criteria. For example, claims have been made based upon an undisclosed substitution of materials, even if the substitute materials are entirely within the specification and meet all known design and criteria. Similarly, claims have been made based on the unintended consequences of manufacturing process changes which may have subtle, but crucial, impacts on product durability or performance. Supplier should be careful to seek written approval from the OEM of any and all changes, no matter how slight, from approved materials or processes. 7. Lower Tier Suppliers, Directed Suppliers and Warranty Liability Unless there is an agreement to the contrary, the Supplier is liable to the OEM for defects and other warranty breaches of its lower tier sub-suppliers. This is even true for directed suppliers unless a separate written agreement for the directed supply was executed which creates an exception to this rule. Some OEMs use separate standard agreements (some complex and lengthy, others a brief side letter) that in broad terms provide that the directed supplier is directly liable to the OEM. The specific agreements are outside the scope of this Manual. Whether or not an OEM has developed standard agreements, Suppliers should consider pursuing appropriate directed supplier agreements with the OEM.

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8. UCC Implied Warranties of Merchantability and Fitness for Purposes In addition to any express warranties in the terms, Suppliers also give an “implied warranty of merchantability.” Many OEM terms provide for an express warranty of merchantability, but it is implied even for the OEMs that do not expressly include it. The UCC also provides an “implied warranty of fitness for purpose” (UCC § 2-315) if the Supplier “has reason to know” of the buyer’s purpose and that it is relying on the Supplier’s judgment to meet that purpose.12 A number of OEMs expressly provide for a warranty of fitness for purpose, and others expressly state that the Supplier knows the OEM’s purposes. For those OEMs that are silent, there can be a factual dispute whether the fitness warranty applies. The question can be very important when the parts conform to the specifications, but perform inadequately, often because of integration and assembly issues that may be outside the Supplier’s control. In addition, an unqualified fitness warranty is implicitly also a warranty of the design, even if not designed by the Supplier. 9. Notice of Claim Under UCC § 2-607(3), a buyer waives all claims (not just warranty claims)13 unless it notifies the seller of the breach “within a reasonable time” after it discovered or should have discovered any breach.14 This obligation applies only to buyers, not Suppliers. The case law is confused and inconsistent regarding when notice is sufficiently timely and specific to satisfy this requirement.15 Some OEMs have recently been including terms purporting to waive this notice requirement or at least water it down. Whether these provisions are effective remains an open question. 10. Warranty Duration While the language used may differ, virtually all of the OEMs’ Terms and Conditions include language tying the duration of the warranty period to the duration of the consumer warranty period for the vehicles in which the parts are installed. OEMs typically take the position that these provisions act as a “warranty of future performance” for purposes of the Uniform Commercial Code warranty statute of limitation section at UCC § 2-725(2). The general rule under UCC § 2-725 is 4 years from the date of tender of the parts, but for warranties of future performance, it is 4 years from when one “knew or should have known” about the alleged

See e.g., See, e.g., Vanalstine v. Land O’Lakes Purina Feeds, LLC, 326 Mich. App. 641, 650-54 (2018) For example, it applies to overcharge and untimely delivery claims. Johnson Controls, Inc. v. Jay Indus., 459 F.3d 717, 729 (6th Cir. 2006) 14 Whether the timing and substance of a notice is sufficient is usually a question of fact. SEE, Inc. v. See Concept SAS, No. 16-13261, 2017 US Dist. LEXIS 27621, at *10 (E.D. Mich. Feb. 28, 2017) 15 “Two conflicting views-a so-called ‘lenient’ view and a so-called ‘strict’ view-have emerged regarding the sufficiency of notice required under § 2-607. The lenient view is justified by UCC comment four to this section, which states that the ‘content of the notification need merely be sufficient to let the seller know that the transaction is still troublesome and must be watched.’ The strict view is justified by other language in the same comment, which states that ‘[t]he notification which saves the buyer’s rights…need only be such as informs the seller that the transaction is claimed to involve a breach, and thus opens the way for normal settlement through negotiation.” Contech Casting, LLC v ZF Steering Systems, LLC, 931 F.Supp2d 809, 815 (E.D. Mich. 2013)(internal citations omitted). 12 13

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breach of warranty (a discovery rule). The law regarding whether a warranty is a warranty of future performance is complex and often uncertain.16 11. Intellectual Property Warranties Intellectual property warranties are addressed in Part 5.

See In re Fort Totten Metrorail, 793 F.Supp.2d 133, 153 (2011); Standard Alliance Indus., Inc. v. Black Clawson Co., 587 F.2d 813, 820 (6th Cir. 1978) 16

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I. Parts Warranty – OEM Comparative Analysis 1. BMW (2018) (Sections 10.1 and 10.2): •

Supplier warrants that the Goods are “free of defects according to the applicable law and particularly warrants that the Goods are suitable for the use intended under the Supply Contract” as reflected in the drawings, specifications, service level agreements. (See section 2.3).  This language clearly creates a warranty of fitness for purpose, unlike the more ambiguous language of the 2014 terms. The warranty of freedom from “defects according to the applicable law” may be intended to be a warranty of merchantability, but the language is unusual and has no generally understood meaning under US law.

•

The parts must be free from defects in materials and workmanship and must comply with all applicable laws and regulations.

•

If BMW and Supplier have entered into a “Warranty Agreement” regarding the goods, that agreement applies instead of the warranty provisions (Section 10) of the standard terms.  See also, discussion in Part 2, Section III.

•

The warranty period is equal to the lesser of five years from delivery, or BMW’s consumer warranty period, or longer if required by law.

2. BMW (2022) (Section 10): • 3.

The 2022 terms are the same as the 2018 terms.

FCA US (2021) (Section 8): •

The parts must conform to specifications, drawings, descriptions, and samples; must be merchantable; and must be free from defects in materials and workmanship.

•

If not designed by FCA US, the parts must be fit for the purpose intended.

•

Supplier also warrants title and warrants that parts are free from any intellectual property claims.

•

Liability for breach will be determined by FCA US by analysis of a sample of the defective parts.

•

The warranty period against defects is equal to FCA US’s consumer warranty period.

4. FCA US / Stellantis (2022) (FCA US Section 8 and Stellantis Global Sections 10 and 12): •

The Global Terms impose new warranties: o Supplier will conform with safety, homologation and reliability requirements of Buyer; o Supplier will perform all “necessary or appropriate” product testing.

 This new requirement means that Supplier can be in breach even if it complies with all FCA testing and validation requirements.

•

Supplier must notify FCA of:

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o Any deficiencies in FCA’s specification or testing,

 This potentially transfers to Supplier responsibility for FCA failures.

5. Ford (2004) (Section 22): •

The parts must conform to drawings, specifications, and samples; must be free from defects in design (if Supplier provided the design), materials, and workmanship; must be fit for purpose intended in the system and vehicle environment; and must conform to regulations in force in countries where the parts are sold.

•

The warranty period for production parts is equal to Ford’s consumer warranty.

•

The warranty period for non-production parts is equal to the greater of 12 months after acceptance by Ford or as specified in the Purchase Order.

•

See Part Two, § V for the warranty period for service parts.

6. Ford (2021) (Section 22): •

The 2021 terms significantly modify the product warranty provisions, with a revised nomenclature and precise and crucial definitions. The following summary supersedes the 2004 summary.

•

The 2004 warranties covered only Goods. The 2021 Terms create separate warranties for Goods, “Tech Products,” and “Supplied Data.” o “’Tech Products’ means Software, Software as a Service, Buyer Data and Supplied Data” 

“Supplied Data” means any data or metadata, including but not limited to digital data, that is related to Supplier’s production, delivery, logistics, quality, volume or similar business information regarding the Goods and Tech Products.”

•

“Goods,” means goods (including tooling) and services.

•

Implicitly, “Goods” are anything Ford purchases, other than Tech Products.

•

“Supplied Data,” with associated warranties.

•

As in the 2004 Terms Supplier warrants that Goods conform to drawings, specifications, and samples; are free from defects in design (if Supplier provided the design), materials, and workmanship; be fit for purpose intended in the system and vehicle environment; and conform to regulations in force in countries where the parts are sold.

•

Supplier also now warrants that Goods will:

•

o Comply with all Laws. o Not infringe any Proprietary Rights. o be free of “Error States,” as well as defects. “Error States” means failure to function for their intended use.  It is not clear that the Error State warranty substantively expands the “fitness for purpose” warranty. Supplier also now warrants that Services will be provided by appropriately qualified and trained personnel, in a professional manner with due care and diligence to such high standard of quality as it is reasonable for Buyer to expect in the circumstances. The new Tech Products Warranties are:

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o Supplier has right to license Tech Products. o Supplier is compliant with any free or open-source licenses. o Tech products do not include “Copyleft Materials” (i.e., licenses that require that materials be disclosed or distributed in source code, permit making derivative works, or be distributed at no charge).  Supplier must understand source of all elements of its software library and rights granted under each license… •

The new Supplied Data Warranties are that the Supplied Data:

•

o is timely and accurate; o is lawfully licensed from data provider, with all necessary rights; and o complies with privacy and security laws. The warranty period for production parts is equal to Ford’s consumer warranty.

•

The warranty period for non-production parts is equal to the greater of 12 months after acceptance by Ford or as specified in the Purchase Order.

•

See Part Two, § V for the warranty period for service parts.

7. General Motors (Section 13): •

The parts must be merchantable, of good materials and workmanship, free from defects, fit for GM’s intended use and conform to quality standards of GM and of Supplier if approved by GM.  Supplier expressly acknowledges that it knows and understands GM’s intended use. This is intended to undermine a Supplier’s “foreseeability” defense to a GM warranty claim, including a claim for failure to be fit for a particular purpose, regardless of whether GM actually communicates the intended purpose/use with sufficient detail to be understood by the Supplier.

•

The duration of the warranty (except for the “no recall warranty,” which is perpetual), is the longer of (1) any period provided by law, (2) the duration of the consumer warranty, or (3) “the expiration of any specific warranty period or performance standard provided in any document incorporated by reference into the Contract, including in Buyer’s specifications or quality standards.”  # 3 potentially materially expands the duration of the Supplier’s warranty obligation if the specifications, quality standards or other GM documents require duration longer than the consumer warranty. It also creates uncertainty and complexity, as the warranty period may vary from part to part. Finally, any duration information in the quality standards or other documents might not be readily known and understood by the Supplier.

8. Honda (Section 5): •

Supplier warrants and represents as to all Goods that they conform to all Specifications and will be in compliance with all accepted models, samples, and all written affirmations of fact made by Supplier, they are in compliance with all Applicable Laws, and are merchantable, fit for particular purpose, free of any defects and free of lawful claim.

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•

Supplier warranties and representations survive termination of the Agreement and Order(s).

9. Hyundai (Section 12): •

The parts must conform to specifications, drawings, and samples, all quality standards, and applicable law, must be merchantable, must be of good material and workmanship, must be free from defects, and must be fit for Hyundai’s intended use.

•

If Hyundai does not provide the design, the parts must be free of design defects.

•

Supplier must convey good title to the parts, free of liens and encumbrances.

•

Supplier warrants that goods are free of silicone.

•

Warranty liability will be determined based on sampling.  Many OEM warranty programs provide for sampling, but Hyundai and Kia are the only OEMs to provide for it in the standard terms.

•

The warranty period is equal to Hyundai’s consumer warranty.

10. Kia (Sections 12 and 31): •

Same as Hyundai, except as noted.

•

Warranty claims are subject to the applicable Acceptance/Burden Ratio Agreement entered into between Supplier and Kia, which governs cost-sharing levels. Ultimate ratios are presumably to be based on fault.

•

See also Part Two, § V of Kia summary, discussing duration of warranty for service parts.

11. Lucid (Sections 6.2-6.7): •

Supplier warrants that its parts will be new and conform to all specification and quality standards as well as applicable laws and regulations.

•

Supplier warrants that the Goods will be merchantable, will be of good material and workmanship and free from defect, will conform to and operate in accordance with the applicable Specifications.

•

Supplier warrants that the Goods will be fit and sufficient for any use that is compatible with the description, purpose and Specifications for the Goods, will be fit and sufficient for the purposes intended by Lucid, including any specified performance in the component, subsystem, system, or location with the vehicle.

•

Supplier warrants that the Goods will be free and clear of any liens and encumbrances and will not infringe an Intellectual Property Right, will be free of malware and any malicious code, will not cause any software or technology contained within or offered by Lucid.

•

All representations and Warranties of Supplier extend to future performance and are in addition to any other warranties whether express or implied by law.

•

Warranties begin on the date of Lucid’s delivery to the end customer and end on the later of (a) the date of expiration of any warranty period under the applicable law; (b) four (4) years or, if earlier, upon 50,000 miles of recorded driving; except powertrain and battery components will be eight (8) years or (c) the expiration of any specific warranty period or performance standard provided in any document or incorporated by reference into the Agreement.

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•

Supplier must notify Lucid when Supplier has reason to believe that the Goods or any component, material, design or defect in the Goods may cause harm to persons or property or do not meet the Specifications.

12. Mazda (Sections 9.1 and 9.2): •

Seller warrant the Products will: (i) conform to Specifications, standards, representations and warranties; (ii) comply with all Laws,; (iii) be free from defects and nonconformities; workmanship, materials and, unless Mazda is solely responsible, design; (iv) be merchantable a fit for their intended purpose; and (v) be manufactured by highly skilled personnel; (vi) be free of liens; and (vii) not infringe 3rd party IP.

•

Seller warrants that it will comply with Mazda’s “Warranty Claim Handling Process,” attached as Appendix A, which addresses, among other things determination of Seller responsibility for warranty claims.

•

Seller warrants that it will comply with Mazda’s “Warranty Condition at Market,” (which conforms to Mazda’s consumer warranty), attached as Exhibit D.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 15): •

The parts shall conform to the specifications, drawings, samples and other descriptions upon which any Purchase Order is issued; shall be new, fit and sufficient for their intended purpose; shall be merchantable; and shall be free from defects in material and workmanship.

•

The warranty extends for duration and mileage MBUSI provides to vehicle purchaser or user, but no less than 48 months. An Emission Warranty of eight (8) years+ in accordance with local law will apply.

•

Supplier must comply with the procedures and other terms and conditions set forth in the current version of the MBUSI Buyer Warranty Process, located on the Supplier Portal and as may be amended from time to time.

•

Supplier warrants good title, free of liens and encumbrances.

•

The warranties are in addition to any warranties express or implied by law or equity.

•

The warranties survive termination of the Agreement.

•

The warranties extend to all parts provided, despite being provided by lower tiered Suppliers, including directed lower tiered Suppliers.  MBUSI Terms are unique in that they expressly address the circumstance of lower tiered Suppliers and directed Suppliers in significant detail. Section 15.5 of the MBUSI Terms and Conditions expressly states that no warranty shall be disclaimed or limited in any way due to the fact that a part has been produced by a lower tier Supplier, including a directed lower tier Supplier selected by MBUSI.

•

The warranties run to MBUSI and its parent, Mercedes.

•

Supplier is responsible to pay the full cost and expense of any warranty claim resulting from a defective or deficient part in accordance with Sections 15.2-15.5 of MBUSI terms and in accordance with the current version of the MBUSI Warranty Process.

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•

Supplier agrees to promptly replace or correct defects of any part not conforming to warranties at the time it is notified of non-conformity by MBUSI. MBUSI reserves the right to correct defects itself, after reasonable notice to Supplier, and to charge Supplier for the cost of materials, labor, transportation and other costs incurred by MBUSI in correcting the defect.

•

Parts must comply with all applicable federal, state and local laws, rules, regulations and other standards both in the manufacture, labeling, transportation, licensing, approval or certification of the parts.

•

When Supplier becomes aware that any part is or may become harmful to a person or property, or that the design or construction of the part is defective in any manner, the Supplier shall immediately give notice to MBUSI and Mercedes.  This notice requirement is extensive and unique. It arguably touches upon, and expands upon, the subject matter of federal regulatory and reporting schemes, such as those promulgated under NHTSA’s direction and/or those outlined in the TREAD Act.

•

Supplier warrants that it has obtained, or will obtain, any required approvals by any government or governmental agency with respect to manufacture or sale of the parts.

14. Nissan (Sections 3, 9, 10 and 13): •

Supplier warrants that the parts are merchantable free from defects in design (if Supplier provides the design), materials, and workmanship, must comply with specifications, drawings, and samples, and must comply with Applicable Laws.

•

Supplier warrants that it has good title to the parts, free from liens.

•

Before producing parts, Supplier must inform Nissan of any Nissan design issue that may interfere with Supplier’s warranty obligations and/or the functionality of the part during the longer of the expected life of the part or the warranty period.  This provision is currently unique among the OEMs. It attempts to delegate to the Supplier oversight over system level design issues which may impact a component part incorporated within a system for which Nissan acknowledges it is design responsible. The Supplier’s engineers must be made aware of this provision so that proper documented communications with Nissan may occur during the development process, particularly as to validation and testing responsibilities.

•

The warranty period is at least as long as Nissan’s consumer warranty.

•

Notice of a warranty breach is deemed sufficient if within 180 days of discovery after discovery by Nissan.

•

Supplier must reimburse Nissan or its affiliates for all expenses that Nissan incurs as a result of Supplier’s breach of warranty.

•

Express contract warranties are consistent and cumulative with all other warranties, and there are no warranty restrictions other than those recited in the contract.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Nissan has access to Supplier’s records of warranty or product liability claims, and Supplier must maintain those records as required by law or for five years, whichever is longer.

15. Rivian (Sections 4.2, 4.5, 5 and 39.23): •

In addition to express warranties stated on the purchase order and any statutory warranties or warranties implied by law, Seller expressly represents and warrant to Rivian and its customers that the product strictly conforms to all drawings, PPAP submissions, samples and other descriptions furnished or relied on by Rivian.

•

Seller warrants that the product is (i) merchantable, free from defects in design, material and workmanship and shall be new (unless agreed otherwise) and of highest quality; (ii) fit for the purpose for which it is intended and safe for any use that is consistent with the applicable Specifications or that is reasonably foreseeable; (iii) free and clear of all liens, claims or other encumbrances; (iv) in conformance to all industry standards and Laws in force in countries to which the product will be exported or sold; and (v) free of all malware, viruses, and other malicious codes.

•

Seller warrants that the product does not infringe any intellectual property rights.

•

Seller’s warranties extend to all future performance of the Products and are not modified, waived or discharged by delivery, inspection, tests, acceptance or payment.

•

Designation of a directed supplier does not relieve Supplier of any of its obligations under the contract.

•

Warranty period is the longest of (i) the warranty period required by applicable law; or (ii) four (4) years or 50,000 miles, whichever is later, from date of end users’ purchase of Rivian’s product into which the product is incorporated.

16. Scout Motors (Sections 11 and 15): •

Supplier expressly warrants and guarantees to Scout, Scout’s successors and the users of Scout’s goods, that its product is (i) competitive in terms of price, quality, delivery and technology, and conform to the specifications, standards, drawings, samples, descriptions and revisions; (ii) conforms to all applicable laws, orders, regulations, and standards in countries where Supplies or vehicles incorporating the Supplies are to be sold; (iii) merchantable and are free of defects in design, materials and workmanship; (iv) will be selected, designed, manufactured and assembled by Supplier based upon Scout’s stated use and be fit and sufficient for the purposes intended by Scout; and (v) be free of all liens, claims and encumbrances.

•

Supplier also warrants that the goods are free from latent defects or conditions that could give rise to a defect.

•

Supplier warrants that goods will strictly conform to the documents provided to or by Scout, including without limitation specifications, data schedules and those listed above.

•

Scout’s approval of any other specification or documentation does not relieve Supplier of the warranties set forth in these terms.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

If applicable, Supplier assigns to Scout all assignable warranties, representations, and indemnities, and remedies therein, granted to Seller by manufacturers of the Goods and any components of such goods.

•

To the extent Seller is unable to assign any warranties to indemnities to Scout, Seller will enforce such on Scout’s behalf and by Scout’s direction.

•

Scout’s approval of any design, drawing, material, process, or specifications will not relive Supplier of these warranties.

•

The express warranties are in addition to those available to Scout by law.

•

Supplier warrants that any services performed are in a professional and workmanlike manner, consistent with all standards and specifications agreed on with Scout and consistent with industry standards.

•

The warranty period begins on delivery to Scout and expires the later of (i) three years from the date of delivery; (ii) the expiration of the warranty period provided by applicable law; or (iii) the expiration of the warranty period offered by Scout to its endusers for Supplies installed on or as part of vehicles beginning when the vehicle is placed in service.

•

The warranty period may be extended if Scout voluntarily or pursuant to a government mandate, makes an offer to owners of vehicles (or other finished products) to provide remedial action or to address a defect, the warranty continues for such period of time as deemed necessary by Scout or as dictated by the applicable law.

•

Supplier must abide by the Scout Supplier Claims Manual for the processing of warranty charge-backs, authorize setoff for such nonconforming Goods and packaging, and must participate in warranty reduction and related programs.

•

Supplier must immediately notify Scout when it becomes aware of any ingredient, component, design or defect in the Supplier or that is or may become harmful to people or property.

Supplier represents and warrants that its use of Open Source Components with the goods do not violate the terms and conditions of the applicable open source license, and that no Copyleft materials have been incorporated into the goods in a manner that triggers an obligation to disclose or distribute any source code; license for making derivative works; or redistribute at no charge. 17. Toyota (2009) (Section 6.4): •

The parts must conform to applicable contract documents, all Toyota requirements, manufacturing and legal requirements, specifications, drawings, and samples; must be merchantable and of good materials and workmanship; must be free from defects to the extent the parts are designed by Supplier or its sub suppliers; and must be fit for Toyota’s intended purpose to the extent such purposes have been communicated to Supplier.

•

The parts must comply with Toyota quality standards (a separate document) and Toyota alone determines compliance.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Toyota may request quality records and conduct quality tests at the premises of Supplier or its subcontractor at no expense to Toyota.

•

The warranty period starts upon Toyota’s acceptance of the part and ends on the date that coincides with the expiration of the consumer vehicle warranty period.

•

Toyota reserves the right in its discretion to extend the warranty period for a “substantial defect” discovered after the consumer warranty period expires, and the parties must then negotiate a reasonable allocation of the costs of the extension.

•

Any modification to the warranty period will prospectively govern items manufactured on or after the date of such modification.

•

Supplier can object to a warranty claim by Toyota and the parties must attempt to resolve the claim by negotiation of each party’s “respective share of the cost” before pursuing other remedies.

•

See Part Two, § V for the warranty period for service parts.

•

If requested by Toyota, Supplier will enter into a separate agreement for the administration or processing of warranty chargebacks for nonconforming goods.

18. Toyota (2021) (Sections 1.3 and 6.4): •

The following supersedes the 2009 summary.

•

2021 warranties appear to apply only to goods sold on or after 10/1/21.  In other words, a part sold on 10/1 is under different and in some respects more stringent warranties than the identical part sold on 9/30.

•

The Items must conform to applicable contract documents, all Toyota requirements, manufacturing and legal requirements, specifications, drawings, and samples; must be merchantable and of good materials and workmanship; must be free from defects to the extent the parts are designed by Supplier or its subsuppliers; and must be fit for Toyota’s intended purpose to the extent such purposes have been communicated to Supplier.

•

Supplier warrants that it is an “expert” and will apply its expertise to the design, development, engineering, manufacture, processing, production, provision, supply, delivery, and transportation of the Items.  A broad “expertise” warranty is unique among the OEMs.

•

Supplier warrants that the Items will meet the “Toyota Requirement,” as defined in the Appendix. It is an extremely expansive definition and encompasses “requirements” never specified by Toyota.

•

If an Item is or includes Software, Supplier warrants that: o It is free of Software Flaws.  o

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Software Supplier must fix any Software Flaws for 15 months following end of vehicle production.

It is free of specified malware;

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

o Supplier owns or has necessary licenses to the Software, including Toyota’s right to use it; o Toyota’s use or copying will not infringe or violate any intellectual property right; o There is no actual or threatened infringement claim.

 (The second sentence of the same provision requires Supplier’s “best efforts” to fix Software Flaws. It is not clear how the two sentences fit together.)

•

If Supplier asks to inspect an allegedly defective part, Toyota may, but is not required to, make the part available.

•

The warranty period starts upon Toyota’s acceptance of the part and ends on the date that coincides with the expiration of the consumer vehicle warranty period. o If an Item is found to be defective after the expiration of the Warranty Period and Toyota elects to provide consumers a remedy, Supplier must decide in good faith whether it bears any responsibility for the defect and, if so, negotiate an allocation of expenses with Toyota. o Any modification to the warranty period will prospectively govern items manufactured on or after the date of such modification. o Supplier can object to a warranty claim by Toyota and the parties must attempt to resolve the claim by negotiation of each party’s “respective share of the cost” before pursuing other remedies. o See Part Two, § V for the warranty period for service parts.

•

Warranties are warranties of future performance.

•

If requested by Toyota, Supplier will enter into a separate agreement for the administration or processing of warranty chargebacks for nonconforming goods.

•

Warranty claims arising out of PDAD Items (i.e., an Item that is designed, developed, conceptualized, or engineered by the Service Parts and Accessories Development division of TMNA) are subject to 6.4.9, rather than the preceding Sections. Within 30 days of receipt of Warranty Claim notice for PDAD Items, Supplier must respond and pay for any accepted or partially accepted claims. Failure to object within 30 days is an acceptance of the claim. Supplier’s liability includes all labor and material costs of replacement or repair.

19. Volkswagen (Sections 11 and 15): •

Supplier warrants that the parts shall conform to the specifications, standards, drawings, samples, descriptions and revisions furnished by VW. o Supplier warrants that the Parts will be merchantable and free of design defects, material defects and defects in workmanship. o Supplier warrants that the Parts which have been designed by the Supplier, and assembled based upon VW’s stated use and are fit and sufficient for the purpose intended by VW.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

o VW’s approval of any design, drawing, material, process or specification does not excuse Supplier’s obligations under these warranties. •

Supplier warrants that the goods are “competitive” in quality.

•

Supplier warrants that the parts will conform to all applicable laws, orders, regulations and standards in countries where the parts or vehicles which incorporate the parts are sold.  This Section specifically incorporates, without limitation, the US National Traffic and Motor Vehicle Safety Act, the Toxic Substances Control Act, and European Union Directive 2000/53/EC. The EU Directive sets quantified targets for reuse, recycling and recovery and addresses recyclability of new vehicles.

•

Warranty extends to VW customers in addition to VW.  This may create or expand customer right to bring suit against supplier. o Supplier warrants that the Parts are free from liens, claims and encumbrances.

o The warranty begins the date when the Supplies are delivered to VW (or as directed by VW) and expires on the later of (i) 3 years from the date of such delivery of Supplies, (ii) the expiration of the warranty period provided by applicable law, or (iii) the expiration of the warranty period offered by VW to end users of the parts installed on vehicles beginning when the vehicle is placed in service. Further, if VW voluntarily or pursuant to a governmental mandate offers to perform any remedial action regarding any parts into which the Supplies are incorporated, the warranty shall continue for such period of time as may be deemed necessary by VW or dictated by federal, state, local or foreign government where the Supplies are used or provided. o Supplier shall abide by the Supplier Claims Manual for the administration or processing of warranty chargebacks and will participate in and comply with warranty reduction or related programs. o Supplier must immediately notify VW in writing when it becomes aware of any ingredient, component, design or defect in the Parts that is or may become harmful to persons or property.  Note that this notice requirement is not identical to the requirements set forth in NHTSA reporting regulations and assigns broader responsibilities to the Supplier. 20. Volvo (Sections 1.1, 14 and 15.2.6): •

Supplier warrants that the goods (i) conform in all respects to the agreed or approved Technical Specifications, if issues, (ii) comply with all laws in all countries where the goods are to be sold, (iii) are free from defect in design, title, materials and workmanship, (iv) are suitable for the intended use, and (v) are free from any trace of prohibited materials or substances as stated in Volvo Car Instruction.

•

Supplier further warrants that it will perform all services in accordance with the Technical Specifications, if issued, and in a good and workmanlike manner, free from faults, exercising the knowledge, skill and care of an expert.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Supplier is liable for Non-Conforming Goods during the Warranty Period that begins on the date the goods are delivered to Volvo (or a third party designated by Volvo) and expires on the date that is the later of (i) the date stated in the relevant Volvo Car Instruction, or (ii) the date on which any applicable government requirement ends.

•

The time frames above do not apply when there is a systematic non-conformity that may cause or has damage or poses a significant threat of damage to property or the health and safety of any person or that result in a Field Service Action, whether mandatory or voluntary.

•

A Field Service Action is a recall, service action, extended warranty, safety, maintenance or improvement program, involving or relating to Non-Conforming Goods.

•

Supplier has no liability for any Non-Conforming Goods (i) resulting from any design specification provided by Volvo with respect to Build-To-Print Goods, (ii) resulting from normal wear and tear, willful damage, and negligence outside of Supplier’s or Supplier’s sub-supplier’s control, and (iii) if Volvo fails to inform Supplier of the Non-Conforming Goods within one (1) year of the non-conformance becoming apparent (Defect Trend) to Volvo.

•

Supplier’s warranty for any Goods repaired or replaced as permitted under Section 15.2 of Volvo’s terms shall continue to apply for the full remaining balance of the original warranty period.

21. MEMA OE Suppliers (Section 8.1): •

The parts must be free from defects in materials or workmanship and must conform to specifications, drawings, samples, and performance requirements incorporated in the contract and conform to Laws.

•

Supplier warrants good title, free of liens and encumbrances (other than those created by Buyer).

•

Supplier does not warrant design unless specifically stated in the Contract.

•

All other warranties (including warranties of merchantability or fitness for a particular purpose) are specifically excluded.

•

The warranty period is equal to the longer of the end user (consumer) warranty unless otherwise agreed or 3 years.

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Express warranty of title/freedom from liens

Express warranty of design?(e)

Y(g)

Express warranty of fitness for purposes?

BMW 2022

Express warranty of compliance with specifications, drawings and samples

Warranty period at least equal to consumer warranty Warranty expressly a warranty of future performance? Supplier duty to inform OEM of OEM design issues which may interfere with supplier part durability, warranty or performance.

BMW 2018

Specific Provisions Provided in Terms and Conditions FCA US S

Y(d)

Y(c)

Y(d)

Y(c)

FCA/Stellantis 2022

I. Parts Warranty – Dashboard Ford 2004 S

Y(d)

Ford 2021 S

Y(d)

GM Y

Honda S

Hyundai S

Kia S

Lucid Y

Mazda S

MBUSI S

Nissan Y

Y(d)

Rivian Y

Toyota 2009 Y

Y(b)

Y(d)

Y(f)

Toyota 2021 Y

Y(b)

Y(d)

VW Y(h)

Volvo

N(a)

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions must be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract

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(h) Supplier shall immediately notify Buyer in writing when it becomes aware of any ingredient, component, design or defect in Supplies that is or may become harmful to persons or property.

(g) Warranty that goods are “suitable for contractually stipulated use.”

(f) If purposes are communicated by Toyota.

(e) See discussion in Context and Questions of the relationship between a design warranty and a warranty of fitness for purpose.

(d) If parts are designed by Supplier.

(b) Toyota may extend for “substantial defects.”

(a) MEMA model terms provide that warranty is as specified on the Purchase Order.

Specific Notes

term.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

II. Recall – Context and Questions 1. Scope and Proofs These provisions explicitly call out responsibility for recall costs, yet they are closely tied to breach of warranty claims. The proofs for each usually revolve around whether the parts supplied were “conforming” or “nonconforming” to the relevant specifications, drawings, warranties, samples and validation parts. “Recall” is usually broadly defined to include “voluntary” recalls, field service actions and other decisions that may be in the control of the OEM. 2. OEM “Warranty Cost-Sharing” Programs OEM “warranty cost-sharing” programs typically exclude recalls. The costs associated with recall damage claims are often broader than warranty claims. These could include OEM claims for among other things: •

Investigation cases;

•

Administrative costs associated with the recall, such as postage, customer contacts, advertising;

•

Internal costs, such as intra-company transfer pricing and markups, and fixed costs, such as warehousing, to these claims;

•

These claims also often include hefty amounts associated with dealer markups for replacement parts and labor. These markups are mandated and set by statute in virtually every state now, although the specific laws of various states vary regarding how the markups may be measured;

•

In practice, unless they accept a tender of defense, Suppliers have little or no opportunity to impact the decision to recall, or to participate in the analysis leading to a decision to recall. Suppliers are also limited in their ability to understand and analyze the impact of the system on vehicle level variables or the failure mode which has actually triggered the recall.

•

Nevertheless, suppliers are liable under NHTSA regulations for failure to report safety defects with their equipment which the OEM fails to report. Therefore, if suppliers believe a part has a safety defect, it should discuss with the OEM and suggest that the OEM may wish to initiate a recall. If the OEM refuses, the supplier may find itself in a catch 22 in which it could face substantial penalties to NHTSA for failure to report, but to report against the OEM’s wishes could be very detrimental to the business relationship. Suppliers facing this situation should seek advice of counsel promptly.

3. Understanding the OEM’s Processes Understanding the OEM’s processes for calculating recall costs is essential to responding to a recall claim. At the very least, a Supplier facing a recall claim should request a detailed cost buildup for each component of the claim. The supplier may also wish to request a review of source/raw cost data regarding larger line items.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

4. Recall Numbers and Volume Have Increased The volume of recalls has reached unprecedented levels, and the volume of recall related warranty cost recovery claims, whether in litigation or private arbitration, appears to have increased commensurately. OEMs and suppliers should maintain rigorous procedures to ensure compliance with Applicable NHTSA Regulations. NHTSA regulations require a manufacturer of motor vehicles or motor vehicle equipment to report a safety defect within 5 working days of the date on which the defect is determined to exist. Penalties for failure to timely report can be imposed per day of noncompliance and can be very substantial. OEMs have safety committees and rigorous procedures to ensure that NHTSA regulations are followed. Because suppliers can be independently liable to NHTSA, and to the OEMs, suppliers should consider adopting their own safety committee and procedures to ensure compliance.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

II. Recall – OEM Comparative Analysis 1. BMW (2018) (Section 11.4) •

Supplier who delivers defective parts must indemnify BMW against claims of any recall of the parts or any components which incorporate the parts.

2. BMW (2022) (Section 11.4) •

No material changes from 2018.

3. FCA US (2021) (Sections 11 and 26) •

Supplier must indemnify FCA US for recall expenses.

•

Recall expenses may be resolved by binding arbitration.  Suppliers should carefully analyze the timing, scope and part/platform focus of any new FCA US recall (or warranty) claim to determine whether the alleged claim has been satisfied by a negotiated cure payment in bankruptcy.

4. FCA US / Stellantis (2022) (FCA US Sections 11 and 26 and Stellantis Global Section 21): •

No material additions or changes from FCA 2021.

5. Ford (2004) (Section 23) •

Ford is to notify Suppliers of a field service action (which includes a recall and other service actions) promptly and prior to the action if “reasonably practicable.”

•

Ford will provide rationale for the recall, review information presented by Supplier and determine all aspects of the recall.  Ford’s Terms and Conditions are particularly clear on the fact that Ford, and not the Supplier, reserves to itself sole right to determine whether a voluntary recall will be instituted, and the scope of the recall.

•

Supplier is liable for all costs of a field service action to remedy non-conformity in the parts, including the costs of any extended warranty or other actions negotiated with governmental authorities.  Note that it is exceedingly rare for a Supplier representative to participate in these types of negotiations, so the exposure is subject to Ford’s negotiation and judgment.

•

The parties will negotiate Supplier’s share of total costs based on the relative allocation of fault between Ford and Supplier (and other Suppliers if applicable).  The Supplier must consider whether it has sufficient access to the type and amount of information and resources necessary to reach a fair allocation of fault, and whether it has been given the time to do so.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Once Ford determines that Supplier is “likely to be liable” for some portion of field service action costs, or the parties have negotiated for 90 days without reaching agreement on cost allocation, Ford may unilaterally setoff up to 50% of the actual parts and labor costs involved (but not more than three times the aggregate price paid for the parts subject to the field service action).  This setoff occurs prior to any final determination of responsibility.

•

Ford’s unilateral cost allocation has no effect on the extent of their liability or rights to recovery.  Other OEMs may attempt to get to the same result by reference to generic “setoff” provisions, such as those discussed in Part Two, § VIII.

6. Ford (2021) (Section 23) •

Only material changes from 2004 Terms are: o Ford is no longer required to give Supplier advance notice of a Field Service Action, if practical. o Ford may recover costs of an extended warranty, regardless of whether it was negotiated with the government.  This change is probably intended to clear up an ambiguity or drafting error in the 2004 Terms.

7. General Motors (Section 25) •

GM can recover all costs of conducting a recall campaign or other corrective service action related to parts that fail to conform to the prescribed warranties. GM will be entitled to recover all damages, including direct, indirect, incidental and consequential damages and all legal and other professional fees and costs.

8. Honda (Section 6.1) •

Honda does not specifically address this topic, other than to require Supplier to indemnify Honda against costs resulting from any recall ordered by any federal, provincial, state, local, or foreign government.

9. Hyundai (Section 13) •

If Hyundai decides that a recall is necessary to remedy a breach of Supplier’s warranty or to comply with laws, Supplier must reimburse Hyundai for all costs incurred by Hyundai unless Supplier proves that there was no defect or deficiency in the parts.

10. Kia (Section 13) •

Same as Hyundai.

11. Lucid (Sections 7.2-7.5) •

Supplier is responsible for all costs of any Field Service Action or corrective Action.

•

If a government agency provides an extended warranty or customer incentives to complete a corrective action, Supplier will also incur these costs.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

12. Mazda (Section 9.3): •

Seller will cooperate with Mazda in any root cause analysis or investigation of any safety, emissions or personal injury involving the Product.

•

If there is a Mandatory (government required) recall, Seller shall, and shall cause its subcontractors to, cooperate and provide all requested information needed for Mazda to fulfill its obligations.

•

Seller is liable for all “Recall Losses” incident to a Mandatory Recall, related to the Product, unless solely caused by Mazda. Recall Losses means typical warranty costs, plus all cost’s incident to the government investigation, including attorney fees and government penalties.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 18): •

In the event MBUSI or its parent, Mercedes, initiate a Recall Campaign, Supplier shall bear the full cost and expense of the campaign unless Supplier proves that there was no defect or deficiency in the recalled parts.

14. Nissan (Section 11): •

Supplier must reimburse Nissan or its Affiliates for all costs incurred by Nissan (including but not limited to the amount of any statutorily calculated dealer rates for parts and labor, costs of notification, penalties, fines, and buy-backs) in a recall or service action, to the extent attributable to Supplier.

•

All decisions regarding recalls are to be made by Nissan in its sole discretion.

•

Supplier shall notify Nissan within twenty-four (24) hours after becoming aware that a decision has been made (by Supplier, a customer of Supplier, or a government authority) to conduct a recall or service campaign or similar program relating to (i) the Parts; or (ii) products substantially similar to the Parts, including retail parts or accessories.

15. Rivian (Section 18.1(b)): •

Supplier must indemnify and hold harmless Rivian for any service campaign, product recall campaign, corrective action, or other voluntary or involuntary action or effort.

16. Scout Motors (Sections 11.c and 15): •

The general warranty period may be extended if Scout voluntarily or pursuant to a government mandate, makes an offer to owners of vehicles (or other finished products) to provide remedial action or to address a defect, the warranty continues for such period of time as deemed necessary by Scout or as dictated by the applicable law.

•

Supplier must reimburse Scout for an incidental, consequential or other damages arising out of conducting recall campaigns, customer field service actions or other corrective service actions.

17. Toyota (2009) (Sections 5.5(a) and 5.5(b)): •

Supplier shall indemnify Toyota for recall costs, including actual, incidental and consequential damages.

•

If a recall is attributable to multiple Suppliers, Supplier agrees to negotiate in good faith with Toyota and all relevant Suppliers to allocate costs.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Recall includes “voluntary” recalls, field service actions and the like, not only government required recalls.

•

Supplier, Toyota and other affected suppliers will negotiate their share of the costs of: (i) complying with our contesting the recall; and (ii) providing remedial rights to Toyota and its customers.

•

The Supplier is responsible for its share of the costs.

•

Recall obligations survive the expiration of the parts warranty.

18. Toyota (2021) (Section 6.5): •

The 2021 Terms are an extensive stylistic re-write, but substantive changes are limited. The following supplements the 2009 summary: o Supplier must indemnify Customers, as well as Toyota.

o For a recall relating to a PDAD Item, recoverable costs include consumer notice costs and costs incurred by Dealers and Distributors. 19. Volkswagen (Sections 15 and 17): •

VW addresses recall within both its Indemnity and its Remedies Sections. It provides that Supplier will reimburse VW for any incidental, consequential or other damages (including lost profits, lost fees, lost business, loss of use and costs associated with business interruptions) arising out of Supplier’s breach or supply of non-conforming parts, including the cost of conducting recall campaigns, customer field service actions or other corrective service actions.

•

VW’s claimed remedies include reasonable attorney fees and other professional fees, including settlements and judgments incurred by VW and other costs associated with VW’s administrative time, labor and materials.  The scope of VW’s claimed remedies (both with respect to recall and otherwise) is considerably broader than most OEMs’ remedy provisions.

20. Volvo (Section 15.3): •

Volvo has the sole right to decide if a Field Service Action should be conducted and how to conduct it regardless of whether required by law or whether initiated voluntarily.

•

Volvo will promptly inform Supplier to remedy Non-Conforming Goods but Volvo’s failure to do so does not affect the Supplier’s liability.

•

If Volvo elects to conduct a Field Service Action, Volvo can require Supplier to pay in advance for up to half of all costs as estimated by Volvo, up to 3 times the aggregate price under the Purchase Agreement if Volvo has determined that Supplier is likely to be liable and the parties have not otherwise agreed how to allocate the costs.

•

Actual costs are limited to the cost of parts and labor incurred by Volvo and its affiliates, calculated pursuant to Volvo Car Instructions.

•

Supplier’s advanced payment is not an admission of liability nor a waiver of any right.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

21. MEMA OE Suppliers (Section 8.3): •

Supplier is liable for the costs of a recall campaign only if and to the extent that the parts do not conform to the production parts warranties during the warranty period.

•

The extent of Supplier’s liability will be negotiated between the parties, giving consideration to a good faith allocation of responsibility for the recall, the reasonableness of costs incurred, the quantity of parts purchased, the contract price and other relevant factors.

•

Buyer must notify Supplier of a potential recall, provide relevant information, provide a reasonable opportunity to participate in settlement negotiations, and consult with Supplier about cost-effective remedies.

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Advance Notice of Recall?

Supplier liable even if no defect/breach?

Liability apportioned based on fault?

Supplier right to participate in allocation process?

BMW 2022

S(a)

FCA/Stellantis 2022

BMW 2018

Specific Provisions Provided in Terms and Conditions FCA US 2021

II. Recall – Dashboard Ford 2004 Y

Y(b)

Ford 2021 S

GM S

Honda S

Hyundai S

Kia S

Lucid S

Mazda N

MBUSI S

Nissan S

Rivian S

Scout Motors S

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2021 Y

VW Y

Volvo S

Page 179

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(b) Prompt notice is required, and advance notice is required if practicable.

(a) While FCA US’s Terms and Conditions are silent on recall issues, FCA US’s warranty provision provides for fault-finding and liability apportionment.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

III. Price Warranty – Context and Questions 1. Focus of Section This section focuses on “best price” or “most favored nation” warranties that some OEMs include in their terms. 2. Clauses May be of Dubious Practical Value It is likely that most OEMs do not include a pricing warranty because it is usually both unnecessary and ineffectual. It is usually unnecessary, because the OEMs typically have other commercial and contractual leverage to extract favorable pricing (or to resource business) without regard to a pricing warranty. It is usually ineffectual because such warranties are virtually impossible to apply to specially designed goods. Even for raw materials and standard parts, differences in timing, volumes, and other commercial circumstances often make pricing warranties difficult to apply. 3. Requests for Supplier’s Commercial Terms with Its Other Customers Nevertheless, pricing warranties can potentially affect a Supplier, especially Suppliers of standard goods and raw materials. Among other things, it may provide a basis for the OEM to demand information on commercial terms with other customers.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

III. Price Warranty – OEM Comparative Analysis 1. BMW (2018): •

Does not address this topic.

2. BMW (2022): •

Does not address this topic.

3. FCA US (2021) (Section 9): •

Supplier must charge FCA US the lowest price that Supplier charges to other OEMs for the same or similar parts or services in similar quantities.

•

Supplier may not charge a higher price for the same parts sold to a third party if the third party is incorporating the same parts into an assembly to be sold to FCA US (other than any additional costs actually incurred by Supplier).

•

Reductions in price awarded to other OEMs must be awarded to FCA US “correspondingly.”  This “corresponding reduction” provision might mean that a reduction is required even if FCA US’s price is not higher. For example, if FCA US’s price was 5% better than another OEM, but that other OEM receives a 2% reduction, this provision may be read by FCA US to require that FCA US receive the same 2% reduction.

4. FCA US / Stellantis (2022) (FCA US Section 9 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global does not address this topic.

5. Ford (2004): •

Does not address this topic.

6. Ford (2021): •

Does not address this topic.

7. General Motors: •

Does not address this topic.

8. Honda: •

Does not address this topic.

9. Hyundai (Section 14): •

Supplier must charge Hyundai the lowest price that Supplier charges to other OEMs for the same or similar parts or services in similar quantities.

•

Supplier may not charge a higher price for the same parts sold to a third party if the third party is incorporating the same parts into an assembly to be sold to Hyundai (other than any additional costs actually incurred by Supplier).

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•

Reductions in price awarded to other OEMs must be awarded to Hyundai “correspondingly.”  This “corresponding reduction” provision might mean that a reduction is expected even if Hyundai’s price is not higher.

10. Kia (Section 14): •

Same as Hyundai.

11. Lucid (Section 8.1): •

Supplier must reduce its price to Lucid if it reduces its price to others for the same of similar Goods or Services.

12. Mazda (Section 3.3): •

If the Product is also sold to others, the price will not exceed the price to other buyers.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 15.14): •

Price must be no higher than price to other customers for the same or similar parts in similar quantities.

•

If Supplier lowers price to other customers, price to MBUSI must be reduced to same extent.  This “same extent” provision might mean that a reduction is required even if MBUSI price is not higher.

14. Nissan: •

Does not address this topic.

15. Rivian (Section 8): •

Supplier represents that all prices comply with all applicable laws.

•

Supplier agrees to ensure that the price charged to Rivian remains competitive with the price for similar goods or services available to Rivian from other suppliers.

•

Supplier agrees to participate in any Rivian cost saving or productive programs and to initiate their own such programs.

•

Supplier agrees that Rivian shall receive the full benefit of all discounts and other favorable terms.

16. Scout Motors (Section 5f): •

Supplier represents and warrants that the prices are, and will remain, no less favorable to Scout than any price sold to another customer for the substantially the same volume.

17. Toyota (2009) (Section 2.2(a)): •

Parts expressly designated in a Purchase Order as being provided on an “interim price basis” may not exceed the average price that Supplier charges to other OEMs for the same or substantially similar items of comparable quantity and quality.

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18. Toyota (2021): •

The 2021 Terms do not address this topic.

19. Volkswagen (Sections 5 and 11): •

Supplier warrants that price is, and will remain, no less favorable to VW than any price Supplier presently or subsequently offers any other customer for the same or substantially similar goods and/or services for substantially similar quantities. If Supplier offers a lower price for the same or substantially similar goods and/or services to any other customer during the term of the Order, then Seller will immediately offer VW the same price as offered to Supplier’s other customer.

•

Supplier warrants that price is “competitive.”

20. Volvo (Section 13.7): •

If another supplier offers Volvo equivalent goods at a total cost lower than the total cost of the same volume of goods and Volvo notifies Supplier, then Supplier shall reduce the price within sixty (60) days or Volvo may purchase from the other supplier with no liability.

21. MEMA OE Suppliers: •

Does not address this topic.

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IV. Indemnification and Product Liability – Context and Questions 1. Indemnification for Acts and Omissions of Lower Tier and/or Directed Suppliers OEMs regularly seek indemnification from Suppliers for the acts or omissions of their lower tier component or material Suppliers. This usually occurs regardless of whether the Suppliers were directed by the OEM. OEMs take the position that the Supplier has the obligation to “manage the supply base” even if that supply base was mandated, in whole or in part, by the OEM. 2. Indemnity and Fault A Supplier’s indemnity obligation for its goods is not necessarily tied to its actual fault or breach. A number of OEMs tie indemnity to “alleged defects.” This likely means that if a defect is alleged the Supplier is obligated for the costs of defense, even if its product is ultimately found to be non-defective. Other OEMs do not explicitly require even an allegation of fault. 3. Tender/Control of Defense While OEMs often tender the defense of an action to component part Suppliers, several reserve the right to control the defense and select counsel even if the tender is accepted. Similarly, the OEMs Terms and Conditions, with the limited exception of BMW, do not include provisions that require specific notice of claims to the indemnifying Supplier or the consent of that Supplier to a compromise or settlement of the claim. 4. Notice and Consent Provisions While notice and consent by the OEM is not usually required in the Terms and Conditions, an OEM’s failure to do so may alter its rights to pursue indemnification and its burden of proof in pursuing indemnification, especially if seeking reimbursement for voluntarily settlement of a contested claim. 5. Alternative Dispute Resolution – Participation and Monitoring As alternative dispute resolution and private arbitration become more common, Suppliers must be mindful of their ability to meaningfully monitor these proceedings or participate in the defense of claims for which they may be called upon to provide indemnification. Many private arbitrations, for example, do not even result in a written record of the proceedings. 6. Consequential and Incidental Damages While certain OEMs, such as Toyota, expressly highlight a right to collect consequential and incidental damages, other OEMs seek the same type of damages (even if their contracts are silent on the topic) through the general provisions of their Terms and Conditions, the UCC and the common law.

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7. Indemnity vs. Damages In general, the types of losses recoverable as “indemnity” may also be recoverable as damages for breach of contract. This means that the fact that an OEM’s terms do not provide for indemnity for a type of loss does not mean that the loss is not recoverable. 8. Intellectual Property Indemnity The OEMs separately provide for indemnity for intellectual property infringement and related claims. Those provisions are addressed in Part Four, § III.

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IV. Indemnification and Product Liability – OEM Comparative Analysis 1. BMW (2018) (Sections 10.3, 10.4, 11): •

Supplier must indemnify BMW against all claims, losses, and damages for personal injury or property damage arising out of a defect or alleged defect in the parts, Supplier’s breach of the contract, Supplier’s fault or negligence, or Supplier’s failure to comply with applicable law.

•

Supplier must indemnify BMW against all claims, losses, and damages incurred by BMW from defective parts not discovered by BMW before incorporation into the vehicle. See also, Part 2, Section III.

•

Supplier must indemnify BMW against claims arising out of performance of work on BMW’s premises, unless caused by BMW’s negligence or intentional acts.

•

Supplier must indemnify BMW against all claims, losses and damages arising out of a recall of any product into which Supplier’s goods have been incorporated.

•

BMW must notify Supplier of a claim for which indemnification may be sought, and Supplier must provide reasonable assistance in the defense of the underlying claim.

•

If an indemnification claim relates to allegedly defective parts, BMW and Supplier must attempt to negotiate a defense agreement that apportions liability and establishes a framework for cooperation in the defense of the underlying claim.

2. BMW (2022) (Sections 11.2, 11.3, 11.4 and 11.5): •

No material changes from 2018.

3. FCA US (2021) (Sections 11 and 24): •

Supplier must defend and indemnify FCA US against all claims, losses, and damages arising out of any actual or alleged act, omission, or negligent work of Supplier in the performance of the Purchase Order (including injury or death to persons or damage to property).

•

Supplier must indemnify FCA US against a failure of Supplier (or its subcontractors) to comply with applicable laws and regulations.

4. F CA US / Stellantis (2022) (FCA US Sections 11 and 24 and Stellantis Global Sections 10 and 21): •

No material additions or changes from FCA 2021, except Supplier must indemnify for costs of quality-issue investigation and containment (Section 10).

5. Ford (2004) (Section 25): •

Supplier must indemnify Ford against litigation costs resulting from a third-party claim arising from allegedly defective parts, Supplier’s alleged failure to comply with the contract, or any alleged negligence in the design or manufacture of the parts.

•

Litigation costs include the costs to defend the claim, as well as payment of any settlement, judgment, or award.

•

Litigation costs will be apportioned by Ford in good faith based on relative fault.

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•

Supplier must indemnify Ford against claims arising out of performance of work on Ford’s premises or while using Ford’s property, except for claims arising out of Ford’s sole negligence.

•

Ford controls the defense of the underlying claim for which Supplier must indemnify.

6. Ford (2021) (Section 25): •

No changes from 2004.

7. General Motors (Sections 16, 25 and 31): •

Supplier must indemnify for “any failure of Seller to fully perform any of its obligations under this Contract.”  In substance, every contract breach gives rise to an indemnity claim.  The practical significance of the expansive indemnity right is probably limited to: (1) creating a duty to defend; and (2) expanding the limitations period (indemnity claims do not accrue until the indemnifiable liability accrues). Otherwise, the damages available to GM in a breach of contract claim are defined so expansively that indemnity adds little to the seller’s exposure.

•

Supplier must indemnify GM against performance of the work by Supplier on GM’s premises, or performance of work utilizing GM’s property, except for claims arising out of GM’s sole negligence.

•

Supplier must indemnify GM against any claims, demands or expenses related to Supplier’s noncompliance with applicable laws.

8. Honda (Section 6): •

Supplier must defend, indemnify and hold harmless Honda and its affiliates, parents, subsidiaries, and representatives and each of their respective shareholders, members, partners, managers, officers, directors, employees, and agents (individually and collectively with Buyer as “Indemnitee”) from and against any loss, cost, liability, damages, claims, demands, actions, or lawsuits, including attorney fees and other professional fees and costs, arising from or relating to directly or indirectly (i) acts and omissions of Supplier’s employees, independent contractors, agents, or other representatives: (ii) the parts or any intellectual property related claim; (iii) Supplier’s performance; or (iv) Supplier’s breach of any written representation or warranty made to or for the benefit of Honda.

•

Supplier expressly waives any and all statutory or legal immunity it might be entitled as an employer in compliance with workers’ compensation laws or any other employee benefit statute or law.

•

Supplier, except to the extent prohibited by applicable law, shall defend, indemnify, and hold Honda free and harmless from all losses, arising from or relating to loss of or damage to property or injuries to or death of persons, of any kind or nature, arising out of or resulting from acts or omissions of supplier or supplier’s agents. The defense provided by Supplier for the Indemnitee under the agreement shall be provided by legal counsel and other professionals satisfactory to the Indemnitee. Notwithstanding, an Indemnitee

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may, at its option, engage its own attorneys and professionals to defend or assist Indemnitee in connection with a claim, and also at Indemnitee’s option, such attorneys shall control resolution of the claim. Under such circumstances, Supplier shall promptly pay (or reimburse Indemnitee, if applicable) on demand all amounts due and otherwise payable by Indemnitee on receipt of a written statement of the amounts incurred or to be incurred by Indemnitee. •

Supplier must defend and indemnify Honda against claims arising out of actions of Supplier’s employees on Honda’s premises, and Supplier must waive its immunity under workers compensation or other benefit statutes or laws.

•

The provisions of the indemnity section shall survive expiration or termination of the agreement and any performance of such obligations shall continue indefinitely. Whether Honda’s defense under the indemnity section is controlled by Honda and its legal counsel or Supplier and its legal counsel, at Honda’s request, Supplier will take all actions necessary to include and allow Honda and its legal counsel to participate in any claim evaluations, defense strategy discussions, and settlement negotiations and evaluations (including discussions relating to settlement funding) conducted by Supplier and/or its legal counsel and insurers. If Honda retains legal counsel in order to secure or attempt to secure any rights and benefits under the indemnity section of the agreement, the Supplier shall reimburse Honda for the legal costs, expenses and fees (including, without limitation, attorney fees) promptly following receipt of a written statement of amounts incurred by Honda.

9. Hyundai (Section 18): •

Supplier must defend and indemnify Hyundai against all claims, losses, and damages for personal injury or property damage or economic damage arising out of Supplier’s performance of the Purchase Order, except to the extent arising out of negligence or willful misconduct by Hyundai.

•

Supplier must indemnify Hyundai against claims arising out of performance of work on Hyundai’s premises, except to the extent arising out of negligence or willful misconduct by Hyundai.

10. Kia (Sections 18 and 21): •

Same as Hyundai, except as noted.

•

Supplier also must indemnify Kia for any claims made against service parts.

11. Lucid (Section 10): •

Supplier will indemnify, defend and hold harmless Lucid and its affiliates, directors, officers, employees, contractors, customers, and agents (“Indemnified Parties”) from all liability, demands, claims, losses, costs, judgments, fines, and other expenses, including attorney fees and costs, that come from any claim related to Supplier’s noncompliance or breach of any warranty or representation, any service campaign, product recall, or corrective action, whether or not it was done voluntarily.

•

Supplier will indemnify, defend and hold harmless the same Indemnified Parties for any infringement or misappropriation of any intellectual property right, or any misrepresentation.

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•

Supplier will pay for and handle the defense if Lucid chooses to do so. Supplier can choose the lawyer and run the defense, but if the terms of a settlement could affect Lucid in any way, Supplier must tell Lucid and get permission before reaching a settlement.

•

As an alternative to the above, Lucid may choose to handle the defense itself, with Supplier reimbursing Lucid each month for all expenses, attorney fees, and costs.

•

Lucid is not responsible to Supplier for expected or lost profits, interest, penalties, incidental, consequential, special, exemplary, or punitive damages, attorney or other professional fees and costs.

12. Mazda (Section 11): •

Seller shall indemnify against “Liabilities” incurred in an actual or threatened “Action” resulting from any (i) violation of any Law; (ii) breach of contract or warranty; (iii) negligence or willful misconduct by Seller or its subcontractors; (iv) infringement or misappropriation of 3rd Party IP rights; (v) any claims of Seller personnel; (vi) Seller’s failure to pay taxes; (vii) the physical integrity and security of shipments, including the introduction of unauthorized materials or personnel; (viii) damage to Mazda Property; (ix) Recall and Warranty losses; or (x) manufacturing or design defects (unless solely caused by Mazda).

•

For potential IP infringement, Seller must notify Mazda and take commercially reasonable actions to maintain Mazda’s uninterrupted use and supply and otherwise protect Mazda from Liabilities. Mazda may direct Seller to cease use of the potentially infringing materials, refund to Mazda all “fees” for products that have not been provided; and pay all amounts necessary to maintain supply during a transition period to a noninfringing alternative.

•

Mazda shall notify Seller of in writing of any Action or Liability for which it seeks indemnity and cooperate with Seller, at Seller’s cost, in any investigation or defense.

•

Seller may not settle any Action that adversely affects Mazda without Mazda’s consent.

•

Mazda may participate in the defense of the Action at Mazda’s expense.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 16 and 23): •

Supplier is required to indemnify and hold harmless MBUSI against claims for personal injury or death, for damage or loss of any property and for claims arising out of any act, omission or negligence of Supplier, including those based on alleged defects in the design, materials, manufacture or sale of the parts.

•

If the product liability claim relates to or arises out of a given or alleged defect in the part, Supplier must indemnify MBUSI and Mercedes and any authorized distributor of vehicles on which the parts were placed against any and all claims, liabilities, losses and damages, including reasonable legal fees and expenses based upon product liability, regardless of the legal theories to the claim.

•

In the event that any claims, demands or lawsuits are brought against MBUSI or Mercedes relating to the parts relating to specifications furnished by Supplier, trade names, trademarks, copyrights or patents in connection with the manufacturing processes or based upon unfair competition, Supplier shall indemnify and hold harmless MBUSI

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and Mercedes against all actions, including paying lawsuit costs, including reasonable legal fees and expenses. •

Supplier must indemnify MBUSI with respect to Supplier’s activities on the premises of MBUSI.

14. Nissan (Section 12): •

Supplier must defend and indemnify Nissan (and its dealers, affiliates and their dealers, and their respective officers, directors and employees) against claims arising directly or indirectly out of Supplier’s performance under the contract or the use or sale or importation of the parts, including design (regardless of whether Supplier has been negligent).

•

Nissan may require Supplier to assume the defense of any claim subject to indemnification.

•

Nissan may access all information of Supplier related to an indemnified claim.

•

Supplier’s liability is not be barred by the negligence of Indemnitees, but extends to the full amount of fault attributable to Supplier for any act, omission, defect, or other condition out of which a claim, damage, or loss arises, even if Indemnitees were also negligent in connection therewith.

•

Supplier agrees that it may be required to indemnify Indemnitees for fault assigned to or alleged against Indemnitees in a proceeding commenced by a third party. Supplier’s absence from such proceeding or the inability to apportion fault to Supplier in the manner specified in Section 12 of the terms in such proceeding, will not alter Supplier’s obligations to Indemnitees.

15. Rivian (Sections 18 and 22): •

Supplier shall indemnify and hold harmless Rivian and its affiliates, directors, officers, employees, contractors, customers, and agents form all liability, demands, claims, losses, costs, judgment, fines and other expenses, including attorney fees and costs, arising out of any claim relating to Supplier’s noncompliance or breach of any warranty or representation, any service campaign, product recall, or corrective action, whether or not voluntary, any infringement or misappropriation of intellectual property, releasing or terminating a lien, or any product liability claim.

•

Supplier waives the application of the doctrine of comparative negligent or similar doctrines.

•

Rivian will provide Supplier written notice of any claim for which indemnification will be sought. However, failure to give notices will not diminish Rivian’s right to indemnification.

•

Supplier, at Rivian’s option and at Supplier’s expense, will undertake the defense. Supplier may select legal counsel and control the defense but must first inform and obtain authorization from Rivian before any settlement if the terms could affect Rivian in any way.

•

In the alternative to the above, Rivian may elect to undertake the defense with Supplier reimbursing Rivian on monthly basis for all expenses, attorney fees and cost.

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•

In no event will Rivian be liable to Supplier for anticipate or lost profits, interest, penalties or for incidental, consequential, special, exemplary or punitive damages, or attorney or other professional fees and costs.

16. Scout Motors (Section 17): •

Supplier assumes all and sole responsibility for any injury to person, including death, or damage to any property, resulting from, or in connection with the Supplies by Supplier, its sub-suppliers, subcontractors, officers, agents or employees.

•

Supplier must defend, indemnify and hold harmless Scout, its dealers and users of the products sold by Scout (or the vehicles in which they are incorporated) and all of their respective agents, customers, invitees, subsidiaries, affiliates, successors and assigns, against all damages, losses, claims, liabilities, and expenses (including attorney’s and other professional fees, settlements and judgments) arising out of the Goods, including the cost of recall campaigns and Scout corrective service actions.

•

If Supplier performs any work on Scout’s premises or utilizes the property of Scout, Seller must defend, indemnify, and hold harmless Scout and its agents, customers, invitees, subsidiaries, affiliates, successors, and assigns, against all damages, losses, claims, demands, liabilities and expenses (including attorney’s and other professional fees, settlements and judgments) arising out of or resulting from damages to the property of or personal injuries (including death) to Scout, its employees or agents or any other person on or using Scout property.

17. Toyota (2009) (Sections 4.3, 4.6, 5.5 and 6.16): •

Supplier must indemnify Toyota against all costs and damages, including consequential and incidental damages, relating to a recall, property loss, or personal injury, including costs incurred by Toyota in trying to remedy the situation, if Toyota determines that Supplier is the responsible party.

•

Toyota controls the defense of the underlying claim for which Supplier must indemnify.

•

Supplier must defend and indemnify Toyota for all costs and damages resulting from Supplier’s use of the Toyota Supplier Network.

•

Supplier must indemnify Toyota against any damages or expenses related to Supplier’s noncompliance with any manufacturing and legal requirements.

18. Toyota (2021) (Section 7): •

The following supersedes the 2009 Terms.

•

Supplier must indemnify Toyota, its representatives, successors and assigns from any and all Losses based upon, relating to, arising from, or were alleged to have been caused by a Supplier Party in connection with, among other things: o Breach of the Agreement.

o Violation of any Legal Requirement, including causing a vehicle to not comply with a Legal Requirement. o Any Product Related Claim caused by Supplier, as determined by Toyota. o Unfair competition related to the Items. Page 192

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•

Supplier must defend Indemnification Claims at its sole expense. Toyota must approve Supplier’s counsel may assume the right to defend and settle at its own discretion at Supplier’s expense.

•

Supplier may not compromise or settle any Indemnified Claim without Toyota’s consent.

•

Where an IP Infringement Claim results, or is likely to result, in an injunction or order that prevents Toyota from using the IP, Supplier must either (at Toyota’s discretion) secure a license, modify the Item, or replace the Item.

•

If an indemnity payment or reimbursement made by Supplier to a Toyota Party is subject to any tax, Supplier must pay Toyota an amount equal to the tax.

•

Supplier will not be liable for Losses to the extent such Losses are caused by Toyota’s gross negligence or intentional misconduct.

19. Volkswagen (Section 17): •

VW reserves, to the fullest extent permitted by law, the right to be fully indemnified by the Supplier for personal injuries or death and property damage of any kind or nature, which result from Supplier’s furnishing of the parts to VW.

•

Supplier’s indemnification obligations extend to parts provided by lower-tiered suppliers and subcontractors.  This probably does not expand Supplier’s liability, since it is likely responsible for its subcontractors as a matter of law.

•

Supplier must defend, indemnify and hold VW, its dealers, and users of the parts harmless with respect to all expenses associated with the supply of defective or non-conforming parts. This is expressly extended to costs associated with recall campaigns, field service actions or other corrective service actions that, in VW’s reasonable judgment, are required because of non-conformities in the Parts.

•

Supplier’s obligation to defend and indemnify under this Section applies regardless of whether the claim arises in tort, negligence, contract, warranty, strict liability or otherwise – except for those claims which arise as a result of VW’s sole negligence.

•

VW reserves the right to be represented by and actively participate in the defense and resolution of any matters for which it claims indemnity through its own counsel, at Supplier’s expense.

20. Volvo (Sections 1.1 and 15): •

•

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21. MEMA OE Suppliers (Section 8): •

Supplier must defend and indemnify Buyer against third party claims for: (i) personal injury; (ii) property damage; or (iii) economic loss, all to the extent arising out of defective, negligent or non-conforming performance, except that.

•

If the Buyer or others materially contributed to the loss, it will be equitably allocated among the responsible parties.

•

There is no indemnity for losses arising out of Buyer’s design or specifications. Inadequate installation, maintenance, etc. or integration.

•

Supplier must also indemnify for intellectual property infringement.

•

Buyer must inform Supplier promptly after Buyer becomes aware of the basis for a claim.

•

The parties will cooperate in the investigation and defense of the claim.

•

Buyer may not settle the underlying claim without Supplier’s consent, which may not be unreasonably withheld or delayed.

•

Sections 8 and 11.7 are the only indemnity rights under the Contract.

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BMW 2018

BMW 2022

FCA US 2021 S

FCA/Stellantis 2022

Indemnify OEM for personal injury, product liability and property damage claims(b) Control of defense, even if tender accepted Limitation of liability if OEM is negligent OEM to notify Supplier of claim Apportionment at discretion of OEM

Specific Provisions Provided in Terms and Conditions Ford 2021 Y

Y(c)

Ford 2021 Y

Y(c)

GM S

Y(c)

Honda S

Hyundai S

Kia

IV. Indemnification and Product Liability – Dashboard Lucid S

Mazda N

MBUSI S

Nissan S

Rivian S

Scout Motors S

N(d)

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2021 S

N(d)

VW S

Volvo S

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Y(a)

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(d) Toyota reserves to itself the right to determine if the Supplier is the responsible party

(c) This express Ford and GM limitation is only with respect to claims arising out of work done on Ford or GM premises, or while using Ford or GM property.

(b) Even those OEMs which do not specifically call out a requirement to indemnify for intellectual property claims will likely rely on the broad indemnification clauses and the UCC to pursue such claims.

(a) MEMA’s obligation is to defend and indemnify those claims, losses and damages for personal injury or property damage to the extent arising out of Supplier’s defective design or manufacture of part or Supplier’s negligence.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

V. Default and Remedies – Context and Questions 1. Focus and Related Concepts This section focuses on termination remedies for cause, default, breach and the like. The following discussion and summary will generally use termination for cause or for default to refer to the OEMs’ termination rights, other than termination for convenience. Related topics are covered elsewhere: •

The OEMs’ right to terminate for convenience is addressed in Part One.

•

Non-termination remedies for non-conforming goods are addressed in Part Two, §§ III and IV and Part Three, §§ II and III.

•

Remedies for violation of IP and related rights are addressed in Part Four, §§ I, II, and III.

•

Supplier rights and obligations following termination are addressed in Part One, § IV.

2. Termination for Cause Since most OEMs can terminate the contract at any time without cause, the practical effect of a termination for cause is usually that: (1) the OEM’s payment obligations to the Supplier are more limited than for a termination without cause (the sole obligation is often payment for finished goods delivered prior to termination); and (2) the OEM may recover damages and costs. Even if a particular breach does not trigger a right of termination, the OEM will have the right to damages and other non-termination relief, both under the express OEM terms and under general principles of contract law. 3. Similarity of OEM Default and Termination Terms Many of the differences in the termination provisions among the various OEM forms are superficial. In other words, although the language varies between the forms, in most scenarios a default under one OEM’s terms would also be a default under the others. 4. A Related Concept – Termination Under the UCC The express contractual termination remedies should be considered in the context of the usual termination remedies available under the UCC. In particular, the typical blanket Purchase Order for parts is an installment contract under the UCC (See UCC 2-612) allows termination only if a breach “substantially impairs the value of the whole contract.” None of the OEMs expressly limit their termination rights to breaches which substantially impair the value of the whole. Instead, all OEMs permit termination for any breach, seemingly without regard to severity. (It is an open question whether a court would interpret these broad provisions to permit termination for less substantial breaches. 5. Reasonable Grounds for Insecurity and Adequate Assurances The UCC allows any party which has “reasonable grounds for insecurity” about the other party’s intention or ability to perform to demand adequate assurances of performance and to terminate for breach if those assurances aren’t given (See UCC 2-609). In other words, the © 2026 MEMA Original Equipment Suppliers

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demand for assurances allows a seller with a well-founded concern that a buyer won’t pay or a buyer concerned that a seller won’t ship to bring matters to a head; rather than having to wait for the payment or the parts to not arrive. There are not bright line tests for what constitutes “reasonable grounds for insecurity” or “adequate assurances.” However, courts are reluctant to allow a party to use the process as a means of gaining additional rights, rather than assuring performance of existing duties.17 A demand for assurance is frequently the last step before litigation, and considerable care should be taken in both issuing and responding to a demand. Legal advice is often prudent. e terms. 6. Insolvency, Bankruptcy and Other Financial Distress All OEMs allow for termination for supplier insolvency. Generally, these provisions are triggered by objective circumstances, such as the filing of a bankruptcy petition or execution of an assignment for the benefit of creditors. However, less objective forms of financial distress are an act of default under Toyota (“material adverse change in the financial condition”) terms. Note that Section 365(e) (1) of the US Bankruptcy Code invalidates and overrides any provision in a contract that purports to allow termination solely because of a bankruptcy filing or the insolvency or financial condition of the party prior to the commencement of a bankruptcy case. The Bankruptcy Code only applies to a US bankruptcy filing and does not apply to a finding of insolvency outside of the US bankruptcy context. 7. Change of Control Various types of change of control are considered an act of default by most OEMs, although the precise transactions covered vary. 8. Notice and Opportunity to Cure Most OEM terms provide for notice or opportunity to cure some breaches. The specific types of breaches covered (or excepted from) the right to cure varies significantly. The cure periods range from 10-30 days. The related questions, such as what constitutes cure, whether cure is possible, and whether allowing an opportunity to cure would be futile can be both legally and factually complex with uncertain outcomes. For example, if a Supplier is required to deliver 1000 conforming parts on a date certain and the delivery is late or nonconforming, it is not possible to go back in time and make a timely, conforming delivery. OEMs frequently take the position that cure is impossible in such situations, while Suppliers argue that cure is possible by providing conforming parts within the cure period (and perhaps taking other steps to mitigate the consequences of the earlier failure and/or taking steps to prevent future failures).

See, e.g., Precision Master v. Mold Masters Co. 2007 Mich. App. LEXIS 1736 (Ct. App. July 12, 2007)

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9. Supplier’s Rights to Terminate Only Nissan expressly gives the Supplier a broad right to terminate for an OEM breach. The other OEMs are silent on Supplier termination for breach. This silence may mean that a Supplier may terminate on the grounds generally available under UCC Article 2, i.e., if the breach “substantially impairs the value of the whole contract.” 10. The MEMA OE Suppliers Model Terms’ Approach The MEMA OE Suppliers model terms permit either party to terminate for a default, and specifically limit damages to those arising directly out of the default. Consequential damages (such as lost profits, damage to reputation, etc.) are specifically excluded. From the Supplier’s standpoint, the sole remedy of repair or replacement for non-conforming parts is ideal.

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V. Default and Remedies – OEM Comparative Analysis 1. BMW (2018) (Sections 2.6, 2.7, 2.8, 10.3 and 22.4): •

Although language is unclear, it appears that BMW may terminate for breach only for “extraordinary reasons.” Structure of provisions is unclear, but it appears that extraordinary reasons means breach, violation of law (if continuation of contract is unreasonable, or the offering or payment of a bribe to BMW.

•

If termination is permissible, but breach is curable, Supplier is allowed 30 days to cure.

•

BMW may terminate if Supplier “repeatedly” supplies defective Goods, if it gives notice and Supplier continues to supply defective goods.

•

Either party may terminate the contract if the other is insolvent or files for bankruptcy.  See ¶6 of the “Context and Questions” above, however, which highlights the limitations the United States Bankruptcy Code places on these types of provisions.

•

If BMW has the right to terminate one contract, it may terminate all contracts with Supplier.

•

BMW’s remedies are cumulative and in addition to any further rights or remedies available at law or in equity.

•

A waiver of any right does not imply a future waiver of that or any other right.

•

Termination does not affect either party’s accrued rights or liabilities.  In most scenarios, this likely means that following termination for default, BMW is liable to pay for goods actually delivered, but not for raw materials, work in progress or other termination related costs. This is functionally equivalent to the several OEMs that provide that termination is “without liability” to the terminating party.

2. BMW (2022) (Sections 2.7, 2.8 and 10.3): •

No significant change from 2018 terms.

3. FCA US (2021) (Sections 21 and 23): •

FCA US may terminate the contract for default. Default means the Supplier: (i) fails to perform in a timely manner; (ii) fails to cure any other default within 30 days of event of a default; (iii) becomes insolvent, files bankruptcy, or enters into an assignment for the benefit of creditors; (iv) repudiates the Order without a legal right; or (v) fails to pay any trade payables or account payables owed to FCA US or its affiliates incurred in the ordinary course of business without dispute more than 60 days after the payable is due.  See ¶6 of the “Context and Questions,” above, however, which highlights the limitations the United States Bankruptcy Code places on these types of provisions.

•

FCA US’s only obligation following termination for default is payment for goods delivered and accepted.  Because FCA US treats a merger as an act of default, its payment obligations following such a termination are as if the Supplier had

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breached. For example, FCA US may argue it is not obligated to pay for raw materials, work in progress and subcontractor claims. •

Upon any termination, FCA US may take title to and possession of all or any part of the work performed by Supplier under the Purchase Order.

•

Remedies are cumulative and in addition to any further rights or remedies available at law or in equity.

•

A waiver of any right does not imply a future waiver of that or any other right.

4. FCA US / Stellantis (2022) (FCA US Sections 21 and 23 and Stellantis Global Section 12): •

The Global Terms impose new termination-relevant notification obligations on Supplier.

•

Seller shall immediately notify Buyer in writing of any of the following events or occurrences, or any facts or circumstances reasonably likely to give rise to any of the following events or occurrences: o Any breach;

o Any delay in delivery, non-conformity or quality problem;

o Any failure by Seller, its suppliers, subcontractors or common carriers, to comply with applicable Laws in force in each country where the Goods are, or are intended to be manufactured, used, sold or transferred and/or the services are performed, including, with respect to transportation of Goods under the Contract; o Any material change in Seller’s authorized representatives, insurance coverage or professional certifications (e.g. ISO 9001). 5. Ford (2004) (Sections 26, 28 and 41): •

Ford may terminate the contract for any breach by Supplier. However, Supplier will first be given an opportunity to cure or to provide adequate assurances of cure if Ford believes that cure is possible. For non-conforming goods, the cure period is set by Ford. For other breaches, the cure period is usually 10 days.  Ford’s good faith determination that cure is not possible may be difficult to challenge.

•

Ford may also terminate the contract: o Within 60 days after a change in control of Supplier, where change in control includes the transfer of substantial assets or the sale of a controlling share interest; o After an excusable delay lasting three consecutive months or longer (see Part Three, § VI); o Upon bankruptcy, assignment for benefit of creditors or other insolvency events. Supplier is liable for all Ford legal and other costs connected to the insolvency event;  See ¶6 of the “Context and Questions,” above, however which highlights the limitations the United States Bankruptcy Code places on these types of provisions.

•

If Ford terminates for Supplier’s breach, Ford must pay for any conforming parts previously delivered and accepted and any other outstanding balance owed.

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•

If Ford terminates for other defaults, Ford must also purchase any undelivered conforming parts per releases issued and actual costs to protect Ford property.

•

Repeated failures to comply with certain provisions (identified in Section 26.10 and principally relating to misuse of Ford tooling or intellectual property) also give Ford a right to debit a penalty of up to 15% of Supplier’s total sales on each affected Purchase Order.

•

A waiver of any right does not imply a future waiver of that or any other right.

6. Ford 2021 (Sections 26, 28 and 44): •

No material changes except that Waiver of nonperformance under the Purchase Order must be in a written notice and will apply only to the specific instance addressed in the waiver and to no other past or future performance.

7. General Motors (Sections 9, 15, 20, 25, 26, 33 and 36): •

Unless cured by Supplier (generally within 10 days), GM may terminate for cause if Supplier (1) repudiates or breaches any terms, including warranties, (2) fails to perform services or deliver parts, or (3) fails to make progress so as to endanger timely delivery.  GM sometimes takes the position that the right to cure applies only in termination for failure to make progress. Although GM’s position may be questioned due to the provision’s language and grammatical construction, it seems that no court has addressed the question.  GM (and Nissan) expressly makes failure to make progress a terminable event. Under some fact scenarios, this may allow GM to terminate based on concerns about the Supplier’s future ability to perform without first allowing the Supplier an opportunity to provide adequate assurances.

•

GM may terminate the contract on 60 days’ notice without liability if Supplier sells or offers to sell a material portion of its assets or sells or offers to sell stock resulting in a change in control.  GM reserves the right to treat as a default any offer of a change in control, even prior to consummation of the change of control, and perhaps even if the offer never results in a transaction or an enforceable agreement. A variety of preliminary communications typically precede a binding change of control transaction. Whether and when those preliminary communications are sufficiently ripe to constitute an “offer” is often unclear. It may therefore be prudent for a GM Supplier exploring a change of control transaction to expressly indicate that preliminary communications are not offers.

•

GM may terminate on Supplier’s insolvency, including a voluntary or involuntary bankruptcy petition or assignment for benefit for creditor, unless the assignment, petition, etc. is nullified within 15 days. Supplier is liable for all costs, including attorney fees, incident to insolvency.  See ¶6 of the “Context and Questions,” above, however, which highlights the limitations the United States Bankruptcy Code places on these types of provisions.

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•

Termination for cause is without liability to GM.  Termination “without liability” likely will be construed by GM to mean that GM’s only obligation is to pay for goods delivered prior to termination, but that GM has no obligation to pay for raw materials, work in progress or other termination related costs.

•

Remedies for default are cumulative to those at law.

•

A waiver of any right does not imply a future waiver of that or any other right.

•

Buyer’s legal and professional fees incurred as a result of any breach are recoverable damages.

•

GM has the right to demand adequate assurances of performance and terminate if within a reasonable period, not to exceed 20 days, Supplier fails to provide assurances adequate under the circumstances.

•

Buyer is entitled to specific performance and injunctive relief for any actual or threatened breach.

•

Supplier must notify GM of any breach.

•

Supplier must notify GM if it becomes aware of a likely insolvency event.

8. Honda (Sections 4, 13 and 14.10): •

Honda may terminate an Order or Agreement, in whole or in part, at any time after notice.

•

Either Party may terminate the Agreement if the other Party: (i) defaults in any performance, warranty or representation; (ii) defaults under any two (2) consecutive Orders; (iii) is subject to any administrative or governmental action; (iv) makes a general assignment for the benefit of creditors; or (v) files a voluntary petition in bankruptcy.

•

Honda may return goods that are defective or the delivery is otherwise non-conforming. Supplier shall pay all shipping and other costs related to the return.

•

Supplier agrees that money damages may not be sufficient and Honda is entitled to injunctive relief.

9. Hyundai (Sections 27, 28, 31 and 34): •

Hyundai may terminate the contract without liability or compel specific performance if Supplier fails to deliver parts at times specified, fails to cure any other default within 10 days of written notice, becomes insolvent, files bankruptcy, or is merged.  See ¶6 of the “Context and Questions,” above, however which highlights the limitations the United States Bankruptcy Code places on these types of provisions.

•

Upon any termination, Hyundai may take title to and possession of all or any part of the work performed by Supplier under the Purchase Order and paid for by Hyundai.

•

Supplier is liable for all damages resulting from a default, including consequential damages, attorney fees, costs of collection, and costs of recovering Hyundai property.

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•

Remedies are cumulative and in addition to any further rights or remedies available at law or in equity.

•

A waiver of any right does not imply a future waiver of that or any other right.

10. Kia (Sections 27, 28, 31 and 34): •

Same as Hyundai.

11. Lucid (Sections 3, 7 and 11): •

If Supplier is unable to deliver by agreed upon dates, Lucid may cancel part or all of the order.

•

Lucid may require expedited delivery at Supplier’s cost, except where the delay was caused by Lucid.

•

Supplier is responsible for all costs stemming from non-conforming goods and field service actions.

•

Lucid shall notify supplier of nonconformance and extent of liability and damages and provide a request for reimbursement.

•

The remedies under this section are non-exhaustive. They shall include liability for direct damages, incidental damages incurred by Lucid as a result of the breach, other damages that were reasonably foreseeable at the time of the breach, and costs and expenses incurred by Lucid in connection with each of these types of damages.

•

Neither party can be held liable to the other or its subcontractors or suppliers for anticipated profits, interest, penalties or consequential, punitive, multiple, or exemplary damages or liabilities in connection with the Agreement.

12. Mazda (Sections 18 and 20): •

Mazda may terminate for any breach, if not either cured within 30 days of notice or, unless the breach is not curable within 30 days and Seller to “take demonstrable and substantial steps to cure within the 30 days.”

•

Mazda may terminate for insolvency.

•

In the event of insolvency of Seller or any lower tier supplier, Seller grants Mazda the right. For the purpose of maintaining production: (i) to enter and operate facilities, equipment, and direct Seller’s employees, (ii) to appointment of a receiver. (iii) to remove all machines, tools and dies, whether owned by Mazda.

•

Mazda may terminate a Purchase Order for non-delivery or non-conformity of Products.

•

Expiration or termination does not discharge any unperformed obligation, including fulfillment of a Purchase Order or relieve Seller of its responsibility for surviving obligations.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 21, 29.1 and 30.4): •

MBUSI may terminate the Agreement or any Purchase Order or obtain specific performance if Supplier: (i) misses a key milestone by more than 10 days; (ii) fails to timely deliver goods; (iii) commits any other breach and fails to cure within 10 days; (iv) ceases doing business or becomes insolvent; (v) is merged into another company; (vi)

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makes any false representation, certification or warranty; or (vii) delivers product that do not meet quality and performance standards. •

Termination is without liability except for parts delivered and accepted.

•

Upon notice from MBUSI, Supplier shall assign its subcontracts to MBUSI or entity that MBUSI designates.

•

If MBUSI terminates or determines in its sole judgment that Supplier is or soon will be unable to deliver goods, then MBUSI may, among other remedies: (i) take immediate possession of all MBUSI equipment, intellectual property, etc.; (ii) operate or have a third party operate Supplier’s facilities in order to maintain supply; and (iii) to direct, control and complete all work being performed by Supplier’s subcontractors.

•

If Supplier or any of its affiliates breach any of the representations, warranties or covenants in Section 30, it shall be deemed a material breach. In additional to any other rights MBUSI has MBUSI may declare a forfeit of any unpaid amounts owing to Supplier and will be entitled to repayment of any amounts paid or credited to Supplier, may immediately terminate the Agreement, and Supplier will, at MBUSI’s request indemnify and hold harmless MBUSI.

•

Remedies are cumulative and in addition to any further rights or remedies available at law or in equity.

•

A waiver of any right does not imply a future waiver of that or any other right.

14. Nissan (Sections 27 and 28): •

Either party may terminate the contract without liability for a material breach not cured within 30 days after notice.  Termination “without liability” likely means that Nissan’s only obligation is to pay for goods delivered prior to termination, but it has no obligation to pay for raw materials, work in progress or other termination related costs.

•

Nissan may terminate any Purchase Order, in whole or in part, at any time by giving six (6) months’ advance written notice. Supplier has 30 days to submit a termination claim.

•

A material breach by Supplier includes failure to make deliveries on time, failure to perform any other Purchase Order requirement, or failure to make adequate progress in performing a Purchase Order (as determined by Nissan).  Nissan expressly makes failure to progress a terminable event. Under some fact scenarios, this may allow Nissan to terminate based on concerns about the Supplier’s future ability to perform without first allowing the Supplier an opportunity to provide adequate assurances.

•

If Nissan deems itself insecure, it may require Supplier to furnish within 10 days a performance bond in the amount of two times the value of the performance remaining on the contract. Failure to provide the bond is a default.  The UCC (2-609) allows an insecure party to demand reasonable assurances and to terminate if the assurances are not provided. Nissan’s terms might be read as a contractual stipulation that reasonable assurances require posting the performance bond. It is an

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open question whether Nissan could insist on a performance bond if the Supplier provided another reasonable form of assurance. •

Nissan’s terms state that it may terminate the contract without liability in the event of a Supplier’s bankruptcy or insolvency or change in control.  See ¶ 6 of the “Context and Questions,” above, however which highlights the limitations the United States Bankruptcy Code places on these types of provisions.

•

Upon termination for cause, Supplier must stop all further work, protect Nissan property in its possession, return all confidential information, and deliver to Nissan all Nissan property, Nissan drawings, and Supplier’s own drawings. In addition, the parties must meet to discuss how to minimize any disruption to Nissan’s business upon cancellation or termination of the PO. o Nissan may elect to purchase Supplier completed parts, WIP, or tooling.

o Nissan also obtains expansive license rights to Supplier’s intellectual property (See discussion in Part Four, § II). o Remedies are cumulative and in addition to those available at law or in equity.

o A waiver of any right does not imply a future waiver of that or any other right. •

Supplier agrees that a breach or threatened breach of its obligations in Article 4 constitutes a material breach and will cause immediate and irreparable harm to Nissan, including damage to Nissan’s relationships with its current or future customers, suppliers, lenders, insurers, or labor unions, that cannot be remedied by monetary damages or adequately ascertained, or other legal damages. Supplier agrees that Nissan is entitled to injunctive relief, specific performance, or other equitable relief for Supplier’s breach or threatened breach of Article 4 or any other Article of these Terms and that any such relief is in the public interest and does not cause substantial harm to others.

15. Rivian (Sections 7, 19.3 and 25): •

Rivian’s remedies are cumulative and in addition to any further rights or remedies available at law or in equity.

•

If Supplier is unable or fails to deliver, Rivian may cancel the contract or release without liability, require Supplier to deliver products using expedited delivery at solely its costs, or purchase substitute goods and hold Supplier liable.

•

If other remedies are insufficient, Supplier’s default is deemed to cause Rivian irreparable and continuing injury. Rivian has the right to apply for appropriate injunctive relieve without the posting of any bond.

•

If Supplier breaches warranties set forth in Section 4 of the terms, upon notice by Rivian, Supplier is required to reimburse Rivian for any special, incidental and consequent damages caused by nonconforming products, including costs, attorney frees, expenses and losses.

•

Rivian may immediately terminate all purchase orders without any liability upon the occurrence of any of the following: Supplier’s insolvency, Supplier’s inability to provide assurance of its financial capability, the filing of a voluntary or involuntary petition in bankruptcy, appointment of a receiver or execution of assignment for the benefit of

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creditors. Supplier shall reimburse Rivian for all costs incurred in connection with any of these events. •

A waiver by Rivian of any right or remedy shall not affect any rights or remedies subsequently arising under the same or similar clauses.

16. Scout Motors (Sections 15 and 20): •

Scout’s rights and remedies are reserved to Scout in each Order and are cumulative and in addition to all other or legal or equitable remedies.

•

Supplier must reimburse Scout for incidental, consequential or other damages (including lost profits, lost fees, lost business, loss of use and costs associated with business interruptions) (“Losses”) arising out of Supplier’s breach or by nonconforming Supplies, including attorneys’ fees and other professional fees, settlement and judgments.

•

Reimbursement shall include Losses resulting from, without limitation, Losses incurred directly or indirectly by Scout for (i) inspecting, sorting, storing, reworking, repairing or replacing the nonconforming Supplies; (ii) resulting from production interruptions; (iii) recall campaigns or customer field service actions; (iv) lost vehicle production due to nonconforming Suppliers; or (v) resulting from personal injury or property damage.

•

In an action for specific performance, Supplier agrees that damages will not make Scout whole and that Scout is entitled to injunctive relief, plus reasonable attorney fees.

•

Supplier is in default if it (i) repudiates or threatens to breach; (ii) fails or threatens to deliver Suppliers; (iii) fails to make progress or to meet reasonable quality requirements; (iv) sells or enters into a sale of the assets used in production; and (v) fails to remain competitive with quality, technology, delivery, service or pricing.

•

Supplier will not suspend performance of the Order or terminate the Order for any reason.

17. Toyota (2009) (Sections 2.6, 3.7, 5.4 and 5.9): •

Supplier will be in default, and Toyota may immediately terminate all or part of the agreement, if (1) Supplier breaches Terms and Conditions or any contract document, including warranties; (2) there is a Material Adverse Change in the Supplier’s business or operations that in Toyota’s judgment creates a “substantial likelihood” that any Toyota production will be “imminently interrupted;” or (3) there is a Material Adverse Change in the financial condition of the Supplier.  Toyota does not allow an opportunity to cure.  Under the usual UCC rules, if Toyota were concerned that a Supplier’s business or financial problems threatened its future ability to perform, it would have to give the Supplier an opportunity to provide adequate assurances before treating the threat as a breach. Under Toyota’s Material Adverse Change provisions, a Supplier may be in breach (and liable for damages and other relief) even though it has fully performed and may be willing and able to provide assurances of future performance.

•

Upon Supplier’s breach, Supplier must, upon Toyota’s request, return all Toyota property and technical information, and Toyota may (1) immediately cancel the contract, in whole

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or in part, (2) access Supplier’s premises to pursue available remedies, (3) purchase all items, work in process, materials, and inventory from Supplier, (4) pursue legal and equitable remedies, including incidental and consequential damages, (5) demand that Supplier provide replacement parts, and (6) setoff.  Toyota has the right, but not the obligation, to purchase materials, work in progress and inventory. If Toyota elected not to purchase these items, its obligations following termination for cause would likely be limited to payment for goods delivered and accepted prior to termination. •

Toyota may terminate Tooling Purchase Order if: (1) delay will extend more than 30 days; (2) delay will otherwise cause Supplier to miss Completion Target Date; or (3) Supplier otherwise breaches Tooling terms.

•

Election of a particular remedy will not imply waiver of rights to other remedies.

•

A waiver of any right does not imply a future waiver of that or any other right.

18. Toyota (2021) (Sections 3.5, 6.9): •

Supplier will be in default, and Toyota may immediately cancel all or part of the Agreement, if (1) Supplier repudiates, breaches, or threatens to breach any part of the Agreement; (2) there is a Material Adverse Change in the Supplier’s business or operations that in Toyota’s judgment creates a “substantial likelihood” that any Toyota production will be “imminently interrupted;” (3) there is a Material Adverse Change in the financial condition of the Supplier; or (4) Supplier fails to timely provide any Toyota Party with adequate and reasonable assurance of Supplier’s ability to timely perform any of Supplier’s obligations under the Agreement.  Toyota does not allow an opportunity to cure.  Under the usual UCC rules, if Toyota were concerned that a Supplier’s business or financial problems threatened its future ability to perform, it would have to give the Supplier an opportunity to provide adequate assurances before treating the threat as a breach. Under Toyota’s Material Adverse Change provisions, a Supplier may be in breach (and liable for damages and other relief) even though it has fully performed and may be willing and able to provide assurances of future performance.

•

Upon termination, Supplier must, as directed by Toyota; cease all work; return all Toyota Property; inform Toyota of the extent to which performance has been completed; transfer to Toyota any raw materials, inventory, work in process, take all actions reasonably necessary to protect any Toyota Property and Items in the possession or control of Supplier, immediately return or, if approved by Toyota, certify destruction of all Confidential Information and Toyota Property.

•

Toyota may access Supplier’s premises to allow Toyota to enforce its rights in its property.

•

If terminated for convenience (i.e., any reason other than default), Toyota must make a “Termination Payment” covering only: (i) the inventory of conforming Items (at the

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contract price), work in process, raw materials, and inventory (at actual cost), but not to exceed the quantities authorized per agreement, consistent with releases or consistent with “the general course of dealing between the parties concerning the quantity of Items generally purchased by Toyota” and (ii) the unpaid portion of invoices for Accepted Tooling, if Toyota directs Supplier to return the Tooling. •

Toyota is not liable for subcontractor claims, labor costs, loss of anticipated profit; overhead, interest, product development, or engineering and design expenses; equipment or facilities expenses; general and administrative burden; or (viii) operating expenses.

•

If terminated for default, Toyota may elect to purchase (and make a Termination Payment for) the any of the items described in the preceding bullet.

•

Supplier must make its Termination Payment claim within 30 days. Toyota must pay the undisputed portion of the Termination Payment within 60 days of receipt of the claim.

•

On termination, the parties will assist each other in affecting an orderly termination and transition.

•

Election of a particular remedy will not imply waiver of rights to other remedies.

•

A waiver of any right does not imply a future waiver of that or any other right.

19. Volkswagen (Sections 15, 19 and 20): •

VW may terminate without liability if, among other things, Supplier: (i) repudiates, breaches or threatens to breach any term; (ii) fails to deliver or threatens to not deliver; or (iii) fails to remain competitive with respect to pricing, quality, technology, delivery or service.

•

VW may terminate without liability if Supplier enters or offers to enter into a change of control transaction. Supplier must notify VW within 10 days of entering into any negotiations regarding a change of control transaction.  Both negotiating a change of control transaction and failing to timely notify VW of the negotiations is a basis for termination for cause, regardless of whether the change of control transaction occurs.

•

VW may terminate without liability if, among other things, Supplier: (i) is insolvent; (ii) is bankrupt; (iii) requires financial accommodations; (iv) fails to provide adequate assurances of financial capability to perform; or (v) shows various other acts of financial distress. If VW elects not to terminate, it may make changes in the price or other terms as VW deems appropriate.  The Supplier would likely be able to raise significant questions as to whether VW could enforce a claimed right to reduce the price paid in the event it was experiencing this type of financial distress.

•

VW may terminate without liability if Supplier fails to make progress or meet quality requirements to threaten timely completion and fails to cure such breach within 10 days (or a shorter reasonable time) of receipt of notice of breach.  This is the only act of default for which an express right of cure is provided.

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•

If Supplier experiences any delivery or operational problems, VW may, but is not required to, designate one or more representatives to be present in Supplier’s applicable facility to observe Supplier’s operations. If VW provides any accommodations to Supplier (financial or other), Supplier will reimburse VW for all costs, including attorneys’ and other professionals’ fees, incurred by VW in connection with such accommodation, and Supplier will grant access to VW to use Supplier’s premises and machinery, equipment, and other property necessary for the production of the Supplies.

•

VW has the right to specific performance and injunctive relief for any breach related to delivery of goods, transition support, or possession of property.

•

All of VW’s remedies are cumulative, and a party’s assertion of one remedy does not prevent it from seeking other available remedies.

20. Volvo (Sections 16.2 and 29.4): •

Supplier must maintain a disaster recovery plan that includes emergency back-up capacity and record-protection and recovery.

•

Volvo is entitled to damages in addition to any liquidated damages that the Supplier is required to pay under the Purchase Agreement, if the loss that occurs exceeds the amount of the liquidated damages.

•

See also section on Termination.

21. MEMA OE Suppliers (Sections 8.2, 8.3, 14 and 23.5): •

Except for recall (Part 3, Section II) and indemnity (Part 3, Section IV), Buyer’s exclusive remedy for non-conformities are limited to: (1) rejection; (2) repair or replacement (3) refund, if repair or replacement is not feasible; (4) containment costs, inspection, etc. costs; and (5) direct costs of repair or replacement of installed parts.

•

Except as limited by the exclusive remedies, the non-defaulting party may recover damages directly arising from the default, but all indirect, special, and consequential damages are specifically excluded. Remedies are cumulative and in addition to any further rights or remedies available at law or in equity. A waiver of any right does not imply a future waiver of that or any other right.

•

Termination as a remedy for default is addressed in Part 1, Section IV.

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Express Right to Specific Performance

Non-Waiver

Remedies Cumulative

FCA US 2021

Termination by Supplier?

Termination for failure to make progress

Termination for material adverse change

Termination for failure to give adequate assurances

Right to Cure before termination for breach (not necessarily for all breaches)

Termination for breach / non-conformity

BMW 2022

Termination for Insolvency / Bankruptcy (subject to certain limitations—See ¶6 of “Context and Questions”) Termination for merger / change of control

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA/Stellantis 2022 Y

Ford 2004

V. Default and Remedies – Dashboard Ford 2021 Y

GM Y

Honda Y

Hyundai Y

Kia Y

Lucid Y

Mazda Y

MBUSI Y

Nissan Y

Rivian Y

Scout Motors Y

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2021 Y

VW Y

Volvo Y

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MEMA OE Suppliers

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All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

VI. Excusable Delays/Force Majeure – Context and Questions 1. Purpose of the Provisions; Related UCC Provisions Excusable Delay/Force Majeure provisions are an attempt to cover issues such as force majeure, impossibility, impracticability, acts of God, and similar theories that change or suspend performance obligations. To the extent they are not covered by the Terms and Conditions, such legal theories are provided as “gap fillers” under the UCC (sale of goods), common law (services) or other bodies of law. For example, UCC §§ 2-614 and 615, 616, and 716 may apply to Excusable Delay/Force Majeure. 2. Limitations in the Scope and Duration of Supplier’s Excused Performance Under These Sections It is sometimes unclear under the various OEM Terms and Conditions to what extent a force majeure event relieves a Supplier from the normal consequences for failure to perform timely. Because it is unclear as to what relief is provided to the Supplier, it is unclear as to what other remedies may be preserved by the OEM - either by implication or by specific reservations of right. For example, VW’s terms provide that, after an excused period of 30 days, VW can terminate and the Supplier must reimburse VW for costs associated with the termination. 3. Often a High Hurdle to Clear Both the OEM Terms and common law significantly limit the availability of force majeure excuses. First, the terms often narrowly define the types of events that can provide an excuse. For example, some terms specifically provided that the failure of the power grid is not an excuse. Second, the force majeure event must be the cause of non-performance or, stated differently, if it was still possible to perform, a fire is not an excuse. Lack of electricity excuse Force Majeure provides an excuse for non-performance. Third, OEMs often take a very aggressive position as to whether performance is possible, arguing, for example, that if it is possible to continue supply by air-freighting substitute materials, there is no excuse, regardless of the expense of doing so. Finally, some OEMs are explicitly conditioning the excuse on having and implementing robust business continuity and similar plans. 4. Application of Provision May Not Preclude OEM Termination of Supplier Since most OEMs can terminate their relationships with Suppliers without cause (See Part One, § IV), a force majeure provision may not prevent or delay a termination. It will, however, generally prevent a default (but see below) and the application of the typically onerous remedies for default. Some OEMs can force the Supplier to provide the parts or similar parts from a third party for the price stated in the Purchase Order. Ford can recover its cost of cover (cost associated with obtaining suitable substitute goods). 5. Adequacy of Typical Contract Provisions The Japanese earthquake, tsunami of 2011 and 2020 Covid-19 pandemic demonstrated that many OEM force majeure provisions and related principles of contract law fail to © 2026 MEMA Original Equipment Suppliers

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provide clear or satisfactory answers to questions such as the required timing and content of communications or notice between Buyer and Supplier and the extent of Supplier’s obligation to incur extraordinary expenses to restore supply. The revised MEMA Model Terms attempt to address this by emphasizing the need for open communications and cooperation and the equitable sharing of extraordinary costs, all with the objective of quickly restoring supply.

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VI. Excusable Delays/Force Majeure – OEM Comparative Analysis 1. BMW (2018) (Sections 3.6-3.7): •

Either party may suspend performance for the duration of a “non-fault non-compliance” event

•

Non-fault non-compliance means non-compliance as a result of a force majeure event, or various natural or governmental actions (including strikes), if the non-compliance is outside of the party’s reasonable control and could not have been prevented by “industry standard preventative risk and supplier management.”

•

A non-fault non-compliance event does not limit either party’s rights under any other provision of the contract.

•

Supplier must notify BMW of buffer stick inventory levels if buffer stock is required by agreement or in response to a Critical Supply Situation (discussed in Part II, Section I).

2. BMW (2022) (Section 3.6): •

A party shall be released from its obligation to perform as long as and to the extent that it is unable to provide the respective service as a result of force majeure. Force majeure is defined as an event beyond reasonable control of the incapable party and which cannot be averted and foreseen even if utmost care is taken. Supplier must to all actions necessary and appropriate to ensure contract performance.

3. FCA US (2021) (Section 7): •

FCA US does not address this topic per se; however, Supplier must provide three month notice to FCA US in advance of the expiration of any current labor contract and must establish 40 working days of buffer stock at least ten working days prior to the expiration of the labor contract.  Because FCA does not address the topic, UCC 2-615 applies as a “gap-filler.”

4. FCA US / Stellantis (2022) (FCA US Section 7 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global Terms do not address the topic.

5. Ford (2004) (Section 40): •

Neither party is liable for delay or failure to perform resulting from an “Excusable Event” (an event beyond the reasonable control of the affected party that is not attributable to its fault or negligence. Includes strikes and labor disputes).  An event at a Sub-Supplier can only constitute force majeure for the Supplier if the event qualifies as force majeure at the Sub-Supplier level.

•

A party claiming an Excusable Event must notify the other party as soon as practicable.

•

Upon an Excusable Event affecting either party, Ford may acquire completed parts, WIP, and raw materials in Supplier’s possession and may purchase parts from third parties.

•

Ford may terminate a Purchase Order if an Excusable Event prevents performance for more than three consecutive months.

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•

Ford may continue use of an alternative source for a reasonable time after cessation of the force majeure event.

6. Ford (2021) (Section 39): •

No material change except for section numbering.

7. General Motors (Sections 8 and 27): •

Any delay or failure of either party to perform will be excused if the failure results from an event or occurrence beyond the reasonable control of the affected party and without its fault or negligence, so long as written notice is given by the affected party as soon as possible after the event or occurrence, but in no event more than ten days thereafter.

•

GM may purchase parts from other sources during the period when Supplier is not performing and reduce its schedules to Supplier by a like amount without liability to Supplier.  Supplier may be liable for higher costs incurred in finding a replacement source.

•

GM may require Supplier to provide parts from the other sources at the contract prices.

•

GM may terminate the contract without liability if Supplier fails to assure within five days of a request that the delay will not exceed 30 days, or if it exceeds 30 days.

•

See Part Two, § I, regarding supplier’s obligation to maintain a parts bank against potential disruptions.

•

Supplier must use “all diligent efforts to” minimize the effect of any disruption and resume supply as soon as possible.  This is similar to the duty that exists at law.

8. Honda (Section 4.8-4.9): •

Either party may suspend performance during the occurrence of an “Excusable Event”, which means any delay not resulting from the fault or negligence of the delayed Party and resulting from acts of God, acts of war, restrictions, prohibitions, priorities, or allocations imposed by governmental authority, acts of the other Party hereto, embargoes, fires, floods, winds, earthquakes, epidemics, unusually severe weather, and delays of similar natural or governmental causes.

•

The non-performing party must notify the other party and describe in reasonable detail the circumstances causing the nonperformance and use its best efforts to take all measures and precautions to reduce the effect of the Excusable Delay.

•

Notwithstanding the above, a Force Majeure Event does not include a strike, lock-out, or other industrial disturbance unless Supplier is using its best efforts to cure the cause of such delay and Honda has approved Supplier’s detailed plans and Supplier is diligently implementing the plans.

•

A Force Majeure Event does not limit Honda’s right to terminate the contract.

•

Supplier will bear and pay all charges and expenses as may be required by Honda.

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9. Hyundai (Section 10): •

Neither party is liable for delay or failure to perform resulting from a “Force Majeure” event (an event beyond the reasonable control of the affected party that is not attributable to its fault or negligence but excluding strikes and labor disputes).

•

A party claiming a Force Majeure event must notify the other party as soon as practicable, and in any event, not later than five business days after the event occurs.

•

Upon a Force Majeure event affecting Supplier, Hyundai may purchase parts from third parties.

10. Kia (Section 10): •

Same as Hyundai.

11. Lucid (Section 15.1): •

Delays or failures of either party to perform are excused if they are caused by an extraordinary and unforeseeable event beyond the control of the nonperforming party and without the nonperforming party’s fault or negligence, such as acts of God, natural disasters, action by any governmental authority, war, terrorism, or sabotage (force majeure events) provided the Impacted Party has used commercially reasonable efforts to mitigate the effects of a foreseeable Force Majeure event.

•

Labor disputes, lockouts or shortage of labor are not Force Majeure events.

•

Within two (2) days, Supplier must give Lucid notice of the Force Majeure event. The same notice requirement is applied to Lucid if Lucid is unable to meet its obligations due to a Force Majeure event.

•

Supplier must use diligent efforts to end the failure or delay and ensure the effects of the event are minimized.

•

If failure or delay remains after thirty (30) days, the other Party may terminate the Agreement upon written notice.

•

During the event, Lucid may purchase goods from an alternate supplier and require Supplier to provide Goods from other sources and the prices originally agreed.

•

The rights granted to Supplier are intended to limit Supplier’s rights under theories of force majeure, commercial impracticability, impracticability, or impossibility of performance or failure of presupposed conditions, including Section 2615 or 2616 of the California Comm. Code.

•

Within two (2) days of the force majeure event, Supplier must send a written notice of the delay.

•

If the Impacted Party’s failure or delay remains uncured for thirty (30) days after written notice, the other Party may terminate this Agreement by written notice.

12. Mazda (Section 19): •

Performance is excused if it is prevented by a Force Majeure Event (governmental order or restriction, riot, flood or other acts beyond seller’s reasonable control), terrorism, war,), despite of Seller’s best efforts to continue production.

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•

Labor issues, lack of power, materials, labor equipment or transportation are not Force Majeure Events.

•

Seller must promptly notify Mazda of any Force Majeure Event or of any circumstances that might ripen into one.

•

Mazda may terminate if a Force Majeure day persists for more than 6 months.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 1.1(u) and 13): •

Excuses an act that is beyond the control of the Supplier, not due to the fault of the supplier and results from war, government actions, and acts of God. A Force Majeure Event does not include pandemics, non-performance of lower Tier suppliers (due to nonForce Majeure Events), computer generated delays, and strikes or industrial disturbances unless caused by a government action.

•

MBUSI may suspend performance for the length of the Force Majeure Event.

•

Production of parts for MBUSI takes precedence over production for any other customer of Supplier.  This is of questionable enforceability under the UCC.

•

Must provide six months’ notice of expiring labor contracts even though labor disturbances are not an excuse for non-performance. Moreover, a 90-day working supply must be established by Supplier at its expense in a neutral warehouse site at least 50 miles from the Supplier’s manufacturing locations.  The clause is drawn so tightly that it is of very limited use to a Supplier.

14. Nissan (Section 33): •

Excuses an act that is beyond the control of the Supplier, not due to the fault of the supplier and results from acts of God, fire, shipwreck, acts of a public enemy, or government acts or omissions, or other similar events beyond the reasonable control of the party. The party’s performance will be excused only while the Force Majeure Event persists and only to the extent such party’s performance was impacted. If Supplier claims its performance is excused by a Force Majeure Event, it must, to the extent possible, allocate production and deliveries among its customers, including Nissan, in a fair and reasonable manner.

•

The agreement specifically excludes strikes and labor disputes by the affected party’s workers.

•

The affected party is obligated to promptly notify the other party in writing of its inability to perform during the dates specified.

15. Rivian (Sections 2.3 and 2.4): •

If Seller’s ability to deliver any Products is or is likely to be constrained, Seller must immediately inform Purchaser.

•

During the period of delay, Seller shall fulfill Releases prior to filling any order for other customers for the same or similar products.

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•

Seller shall build and maintain at all times a safety stock of Products at an agreed location at no additional charge to Purchaser.

•

Delays or failure of either party to perform are excused if they are caused by an extraordinary and unforeseeable event beyond the control of the nonperforming party and without the nonperforming party’s fault or negligence, such as acts of God, fires, floods, windstorms, explosion, riots, natural disasters, war and sabotage (force majeure events). Change in raw material costs or availability of product or services and failure of internal business systems are not force majeure events.

•

Written notice of delay is required within 24-hours of the force majeure event.

•

If delay or failure to ship is caused by a force majeure event, Rivian may purchase from another source and reduce scheduled quantities without liability. If delay lasts more than the time period specified by Supplier, Rivian may cancel the contract or purchase order(s). Supplier must reimburse Rivian for any incremental cost.

16. Scout Motors (Section 23): •

Delays or failure of either party to perform are excused if they are caused by an event or occurrence beyond its reasonable and without party’s fault or negligence, such as acts of God, restrictions, prohibitions, priorities or allocations imposed or actions taken by a governmental authority (whether valid or invalid), embargoes, floods, earthquakes, natural disasters, riots, wars, sabotage, or court injunction or order.

•

Supplier’s insolvency or lack of financial resources is deemed in Supplier’s control.

•

Change in cost, availability of materials or components, supplier actions, contract disputes or labor disruptions do not excuse Supplier’s performance. Notwithstanding, Supplier must provide Scout with advance written notice of any anticipated labor disruption or expiration of labor contracts. Supplier must take all necessary actions to avoid a disruption.

•

Supplier must provide immediate notice of any force majeure event, but no less than 1-day notice.

•

During the delay, Scout may purchase from other sources. If requested, Supplier must deliver all finished goods, WIP and raw materials to Scout, and/or provide Supplier to provide Supplies from other sources.

17. Toyota (2009) (Section 2.7): •

Supplier’s delay or failure to perform is excused if caused by a Force Majeure event (an event beyond the reasonable control of Supplier and without its fault or negligence), provided that Supplier notifies Toyota within ten days of such event.

•

A Force Majeure event does not include labor problems of Supplier or its subcontractors or the inability to secure power, materials, labor, equipment or transportation.

•

During the excusable delay period, Toyota may obtain goods from other sources or Toyota may acquire substitute items from alternate sources and make a corresponding quantity reduction to applicable contract documents.  Supplier should anticipate events and use its best efforts for alternative sources of supply.

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•

Toyota does not have to pay Supplier for substitute items from third parties.

•

To the extent the Force Majeure event is foreseeable, Supplier must establish 30 days’ worth of buffer stock for any anticipated Force Majeure event; however, if the expenses of establishing such buffer stock will create a financial hardship for Supplier, Toyota and Supplier will negotiate a reasonable allocation of such costs.

•

Upon request, Supplier must assure Toyota within 10 days of the Force Majeure event that the delay period will not exceed 30 days.

•

If the delay lasts for 30 days or more, Toyota may modify, suspend, or cancel outstanding Purchase Orders and the contract itself.  Once a force majeure suspension occurs, it is within Toyota’s discretion as to when and how the Supplier’s resumption of supply shall occur.

•

Supplier must notify Toyota if it believes parts will not be delivered as scheduled. No effect on other provisions and Supplier is liable for costs of cover.

18. Toyota (2021) (Sections 3.8 and 3.9): •

The following supplements the 2009 summary.

•

Supplier must notify Toyota that a force majeure event has been resolved.

•

If a Force Majeure Event requires allocation, Supplier may not provide Items to Toyota later than similar goods are provided to other customers.  This is more restrictive than the allocation provision of the Uniform Commercial Code.

•

If Toyota consents, Supplier may subcontract with a substitute Supplier to provide the delayed Items, Supplier remains liable for any breach by the substitute supplier.

19. Volkswagen (Sections 21 and 23): •

Neither party is liable for delay or failure to perform resulting from an event beyond the reasonable control of the affected party that is not attributable to its fault or negligence.

•

Supplier’s delay or inability to perform is not excused if caused by Supplier’s insolvency or lack of financial resources, the change in cost or availability of materials or components based on market conditions, supplier actions, or contract disputes or any labor strike or other labor disruption applicable to Supplier or any of its subcontractors or sub-suppliers. Supplier assumes all such risks.

•

During the delay or failure to perform by Supplier, VW may (a) purchase Supplies from other sources and reduce its schedules to Supplier accordingly without liability to Supplier; (b) require Supplier to delivery at VW’s expense all finished goods, work in process, and parts and materials produced or acquired for work under the Purchase Order; and/or (c) request Supplier provide Supplies from other sources (including other sellers) and in quantities and at times required by VW at the prices set forth in the Purchase Order.

•

In addition, Supplier will provide advance written notice of any anticipated labor disruption or expiration of any of Supplier’s labor contracts, and Supplier at its expense

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will take all necessary actions to ensure the supply of Supplies to VW for at least 30 days during any anticipated labor disruption or any delay or disruption resulting for the expiration of any of Supplier’s labor contracts. •

If, on VW’s request, Supplier fails to provide within 10 days (or such shorter period as VW may require) adequate assurance that any delay will not exceed 30 days, or if any delay lasts longer than 30 days, VW may terminate the Purchase Order without liability and Supplier shall reimburse VW for the associated costs with the termination and the transition to a new supplier.

•

VW shall not be required to make termination convenience payments set forth in Section 21 in the event of a termination under Section 23.

20. Volvo (Sections 16 and 27): •

Neither party is liable or in breach for delay or failure to perform resulting from a force majeure event which is defined as a cause or event (including acts of God) beyond the reasonable control of a party that is not attributable to such party’s fault or negligence. Strikes, lockouts or other industrial action or disputes related to the Supplier, its affiliates or sub-suppliers are not deemed as force majeure events.

•

A party claiming force majeure must promptly notify the other party in writing and within ten (10) days thereafter provide evidence of the occurrence and expected duration.

•

The parties shall immediately consult with each other to find an equitable solution and use reasonable efforts to minimize the consequences.

•

Volvo may acquire the goods for other sources for the duration of Supplier’s inability to supply and reduce its obligation to Supplier.

•

If the force majeure event continues beyond thirty (30) days, the party not subject to the force majeure may terminate the relevant Purchase Agreement without incurring any liability.

•

Supplier must maintain a disaster recovery plan that includes emergency back-up capacity and record-protection and recovery.

21. MEMA OE Suppliers (Section 19): •

Neither party is liable for delay or failure to perform resulting from an event beyond the reasonable control of the affected party that is not attributable to its fault or negligence, including labor disputes.

•

An excusable delay does not constitute a default.

•

A party claiming the benefits of an excusable delay must notify the other party promptly after it learns that it has occurred or is reasonably likely to occur.

•

Buyer and Seller must share and update information and cooperate with the objective of avoiding or minimizing the consequences of the disruption and restoring supply as quickly as possible.

•

Buyer and Seller shall equitably share extraordinary expenses that Seller reasonably incurs to maintain or restore supply.

•

Upon an excusable delay affecting Supplier, OEM may purchase parts from third parties.

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•

Buyer may terminate a Purchase Order if an excusable delay prevents performance for more than 30 days.

•

Buyer may obtain substitute parts from other sources.

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No liability for Act of God and other events beyond reasonable control

Without Negligence

Includes Labor Disputes

Must Provide Notice to OEM within ____ days(f)

Must Give Advance Notice

Must Maintain a Bank of parts of ____ days

No Damages Assessed During Event

BMW 2022

FCA US 2021

FCA/Stellantis 2022 S

Ford 2004

BMW 2018

Specific Provisions Provided in Terms and Conditions Ford 2021 Y

GM S

Honda S(b)

N(a)

Y(a)

Hyundai Y(b)

N(a)

Y(b)

N(a)

Kia

VI. Excusable Delays/Force Majeure – Dashboard Lucid S

Mazda Y

MBUSI Y

Y(e)

Y(a)(d)

Nissan S

Rivian Y

Y(a)

Scout Motors S

Y labor

Y(a)

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2021 S

Y(a)

VW Y

Volvo Y

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MEMA OE Suppliers

Right to Purchase Elsewhere

Right to Reduce Quantities

Right to Purchase Materials and WIP

Right to Terminate after ____ days

Is there a Reservation on Right to Cancel or other remedies?

Right to Require Supplier to Use Other Sources

Treated as a Default

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BMW 2018

Specific Provisions Provided in Terms and Conditions

BMW 2022

FCA US 2021

FCA/Stellantis 2022 S

Ford 2004 Y

Ford 2021 Y

GM N

Honda N

Hyundai N

Kia N

Lucid N

Mazda N

MBUSI N

Nissan N

Rivian N

Scout Motors N

Y(c)

Toyota 2021 N

Y(c)

VW S

Volvo

Toyota 2009

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

(f) If “Y” rather than a specific period appears in this row, notice is required, but no specific notice period is prescribed by the applicable Terms and Conditions. Honda requires “immediate” notice.

(e) Must give notice of all delay events whether or not excused.

(d) May be limited to an act of God or governmental act.

(b) Supplier liable for costs of cover.

(a) Does not include transportation, fuel, lack of supply or other commercial risks unless OEM has approved Supplier’s contingency plan.

Specific Notes

General Notes

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VII. Dispute Resolution – Context and Questions 1. Many OEM Terms Address Dispute Resolution Many OEMs include alternative dispute resolution provision in their Terms and Conditions, providing for mediation as a prerequisite to litigations, or arbitration as an alternative to litigation. Often the OEM allows itself discretion as to whether to require alternative procedures. 2. Contested Proceedings and Formal Dispute Atypical The typical approach to the resolution of disputes between automotive Suppliers and OEMs is commercial negotiation involving meetings and correspondence, escalation of the dispute to levels within each organization that correspond to the significance of the dispute, and a negotiated compromise reflecting the degree of leverage that each party has over the other.

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VII. Dispute Resolution – OEM Comparative Analysis 1. BMW (2018) (Section 23): •

The Supply Contract (including the Purchase Terms and Conditions) are governed by and construed in accordance with the laws of the county (and state or province, if applicable) of Buyer’s principal place of business to the exclusion of the conflicts of law of Private International Law (IPR) and the United Nations Convention for the International Sale of Goods (CISG).

•

The courts having jurisdiction over Buyer’s principal place of business have exclusive jurisdiction and venue.

•

The parties agree to waive all rights to a jury trial.

2. BMW (2022): •

No changes from 2014.

3. FCA US (2021) (Section 26 and Appendix A): •

FCA US (i) permits the parties to agree to arbitrate any dispute; (ii) provides FCA US with the unilateral right to compel arbitration in the cases of disputes relating to quality, warranty, or indemnification under Section 6, 8, or 11 of the General Terms, including claims in connection with vehicle recall and customer satisfaction campaigns; (iii) requires that any unilateral arbitration be preceded by negotiation and, if requested, mediation; and (iv) imposes the “Expedited Rules” under Annex A, which may prejudice the supplier.

•

Depending on the size of the damage claim, the arbitration will be conducted by either 1 or 3 arbitrators. In the event the parties cannot agree on an arbitrator (in the case of 3 arbitrators, in the event they cannot decide on the neutral), the arbitrator will be selected by the American Arbitration Association (“AAA”) pursuant to the AAA arbitration selection process.

•

The Expedited Rules shall govern the arbitration. While AAA will be used if needed with arbitrator selection, AAA rules do not apply.

•

The Expedited Rules require baseball style arbitration wherein each side proposes a financial damage amount and the arbitrator must choose one or the other.

•

Annex A provides a set of Expedited Rules that will govern the arbitration. Generally, the Expedited Rules impose strict deadlines and limitations that may prejudice the Supplier.

•

Proceedings will be conducted in English.

•

The 1980 United Nations Convention on Contracts for the International Sale of Goods does not apply to any transactions. All provisions will be governed by the law of the State of Michigan with the exception of an Order between the Supplier and FCA US Canada, Inc. in which the laws of Ontario, Canada will apply.

•

Supplier consents to the personal jurisdiction of the state and federal courts in and for Oakland County, Michigan.

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•

No material additions or changes from FCA 2021. Stellantis Global Terms do not address the topic.

5. Ford (2004) (Section 39): •

Upon notice of a dispute, the parties must appoint representatives to negotiate a resolution.

•

If the dispute is not resolved within 60 days, either party may declare an impasse and the dispute will be referred to non-binding third-party mediation. If the parties agree to arbitrate, the arbitration will be conducted in accordance with Ford’s Dispute Resolution Web-Guide (a separate document).

•

If arbitration has not been selected, either party may proceed with litigation 60 days after the mediation period has ended.

6. Ford (2021) (Section 38): •

Extensive revisions to 2004 Terms. The following supersedes the 2004 summary.

•

Negotiation Phase: Either party may give written notice of a dispute describing in sufficient detail the nature of the dispute. The parties will then promptly negotiate in good faith. At any time, either party may terminate the Negotiation Phase with 14 days written notice to the other party.

•

Mediation Phase; If the dispute is not resolved, a party may elect to engage in nonbinding mediation by providing written notice to the other party. Mediation must be completed within 90 days unless the parties agree to a different timeframe.

•

Arbitration Phase; If dispute is not resolved through negotiation or (if chosen) mediation, a party may request the other to participate in arbitration by making such request in writing. The other party has 15 days to respond, in writing, as to whether it will agree to binding arbitration.

•

Ford may unilaterally elect arbitration of disputes relating to quality, quantities, delivery, payments, warranty, indemnification, any kind of field service action, shipping, packaging and/or actions under Sections 10 (setoff), 11 (quality assurance), 12 (shipping packaging and delivery), 13 (non-conforming goods, 14 (use of Ford’s IP or Tooling), 22 (warranty), 23 (recalls), and 25 (Indemnity by Supplier).

•

Arbitration will be conducted in accordance with Ford’s Dispute Resolution Supplier Guide (a separate document).

•

Disputes that are not arbitrated may be litigated. If both Ford US and non-US Ford entities are parties to dispute, litigation must be filed in US.

•

If litigation is with Ford US, it must be filed either in federal court in Detroit or state court in Oakland County or Wayne County.

•

If both Ford US and non-US Ford entities are parties to dispute, US law will apply.

•

Ford may immediately (without negotiation, mediation, arbitration or litigation) exercise rights under Sections 11 (setoff) and 23 (preliminary setoff of field service action costs), seek injunctive or similar relief and “exercise any of its rights or remedies under the Purchase Order or applicable law.”

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•

Special rules for antitrust claims: If Supplier pleads guilty to violating, or a court or regulator finds that Supplier has violated, the antitrust laws with respect to a commodity sold to Ford, Supplier must: (1) produce to Ford within 4 weeks all documents it has produced to any government authority and (2) participate in binding arbitration. o If the arbitrator finds a violation affecting Ford, Supplier must pay Ford 15% of the purchase price of any Ford goods affected by the violation (trebled, if US law was violated). This payment is a minimum; Ford may pursue additional damages. o This provision supersedes all other dispute resolution provisions (e.g., mediation).

7. General Motors (Section 35): •

Claims are subject to the law of the state or country of Buyer’s location specified on the Purchase Order. Buyer may bring a lawsuit in Buyer’s location or any other place having jurisdiction over seller. Seller may only bring a lawsuit in Buyer’s location.

8. Honda (Section 14.7): •

The Agreement and any other document delivered under the Agreement are governed under Ohio law.

•

If the Honda Company issuing the Order is located in a state other than Ohio, or in a country other than the United States, it is the intention of the Parties that Ohio law shall govern. In the event that is found unenforceable, the law of the state/country where the Honda Company’s receiving facility is located shall govern.

9. Hyundai (Section 36): •

Hyundai may at its option invoke binding arbitration as the exclusive means of resolving any dispute at any time within 180 days after legal proceedings have been commenced (Supplier has no corresponding right).  It is uncertain whether the “180 day” provision is legally enforceable. It is at least questionable whether a court would allow Hyundai to compel arbitration if, for example, substantial court activities have occurred or the court has resolved substantive matters.

•

If Hyundai invokes arbitration, Supplier must dismiss any pending litigation.

•

If Hyundai invokes arbitration, it will occur in Montgomery, Alabama under the American Arbitration Association’s Commercial Arbitration Rules, including Emergency Interim Relief Procedures.

10. Kia (Section 36): •

Same as Hyundai, except agreement is governed by Georgia law and venue is proper in Troup County, Georgia.

11. Lucid (Sections 23.5 and 23.9): •

Parties agree to resolve disputes with senior management and try to resolve them in good faith prior to litigation.

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•

If management fails to resolve the dispute within thirty (30) days of initial discussion, prior to litigation ensuing the Parties may mutually agree to resolve the dispute through other informal procedures, including but not limited to mediation or arbitration.

•

Agreement is governed by California law, excluding its rules on the conflict of laws.

•

State and federal courts in Alameda County, California are the exclusive venue and jurisdiction.

12. Mazda (Sections 24, 26 and 28): •

Governing law is Alabama.

•

Exclusive jurisdiction is state or federal courts in Limestone County, Alabama.

•

Jury trial rights are waived.

•

The prevailing party in litigation is entitled to attorneys and expert fees and costs.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 30): •

The Terms and Conditions are governed by Alabama law, exclusive of its choice of law rules.

•

Supplier must bring any claims in Alabama, and consents to Alabama venue and jurisdiction. MBUSI may invoke binding and exclusive arbitration.

•

MBUSI may bring any claims anywhere Supplier is subject to jurisdiction.

•

Supplier waives the right to a jury trial.

14. Nissan (Section 43): •

Requirement to first attempt to resolve a dispute by providing notice of the dispute, exchanging information, and then negotiating in good faith. Either party may terminate the negotiation, at any time, with 14 days advance notice.

•

If negotiation is unsuccessful, either party may elect to engage in non-binding mediation with a neutral third-party mediator. If the parties are unable to select a mediator, the mediator will be selected in accordance with AAA Rules. Mediation must be completed within 90 days unless the parties agree otherwise.

•

Following the conclusion of negotiations or, if mediation followed negotiation, if mediation was unsuccessful, either party may request that the dispute be resolved through binding arbitration. The other party has 15 days to respond. However, Nissan has the right to demand arbitration where the dispute relates to quality, quantities, delivery, payments, warranty, indemnification, offsets, any kind of field service action, or actions under Articles 4-6, 9-12, or 15-16 of the Terms.

•

Arbitrations are to be conducted under AAA Rules, with a panel of three arbitrators, governed by the Federal Arbitration Act (FAA), to the exclusion of state laws inconsistent with the FAA, and to take place in Nashville, Tennessee, unless agreed otherwise.

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•

Either party may seek provision judicial relief, including injunctive relief, pending the outcome of mediation or arbitration.

•

All legal actions must be brought in Williamson County, Tennessee, or the US District Court for the Middle District of Tennessee, Nashville. Supplier agrees to jurisdiction and venue in these courts and acknowledges removal rights under federal law.

•

Parties must continue to perform obligations under the agreement pending final dispute resolution.

15. Rivian (Section 33): •

All Supplier claims must be commenced within one year after the breach or event giving rise to the claim.

•

Any claims or disputes shall, at Rivian’s sole discretion, be resolved through binding arbitration under the American Arbitration Association’s Commercial Arbitration Rules and Mediation Procedures by a single arbitrator. The arbitration shall take place in Plymouth, Michigan.

•

If arbitration is not elected, Supplier consents to the exclusive jurisdiction of the appropriate state court in Wayne County, Michigan.

•

Supplier specifically waives the right to a jury and all objections to venue in such courts.

16. Scout Motors (Sections 37 and 38): •

Governing law is the laws of the State of South Carolina.

•

All claims and disputes, except matters brought pursuant to the Supplier Claims Manual, (“Claims”) must be resolved through the following process: (i) initial meeting between representatives of both parties that takes place within ten (10) days of written notice of the Claim; (ii) if not resolved, a second meeting between the party managers, supervisors, or designated executives within thirty (30) days after the initial meeting; (iii) if the Claim is not resolved within fourteen (14) days of the second meeting the parties shall submit the claim to non-binding mediation; and (iv) if not resolved through mediation, the Claim shall be resolved through binding AAA arbitration. Notwithstanding the above, if a Claim is not settled or resolved within 120 days after the initial meeting, either party may submit the claim to binding arbitration. Any arbitration proceeding shall be held in South Carolina with a 3-arbitrator panel. AAA Rules shall apply. Fees and expenses in connection with the arbitration (including attorney fees and costs) shall be awarded to the prevailing party.

•

The arbitration proceedings shall be confidential.

•

Notwithstanding the above, either party may apply to a court for equitable relief, including a temporary restraining order, preliminary injunction or other interlocutory relief if it will not delay or adversely affect the completion of Scout’s project. The arbitration panel, however, has the authority to modify any court order granting interlocutory relief.

•

The parties agree to the exclusive venue and jurisdiction of the state and federal courts in South Carolina. Scout and Supplier expressly waive any right to a jury trial.

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17. Toyota (2009) (Section 7.8): •

Toyota provides a stepped-up protocol for resolution of disputes involving the contract: good faith negotiations, then non-binding mediation, and then binding arbitration in accordance with the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes.

•

The arbitration will be held in Kentucky and the prevailing party is entitled to recover reasonable attorney’s fees.

•

The contract is not clear as to when litigation is permitted and when arbitration must be used.

•

Any applicable limitations period is tolled upon either (a) a party’s written notice to the other of a dispute to be resolved under the Alternative Dispute Resolution provision of the Terms and Conditions, or (b) when the parties begin negotiations under such section of the Terms and Conditions.  This provision gives suppliers a substantial incentive to provide Toyota with prompt written notice of any dispute to be resolved under the Terms and Conditions. Participating in negotiations can serve the same end, but a written communication will create more clarity as to when the tolling of the limitations period begins.

18. Toyota (2021) (Section 8.12): •

The following supersedes the 2009 summary.

•

All disputes will be resolved through good faith negotiations, then non-binding mediation before a single mediator, and then binding arbitration before three arbitrators. o Either party may demand mediation, to be conducted through ADR Services, JAMS, or the International Institute for Conflict Prevention and Resolution before a single mediator. o If mediation does not resolve the dispute within 90 days, either party may demand arbitration before a three-person panel. The arbitration will be subject to the rules of the same arbitral forum that conducted the mediation. The arbitrators may only award damages permitted under the Agreement, plus attorney fees and expenses. o The Terms address timing and process for the mediation and arbitration processes.

•

Either party may proceed in court only to (1) seek provisional relief, such as a preliminary injunction; or (2) to enforce the arbitration award. If suit is filed, it must be in the state or federal court in Wayne County, Michigan.

•

Dispute resolution communications are confidential and subject to the settlement discussion privilege.

•

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 This provision gives suppliers a substantial incentive to provide Toyota with prompt written notice of any dispute to be resolved under the Terms and Conditions. Participating in negotiations can serve the same end, but a written communication will create more clarity as to when the tolling of the limitations period begins.  The 45-day notice allows the parties 45 days to assess whether initiating arbitration is necessary to prevent the expiration of any applicable statute of limitations. 19. Volkswagen (Sections 37, 38 and 43): •

VW provides a stepped-up protocol for resolution of disputes involving the contract, including an initial meeting with discussions between both parties’ respective field representatives, a second meeting in which the representatives meet again, nonbinding mediation, and then binding arbitration in accordance with the AAA Rules and in accordance with Agreement terms. Arbitration shall be governed by the Federal Arbitration Act or the Tennessee Uniform Arbitration Act, as applicable. All arbitration proceedings shall be conducted in Hamilton County, Tennessee in accordance with the AAA Rules.

•

Any court relief sought under Section 38 shall be brought in and subject to the exclusive venue and jurisdiction of the courts of Hamilton County, Tennessee or the US District Court for the Eastern District of Tennessee, as applicable, provided that VW may elect to seek such relief against Supplier in any court having jurisdiction over Supplier.

•

Any legal action or arbitration by Supplier must be commenced no later than one year after the breach or other event giving rise to Supplier’s claim occurs, or Supplier becomes aware of the existence (or facts and circumstances giving rise to the existence) of such claim, whichever occurs first.

20. Volvo (Section 28): •

The location for dispute resolution is subject to the Volvo Buyer’s principal place of business (Sweden, Belgium, Malaysia, US, China and India). Local law applies in all locations. All locations except the US have mandatory arbitration. US disputes are governed by the laws of South Carolina and the courts of Berkley County, South Carolina have jurisdiction. Both Volvo and Supplier waive the right to a jury trial.

•

Injunctive and other forms of interim relief are available, as permitted by local law.

21. MEMA OE Suppliers (Section 20): •

Michigan law applies.

•

Michigan is the exclusive forum for litigation.

•

The United Nations Convention on Contracts for the International Sale of Goods will not apply to the Contract.

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PART FOUR I.

OEM’s Intellectual Property 236

II.

Supplier’s Intellectual Property

249

III. Infringement 263 IV.

Cybersecurity 274

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I. OEM’s Intellectual Property – Context and Questions 1. OEM Intellectual Property Most OEMs retain ownership of all their intellectual property and grant the Supplier a limited license to supply the Parts to the OEM. However, in every instance where an OEM expressly grants such a supply license, there is no detail regarding the material terms of the supply license or the consequences for any breach of the supply license. 2. Significant Variation There is significant variation in the contractual intellectual property of the OEMs. Further, there are significant differences between suppliers in the nature and extent of their intellectual property concerns. Intellectual property provisions are among the more common points of negotiations with the OEMs. 3. Artificial Intelligence, Intellectual Property and Confidentiality The emergence of generative and agentic artificial intelligence (“AI”) creates legal risks, both under general confidentiality and intellectual property provisions in OEM standard terms and through incorporated AI-specific polices that some OEMs have adopted. Some of these risks include the disclosure of technical information and trade secrets to third parties (including the AI company), as data may be incorporated into the AI platform’s model. Ownership of ideas and designs may be in question, depending on the AI platform being used. Other threats to the security and integrity of information and data also exist. These contractual obligations to customers should be understood and considered as part of an overall internal strategy when deploying AI and assuring that all people involved in working on programs understand AI risks and mitigation strategies. 4. MEMA Approach to Intellectual Property Consistent with most OEM terms, under the MEMA model terms, the OEM does not transfer any intellectual property rights to the Supplier and the Supplier only obtains a supply license under the Purchase Order. The MEMA model terms expressly require the Supplier to keep confidential all non-public OEM information marked as confidential by the OEM. The MEMA model terms do not grant the OEM ownership of any of the Supplier’s intellectual property except for the limited purpose of maintaining supply of Parts if a supplier fails to do so (for example, due to bankruptcy).

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I. OEM’s Intellectual Property – OEM Comparative Analysis 1. BMW (2018) (Sections 12.1 - 12.3, 15 and 18): •

Neither party shall use any of the other party’s proprietary names, logos, trademarks or service marks without prior written consent of the other party.

•

Supplier may not publish that it has contracted with or has been supplying goods to BMW unless required by law.

•

BMW’s terms do not address the ownership of Intellectual Property.

•

Supplier shall mark the parts as directed by BMW.

•

Supplier must keep confidential all non-public commercial or technical information belonging to BMW and may not reproduce that information without the consent of BMW.

•

Supplier must include corresponding confidentiality provisions in its contracts with subcontractors.

2. BMW (2022) (Sections 12.1-12.3, 15 and 18): •

BMW made several changes to its Intellectual Property provision, Section 15. However, BMW continues to not address the ownership of either BMW’s or Supplier’s intellectual property.

•

Supplier may not publish that it has contracted with or has been supplying goods to BMW unless required by law.

•

Neither party shall use the other party’s copyrights, logos and/or trademarks without prior written consent of the other party.

•

Supplier must keep confidential all non-public commercial or technical information belonging to BMW and may not reproduce that information without the consent of BMW.

•

Supplier must include corresponding confidentiality provisions in its contracts with subcontractors.

3. FCA US (2021) (Sections 4, 10, 16, 17 and 18): •

Supplier will mark goods in accordance with FCA US’s instructions.

•

All property provided or paid for by FCA US (including drawings and specifications) remains the property of FCA US and must be plainly marked and safely stored separate from Supplier’s property.

•

No rights are granted to Supplier under any FCA US patents except as necessary to complete the work unless expressly provided in the Order or otherwise agreed to in a writing signed by FCA US.

•

Supplier will not place any of its own marks on the parts if the part bears a FCA US or the part design is peculiar to FCA US.

•

Suppliers must keep all information confidential.

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4. F CA US / Stellantis US (2022) (FCA US Sections 4, 10, 16, 17 and 18 and Stellantis Global Sections 19 and 20): •

The Global Terms address intellectual property and data ownership in far greater detail than the FCA US Terms. The following summarizes the new provisions and replaces the 2021 summary to the extent of overlap.

•

Definitions {Global §19a}: o Intellectual property (“IP”) rights broadly include patents, copyrights, source code and data base rights, trade secrets and all proprietary rights regardless of whether they have been registered, with broad license rights.

•

Foreground Intellectual Property Rights {Global §19b}: o “Foreground IP” is defined as IP created by the FCA alone, by the FCA and the Supplier, or by the Supplier in fulfillment of the contract, or relating to the Goods. o Foreground IP is owned by the party that created it or, if jointly created, by both parties. o If owned by Supplier, FCA is granted a royalty free, fully paid-up, perpetual, nonexclusive license with the right to sublicense. o If jointly owned, each party may license it on a non-exclusive basis to any third party with no requirement to seek approval or to account.

•

Background Intellectual Property Rights {Global §19c}: o “Background IP” is that which existed before the date of the contract or before technical cooperation began or that a party acquired indirectly or outside of the agreement. o Each party retains ownership of its Background IP.

o Supplier grants FCA an irrevocable, worldwide, nonexclusive, fully paid up, royalty free license to its Background IP, to be used solely if the Supplier breaches or is unwilling or unable to deliver goods or as is required to support the contract under a force majeure event. •

Copyrights and Droit d’aunteur {Global §19d}: o Copyrighted material will be considered works for hire to be owned by FCA. Where these rights cannot be assigned, Supplier grants FCA an exclusive, irrevocable, perpetual, worldwide, royalty-free, fully paid up, transferrable and sublicensable license.

•

Miscellaneous {Global §19i}: o If a product is based on drawings, designs, software, model or specification of the FCA, Supplier cannot use the design or output for its own purposes and cannot sell it to third parties without written authorization. o Supplier warrants that it will comply with all requirements for software.

•

Trademarks {Global §19j}:

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o Supplier may use and reproduce FCA trademarks in accordance with FCA’s published marking and branding standards. o Supplier may not use its own trademarks or any third-party trademark on FCA’s goods. •

Extension of Goods to new countries {Global §19k}: o If FCA decides to produce products containing the goods in a new country, upon request, Supplier will use best efforts to help FCA localize the goods, including through the acquisition of licensing if required.

•

Data {Global §19}: o FCA owns all Data rights (including any intellectual property rights vesting in the data). Seller obtains no rights or licenses to use FCA Data other than the rights needed to perform the contract. o Seller-provided, internal cost data given to FCA is not FCA Data. o Seller must protect FCA Data from unauthorized disclosure.

o Seller will discontinue use of any FCA Data or FCA trademarks or logos upon FCA request and return or destroy such items, at FCA’s direction. •

Software {Global §19}: o Right to Repair: FCA, dealers, customers and related subcontractors have the right to repair including remanufacture, reconstruct, reflash or rebuild components without paying royalty. o Free and Open Source Software: Supplier cannot include any free and open source software unless FCA agrees in writing. If the goods include any such open source materials, they must comply with any additional open source terms in the contract. o Logic Keys: Supplier may not include any security certificate logic keys which were not agreed to in writing.

5. Ford (2004) (Sections 15, 17, 35.03 and 46): •

Supplier may use Ford intellectual property rights only for production and supply of parts for Ford.

•

Supplier must comply with Ford’s Vehicle Parts Branding Directive (a separate document – there is a process for exceptions).

•

Supplier must obtain Ford written consent to use Ford intellectual property rights or other Ford property to make parts for third parties.

•

Supplier must use reasonable care to protect all non-public Ford confidential information (including all information about volume projections, future product plans, or other information designated by Ford (orally or in writing) as confidential).

•

Supplier will not incorporate Buyer’s logos, trademarks, trade names or unique part numbers on any other products manufactured or distributed by Supplier except as provided in the Purchase Order or to comply with a governmental requirement.

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6. Ford (2021) (Sections 14, 15, 16): •

Material changes from 2004. The following supersedes the 2004 summary.

•

Supplier may use Ford intellectual property rights only for production and supply of parts for Ford.

•

Supplier must comply with Ford’s Parts Brand Protection Supplier Guide.

•

Supplier must obtain Ford written consent to use Ford intellectual property rights or other Ford property to make parts for third parties.

•

Work for Hire: Any work of authorship created by Supplier or its employees under a Purchase Order will be considered as a “work made for hire” and all copyrights for same will belong to Ford.

•

Supplier must use reasonable care to protect all non-public Ford confidential information (including all information about volume projections, Buyer Data, future product plans, information that would be reasonably regarded as being confidential in nature, or other information designated by Ford (orally or in writing) as confidential).

•

Ford’s confidentiality obligations under Section 15 apply to Supplier Confidential Information disclosed to Ford on or after January 1, 2021.

7. General Motors (Sections 23 and 30): •

IPR is defined broadly to any technology, invention, patent rights, source code, software rights, and any equivalent trade secret. IPR does not include branding or trademark rights.

•

GM owns its “Background IPR,” i.e., IPR it owned prior to the earlier of the PO or technical cooperation or which it developed independent of the contract.

•

GM owns “Foreground IPR,” which it developed under the contract.

•

IPR Terms are superseded if there is an existing or concurrent separate written IP agreement that expressly supersedes them.

•

GM has a royalty free right to repair, reconstruct, remanufacture, reflash or rebuild products.

•

Parts made based on GM drawings or specifications may not be used for Supplier’s own uses or sold by Supplier to third parties without GM’s consent. GM will own all copyrights either as a “work made for hire” or, if not a “work for hire,” then by assignment.

•

Without GM’s consent, Supplier may not disclose that it has contracted to supply the goods and may not use GM’s trademarks, trade names or confidential information in advertising or in any form of electronic communication, including websites, blogs, or other postings.

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•

All GM provided information is confidential and may not be disclosed to any third party, including subcontractors, without GM’s written consent.  On its face, this requires GM’s consent not only to engage a subcontractor, but to share discrete pieces of information with it.

8. Honda (Section 8): •

In the absence of a written agreement, ownership of all tools, equipment, dies, jigs, returnable containers, Specifications, and other materials and all intellectual property related to them furnished to Supplier by Honda or to be paid for by Honda is Honda’s property.

•

All Honda property shall be plainly marked “Property of Honda.”

•

In the absence of a written agreement, ownership of all inventions, products, processes, apparatus, or designs, patentable or unpatentable, conceived, invented, or originated by either party prior to the date of the applicable PO, will remain the property of that party and is to be held in confidence by the other Party.

•

All information intended to be held in confidence shall be marked Confidential or disclosed as such.

•

In the absence of any prior written agreement, ownership of patents, design patents, and other intellectual property with respect to joint development activity belongs to Honda.

•

If the parties have joint research or development activities, Honda and Supplier may agree in writing on the ownership of Intellectual Property rights. Without a written agreement, ownership will belong to Honda and Supplier agrees that each of its employees and others under its control are subject to obligations to vest ownership. Supplier must require employees and others to execute an assignment of rights.

9. Hyundai (Sections 19, 24 and 25): •

Supplier may not provide parts to third parties that have been made from Hyundai drawings or specifications or that bear Hyundai’s marks, trademarks, or trade names.

•

Hyundai does not transfer any patent rights to Supplier other than as needed to fulfill Order obligations.

•

Supplier must keep confidential all non-public Hyundai specifications, drawings, designs, manufacturing data, and other information transmitted to Supplier, and it may not use that information for any purpose that is “detrimental to the interests of” Hyundai.

10. Kia (Sections 19, 24 and 25): •

Same as Hyundai.

11. Lucid (Sections 10.2, 12, 17.1-17.3 and Schedule 1): •

All Lucid Confidential Information is Lucid’s property.

•

Any Work Product that may qualify as “work for hire” is Lucid’s property.

•

Anything that does not qualify as “work for hire”, Supplier agrees to irrevocably assign to Lucid all right, title, interest and IP Rights in and to the Work Product.

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•

Supplier agrees to cause its personnel to irrevocably waive, to the extent permitted by law, all claims to the Work Product.

•

Supplier agrees that any inventions, processes, development, research or experimental activities first reduced to practice in its activities with Lucid will be owned by Lucid.

•

Supplier has no rights in Lucid Intellectual Property, including no right to reverse engineer.

•

A separate Confidentiality Agreement (as defined on Schedule 1) is incorporated into the Agreement and the terms of the Confidentiality Agreement survive termination of the Agreement for a period of seven (7) years from the date of termination, notwithstanding any terms in the Confidentiality Agreement providing for an earlier termination.

12. Mazda (Sections 13, 14.1, 14.2, 14.4, 14.5 and 14.6): •

Mazda ownership is tied to the defined terms “Information” and “Intellectual Property.”

•

“Information” broadly defined to include, among other things, concepts, conclusions, knowledge, know-how, practices, processes, procedures results and research) whether or not patentable or copyrightable.

•

“Intellectual Property is defined to include Information which is used or useful or otherwise disclosed or made available to the other Party in connection with the Products.

•

Mazda owns Information which it has provided or for which Seller has been reimbursed.

•

Mazda owns all works of authorship and other written work products or materials created by Seller in the course of performing under the Contract, (i) as works for hire; or (ii) by assignment. If Mazda ownership is not possible, then Mazda receives a perpetual, worldwide, exclusive, royalty free license.

•

Mazda owns Intellectual Property resulting from engineering, consulting or development services which it has funded.

•

Seller grants a permanent paid-up license for any operating software incorporated in the Products.

•

“Confidential Information is broadly defined to include, in substance, all non-public information regarding the parties or the Product, including Intellectual Property and Information, as well as contract terms and Mazda’s identity.

•

Each party owns its confidential information.

•

Each party will keep the other party’s Confidential Information in confidence and use it solely for the purpose of performance under the Contract. The receiving party may disclose it to its personnel, subcontractors, directors, and other representatives only on a “need to know” basis, will inform each of them of their confidentiality obligations, and will have in place a written agreement requiring compliance.

•

If disclosure is legally required (e.g., by subpoena), the receiving party must first notify the disclosing party to allow it to seek a protective order.

•

The receiving party is liable for any breach by its representatives.

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•

The receiving party shall have in place reasonable safeguards to protect the Confidential Information.

•

Mazda may require the return or destruction of its confidential information.

•

The receiving party consents to an injunction to prevent wrongful disclosure.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 5.3(f)(t), 14.1, 14.3, 24. 1 and 32): •

MBUSI retains ownership of all of its intellectual property rights and no rights are granted other than a limited, nontransferable, nonexclusive right and license to use MBUSI Intellectual Property only to the extent to fulfill obligations under the agreement to supply MBUSI with parts unless otherwise expressed in writing to the extent licensed in that agreement. MBUSI owns all work product as work for hire.

•

MBUSI reserves all ownership right to its Data, Supplier may only use Data in performance of Services. If Supplier has access to MBUSI Data that may be Personal Data, Supplier shall execute necessary agreements to address data protection.

•

Supplier agrees to comply with the Standard Essential Patent Addendum, as may be agreed to between MBUSI and Supplier.

•

MBUSI grants the Supplier the right to sublicense the MBUSI Intellectual Property to a Lower Tier supplier only to the extent necessary to supply components under the original agreement. This agreement must be in writing and does not possess the right to grant additional sublicenses.

•

MBUSI may assign any of its intellectual property rights without any notice to Supplier.

•

Supplier may not sell “Marked Parts” (MBUSI marked or custom designed parts) to any third party.

•

Upon expiration of Agreement, or at MBUSI’s request, Supplier shall return or destroy all Proprietary Information.

14. Nissan (Sections 15, 17, 22 and 23): •

All intellectual property owned by Nissan and created before any Development Work remains Nissan intellectual property.

•

Supplier may use Nissan intellectual property only to fulfill its obligations under the contract.

•

Nissan Property must be marked and not commingled with Supplier’s property or that of any third person and may not be moved from Supplier’s premises without Nissan’s prior approval.

•

Supplier must keep confidential all non-public information about Nissan that is of a secret or confidential nature, but it may disclose this information as necessary to subcontractors who agree to keep it confidential.

15. Rivian (Sections 12, 14, 39.10 and 39.11): •

All products, whether or not patentable, any idea, invention, concept, design, prototype, product configuration, process, technique, procedure, system, plan, model, program,

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software or code, data, specification, drawing, diagram, flow chart, documentation, or the like that are created in the course of performing any purchase order are the sole and exclusive property of Rivian. •

Supplier agrees that all inventions are “works made for hire.”

•

Supplier assigns all ownership right, title and interest in the products and its associated intellectual property to Rivian.

•

The Confidentiality provision in the terms and conditions will prevail over any previously executed confidentiality or non-disclosure agreement.

•

Mutual confidentiality obligation restricting use and disclosure to performance under the contract. The confidentiality period continues for a period of five (5) years after termination of the contract.

16. Scout Motors (Sections 24, 26, and 31): •

All Supplies, Tooling, and all other deliverables, data, inventions, industrial designs, technical information, know-how, processes of manufacture and other intellectual property and information created, developed, conceived or first reduced to practice by or on behalf of Supplier are the sole and exclusive property of Scout upon payment.

•

Supplier will promptly disclose in an acceptable form and grant a non-exclusive, irrevocable, worldwide license and all right, title, and interest in all deliverables, data, inventions, patents, patent applications, utility models, copyrights, trade secrets, trademarks, industrial designs, technical information, know-how, processes of manufacture and other intellectual property and information created, developed, conceived or first reduced to practice by or on behalf of Supplier, including works for hire.

•

Supplier agrees that Scout’s Property includes proprietary and confidential information (“Confidential Information”) and regardless of whether it is marked as such, Seller agrees to keep all Confidential Information in strictest confidence.

•

Supplier can only disclose Scout’s Confidential Information within Seller’s organization to those employees that have a need to know and must prevent any of the information from being divulged to third parties.

•

The confidentiality obligations survive the termination of the Order and continue for the longer of (i) a period of five (5) years from the date of disclosure, or (ii) a period ending three (3) years after termination or expiration of any related Order, or (iii) as long as Scout’s Confidential Information remains a trade secret, unless a specific period is specified in writing by Scout.

•

Supplier may not advertise or publish that it is furnishing Supplies to Scout.

17. Toyota (2009) (Sections 2.1(b), 4.5, 4.6 and 5.6): •

Supplier may not sell Toyota unique Parts (“Items”) to third parties other than Supplier’s standard stock items.

•

Supplier may not disclose any confidential information of Toyota, except as necessary to for supply of Items to Toyota.

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•

Supplier may not reverse engineer, decompile or disassemble the Toyota’s property that reflects the Toyota’s Confidential Information.

•

Toyota does not transfer to Supplier any intellectual property of Toyota other than the limited right to use such intellectual property in conjunction with manufacturing, supplying and/or repairing any Items or Tooling.

18. Toyota (2021) (Sections 3.1.3, 5.6, and 5.7 and Schedule A): •

The following supersedes the 2009 summary.

•

Item Specifications are Toyota’s IP.

•

Toyota retains ownership of all Supplier modifications or improvements to its intellectual property.

•

All data created, collected, generated, stored and transmitted (“Item Data”) is owned by Toyota and Supplier has no rights to the data except as permitted in the parties’ Agreement.

•

Supplier may not sell Items or anything that utilizes the Item specifications, to a third party, except for standard stock.

•

If the parties enter into a “Supplemental Development Agreement,” the IP rights will be defined in that Agreement.

•

If Items are developed pursuant to a “Request for Design & Development of Parts,” Supplier and Toyota will jointly own jointly developed property and Supplier will own “Secondary Intellectual Property.

•

Supplier may not disclose to third parties any confidential information of Toyota, unless necessary to the contract purpose (and then subject to a either a confidentiality agreement or a professional confidentiality obligation (e.g., with attorneys)) or as required to by law.  The 2009 terms did not specify that confidentiality obligations must be in writing. If Supplier does not currently have written agreements with its employees, subcontractors or other third parties with which it shares Confidential Information, it would be prudent to do that.

19. Volkswagen (Sections 24, 25, 26, 30 and 31): •

All of VW’s intellectual property rights and information remain the property of VW and may not be used for any purpose other than the performance of the Purchase Order.

•

Supplier may not sell any goods manufactured using VW’s Property to any third party without prior express written authorization.

•

Supplier will mark all goods as required by VW.

•

Supplier acknowledges that OEM’s Property includes proprietary and confidential information and agrees to keep all such information (including the terms of the Purchase Order) in strictest confidence whether marked or not by VW, and it will prevent any

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further disclosure to third persons not employed by Supplier without VW’s consent, including having recipients acknowledge confidential status and agree to similar restrictions. 20. Volvo (Sections 10.1 and 12): •

Supplier may use Volvo’s intellectual property, trademarks and confidential information only when performing under the Purchase Agreement.

•

The receiving party shall use reasonable care to treat the other party’s confidential information as confidential and cannot directly or indirectly disclose it to third parties, expect they may share it with affiliates, consultants, sub-tier suppliers, contractors, experts and agents so long as they have agreed in writing to keep the information confidential.

•

Supplier must obtain Volvo’s consent before providing any of Volvo’s confidential information to anyone that manufactures or distributes motor vehicles or otherwise directly or indirectly competes with Volvo.

•

Volvo recommends that Supplier does not place any Supplier confidential information onto Volvo’s electronic system unless Volvo has provided Supplier with notice that the system is configured to keep the information confidential.

21. MEMA OE Suppliers (Sections 11, 16 and 17): •

Each party retains ownership of its background IP.

•

Foreground IP is jointly owned if both parties materially contributed to its development. Otherwise, it is owned by the developing party.

•

Jointly owned IP may be licensed by each party.

•

Buyer has a license to use Supplier’s IP solely if Supplier is unable or unwilling to supply the goods.

•

Copyrightable work is work for hire.

•

Each party retains ownership of its confidential information. The receiving party will not disclose or use it except for purpose of the contract and will protect it with the same degree of care it uses for its own confidential information. On request, the receiving party will destroy disclose the disclosing party’s confidential information, except for one copy for legal purposes and backup copies.

•

Supplier must maintain reasonable enterprise, product and supply chain cyber-security measures.

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Confidentiality of OEM information required

Supplier must obtain confidentiality from lower tier Suppliers

Marking of Parts with OEMs trademarks

OEM expressly retains ownership of its Intellectual Property

Supplier licensed to use OEM’s Intellectual Property for Supply of Parts to OEM (Supply license)

Supplier may not publicize its supply relationship with OEM without permission

OEM may assign ownership of its intellectual property rights without notice to Supplier

Parts supplied to OEM may not be supplied to third parties S

BMW 2022

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA US 2021 Y

FCA/ Stellantis 2022 Y

Ford 2004 Y

Ford 2021

I. OEM’s Intellectual Property – Dashboard GM Y

Honda Y

Hyundai Y

Kia Y

Lucid S

Mazda Y

MBUSI Y

Nissan Y

Rivian S

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2009 Y

VW Y

Volvo Y

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MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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II. Supplier’s Intellectual Property – Context and Questions 1. Ownership – Separate Agreement Any Supplier with intellectual property that provides the Supplier with a competitive advantage in the marketplace must carefully evaluate the OEMs Terms and Conditions and must plan to obtain a separate technology or confidentiality agreement (or addendum) to protect its innovations. These terms are relevant in any default situation, particularly where an OEM is in a bankruptcy proceeding or a Supplier cannot provide an appropriate response to a request for adequate assurance. 2. OEM Rights in Supplier IP Most OEMs grant themselves at least sufficient rights to the Supplier’s intellectual property to maintain supply of the Parts in the event of a disruption or termination of the supply relationship. In several instances, the OEMs expressly obtain ownership of the Supplier’s intellectual property rights, thereby divesting the Supplier of their own intellectual property. 3. Confidentiality of Supplier IP Some OEMs promise to keep certain Supplier technical information confidential, but most OEMs require the Supplier to first meet procedural requirements. 4. Enforcing Patents and Copyrights Many OEMs now follow GM’s approach where the Supplier may only enforce the Supplier’s patents and copyrights against the OEM and no other intellectual property rights (i.e., trade secret misappropriation). Many OEMs also specifically require an assignment of any copyrights the Supplier may have in the Parts. This may lead to significant consequences resulting from an OEM bankruptcy proceeding, as the Supplier’s assigned copyrights may be owned by a new entity such as a bankruptcy trustee or the asset purchaser of the bankrupt company—which could be a competitor to the Supplier. 5. Trade Secret Enforcement Against OEM Unlikely Most OEMs aggressively restrict the intellectual property rights a Supplier may assert against an OEM, by requiring the Supplier to waive virtually all claims to assert rights in disclosed intellectual property, with the exception of certain valid patents (and sometimes copyrights). There is a serious risk to any Supplier in disclosing confidential information to these OEMs as it arguably loses all trade secret protection if the Supplier fails to take reasonable steps to protect such information from becoming publicly known. Subsequently, such Supplier technical information may be freely disclosed to its competitors absent a separate agreement to the contrary. 6. MEMA OE Suppliers Model Terms The MEMA OE Suppliers model terms do not transfer ownership of any Supplier intellectual property rights to the OEM; they include mutual confidentiality restrictions and require only limited licensing of Supplier intellectual property rights for use by the OEM to obtain supply © 2026 MEMA Original Equipment Suppliers

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of the Parts from another source after the contract is terminated by either party. The OEM is entitled to a license at contract termination, but the terms of the license vary. The OEM will not be responsible to pay the Supplier a fee for the licensed intellectual property rights if the OEM terminates the contract because of a Supplier’s default termination without cause. Suppliers are strongly advised to invest in negotiating improved Terms and Conditions on Supplier’s intellectual property rights and licenses for conditions where the Supplier or the OEM becomes financially troubled or files a bankruptcy proceeding.

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II. Supplier’s Intellectual Property – OEM Comparative Analysis 1. BMW (2018) (Sections 12.2, 15.3, 18): •

Neither party shall use any of the other party’s proprietary names, logos, trademarks or service marks without prior written consent of the other party.

•

Upon request by BMW, Supplier must disclose to BMW all intellectual property rights known to Supplier and used in the design or manufacture of the parts or otherwise affect or relate to the parts.

•

BMW receives a fully paid, unrestricted, perpetual, non-exclusive license to use any Supplier intellectual property rights necessary to use Tooling. This license applies to uses for series and spare part production by BMW or by third parties and Affiliated Companies.

•

BMW must keep confidential all non-public commercial or technical information belonging to Supplier and may not reproduce that information without the consent of the Supplier.

2. BMW (2022) (Sections 12.2, 13.1, 15 and 18.1): •

BMW made several changes to its Intellectual Property provision, Section 15. However, BMW continues to not address the ownership of either BMW or Supplier intellectual property.

•

Supplier must indemnify BMW for any third party claims arising out of Intellectual Property Rights of any third party with respect to the Goods. Supplier is not liable, however, to the extent that the infringement results from the production of Goods in accordance with BMR’s technical instructions.

•

Seller must inform BMW, on request, of any intellectual property rights used in the design or manufacture of the Goods.

•

BMW must keep confidential all non-public commercial or technical information belonging to Supplier and may not reproduce that information without the consent of the Supplier.

3. FCA US (2021) (Sections 10, 16, 17 and 23): •

Supplier’s right to protection of its intellectual property is limited to rights under valid copyrights or patents applicable to the parts (all other intellectual property disclosed to FCA US is without any protection).

•

FCA US obtains a non-exclusive, world-wide, paid-up, irrevocable and perpetual license to any intellectual property incorporated into or used to make the design for tooling.

•

FCA US is granted a non-exclusive, world-wide, paid-up, irrevocable license to any Supplier intellectual property that is incorporated into the design, used to make the goods, or is used in connection with the sale of goods for the life of the vehicle programs using the goods. This license includes use in service parts.

•

Supplier may not use its trademark or name on any product if the good bears a FCA US trademark or a FCA US identifying mark (or “marked part”).

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•

Upon request by FCA US, Supplier must provide any design aids, specification, or information regarding goods or Work Product.

4. F CA US / Stellantis (2022) (FCA US Sections 10, 16, 17 and 23 and Stellantis Global Sections 19 and 20): •

See discussion in Part IV, Section 1 regarding Supplier rights in intellectual property and related topics.

5. Ford (2004) (Sections 16, 17, 19 and 20): •

Ford may disclose without restriction (other than rights under patents or trademarks) Supplier’s “Level One Materials” (general definitions of geometrics and functional attributes of parts as they interface with the vehicle).

•

Ford will treat as confidential “Level Two Materials” (more detailed design, manufacturing, and technical information) that meet requirements of Confidentiality (non-public information).

•

If the parties cannot agree on a classification for particular materials, they are deemed to be Level One Materials.

•

Ford will keep confidential non-public information of Supplier disclosed under the contract (but not otherwise) that has been so identified in writing by Supplier and that falls within certain specified categories (such as Level Two Materials, information provided under a Team Value Management initiative, etc.).

•

Supplier does not grant to Ford any license to any intellectual property rights for any off the shelf products of Supplier (not functionally or structurally developed for Ford Purchase Order).

•

For any part under a Purchase Order including Design Services that has been designed or modified by Supplier for Ford’s vehicle application, Supplier grants to Ford (1) a permanent, paid-up, non-exclusive, world-wide license, with the right to sublicense, in any intellectual property developed in the course of performing work under the contract, and (2) a non-exclusive, world-wide license on “commercially reasonable terms” to all other Supplier Background intellectual property embodied in the parts.

•

Supplier grants to Ford a permanent, paid-up license for Supplier’s copyrights for Embedded Software to: (1) use, repair, modification, and sale of any parts having Embedded Software therein, and (2) in any tangible medium of expression delivered under the contract, to use, reproduce, copy, prepare derivative works, or display publicly.

•

Supplier is obligated to obtain similar intellectual property rights Terms and Conditions with its Suppliers.

6. Ford (2021) (Sections 15, 16, 18, and 19): •

Other than section numbering and nomenclature, material changes are:

•

Certain software and SaaS Products will remain the property of the Supplier including: (1) commercial off-the-shelf software and its derivatives; (2) software made as a service and its derivatives; (3) patents, copyrights, industrial design and proprietary rights that are not developed specifically for Ford.

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o The confidentiality obligations discussed are extended to also include Efficiency Initiative, Software and SAAS. o Penultimate bullet, license is expanded as follows: 

Supplier grants to Ford a permanent, paid-up license for Supplier’s copyrights for any software and SaaS Products, which are included as standalone or embedded in the Goods and Tech Products, unless otherwise specified differently on the applicable Purchase Order. This License is limited to the use, repair, modification, or sale of any software or SaaS Products, in conjunction with the use or sale of Goods and Tech Products.

7. General Motors (Sections 22, 23 and 29): •

GM or its subcontractors may repair, reconstruct, or rebuild parts without any royalty payment to Supplier.

•

If the contract is for creation of copyrightable works, they are considered “works made for hire.”

•

To the extent works are not “works made for hire,” Supplier assigns to GM all copyrights and moral rights therein.

•

Supplier will not assert any claim (other than for patent infringement) against GM for any use by GM of Supplier’s technical information (“there are no secrets”).

•

Seller owns Seller developed Foreground IPR.

•

GM has an irrevocable, worldwide, nonexclusive, perpetual, royalty free, fully paidup license with the ability to sublicense without limitation to use Seller developed Foreground IPR.

•

GM receives a “Limited License” to use seller’s Background IP for the life of the program solely for the goods or services that are the subject of the contract and only if Supplier breaches or repudiates its supply obligation.

•

GM has fully paid, irrevocable, non-exclusive, worldwide, perpetual license in any Intellectual Property Rights owned by or licensed to Seller with the right to grant sublicenses as necessary for any use of GM’s Property (Tooling).

•

Seller is responsible for assuring that it has all proper intellectual property rights and/or licenses to allow Buyer to possess rights under this Contract. Seller is also responsible to assure it complies with any responsibilities under software licenses.

•

Supplier’s information is not confidential unless GM has signed a separate confidentiality agreement.

8. Honda (Section 8): •

•

All information intended to be held in confidence shall be marked Confidential or disclosed as such.

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•

Supplier grants Honda, and Honda affiliates, subsidiaries, and designees, nonexclusive, royalty free, irrevocable licenses under any patent, copyright, or other property right to use, modify, publish, or distribute, provided however, that such grant is only for the purpose of the manufacture, assembly, distribution, and sale of products and parts by Honda, its affiliates, subsidiaries, and designees. Supplier must inform Honda of all patents, copyrights or other intellectual property rights as soon as possible, but no later than thirty (30) days before first delivery of the Goods.

9. Hyundai (Section 19): •

Hyundai and its subcontractors may repair, reconstruct, or rebuild the parts without payment of any royalty to Supplier.

•

If the contract is for creation of copyrightable works, they are considered “works made for hire;” if it is not a work made for hire, then Supplier assigns to Hyundai all ownership rights to those works.

•

For inventions made by Supplier during activities under the contract, Supplier grants to Hyundai a non-exclusive, royalty-free worldwide license to such intellectual property rights.

10. Kia (Section 19): •

Same as Hyundai.

11. Lucid (Section 17.4): •

Supplier Technology is defined as technology that Supplier can demonstrate with supporting documentation that Supplier owned, created, or discovered with the use of Lucid’s Confidential Information or Lucid Intellectual Property. It remains Supplier’s property, but if Supplier incorporates or uses any Supplier Technology in providing the Development Goods or the goods thereafter, Supplier grants Lucid a non-exclusive, irrevocable, royalty-free, perpetual, worldwide license under all Intellectual Property Rights in such Supplier Technology with broad use rights, including making derivative works.

12. Mazda (Section 18.4): •

Seller’s IP ownership rights are never defined.

•

Seller grants Mazda and its subcontractors an irrevocable, non-exclusive worldwide license to Seller’s IP used in the Products, exercisable only upon transfer to supply to a successor supplier. Unless the transfer is the result of breach or insolvency, Mazda will pay a reasonable royalty for patented IP. Note — the provision is silent as to nonpatented IP.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 14.1, 14.3, 19.1 and 24.1): •

Supplier retains ownership and exclusive rights for all of its background intellectual property.

•

MBUSI owns all rights in all inventions and all Work Product that Supplier creates as part of supplying parts to MBUSI.

•

MBUSI owns all copyrights either as a “work made for hire” or, if not a “work for hire,” then by assignment.

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•

Supplier agrees to comply with the Standard Essential Patent Addendum, as may be agreed to between MBUSI and Supplier.

•

Supplier grants rights for MBUSI to inspect and access books and records concerning Supplier’s Intellectual Property used, in whole or in part, to produce the products or services. Supplier shall assure that MBUSI has this right to inspect at any sub-supplier level.

•

All Proprietary Information remains confidential but not for any parts supplied to MBUSI unless Supplier first provides MBUSI with written notice.

14. Nissan (Sections 14, 15 and 22): •

Nissan may copy, use, and disclose Supplier’s “Acceptance Drawings” (drawings based on specification tenders by Nissan and design released by Nissan).

•

Supplier must furnish, and Nissan must keep confidential, other technical information needed by Nissan to understand the parts.

•

Supplier retains all intellectual property rights owned prior to the start of development work.

•

Supplier grants to Nissan a perpetual, paid-up, royalty-free, non-exclusive, world-wide, irrevocable license, with a right to sublicense, to use all Supplier intellectual property embodied in acceptance drawings (except only for patents prior to beginning the development work) to make or sell parts (or similar parts from third parties).

•

At Nissan’s request, Supplier must grant Nissan a non-exclusive license with a right to sublicense all of Supplier’s other intellectual property embodied in or used in connection with the parts on terms to be agreed upon by the parties.

•

Nissan may disclose Supplier’s confidential information not only to Nissan affiliates but also to entities that have a “strategic alliance” with Nissan provided that Nissan ensures that such affiliates and allies are aware of and undertake to maintain the secrecy of such confidential information.

•

For all of Supplier’s inventions based upon Nissan’s information or technical data, Supplier must notify Nissan and the parties shall discuss and agree on ownership of any intellectual property rights.

•

When requested by Nissan either during the term of the PO or in the event of a Termination under Article 27, Supplier grants to Nissan a perpetual, paid-up, royaltyfree, non-exclusive, world-wide, irrevocable license, with a right to sublicense, to use all Supplier intellectual property embodied in acceptance drawings (except only for patents prior to beginning the development work) to make or sell parts (or similar parts from third parties).

•

When requested by Nissan, either during the term of the PO or in the event of a Termination under Article 27, Supplier must grant to Nissan a non-exclusive license with a right to sublicense all of Supplier’s other intellectual property embodied in or used in connection with the parts on terms to be agreed upon by the parties.

•

Nissan’s right to disclose Supplier’s Confidential Technical Information to a competitor of Supplier is “limited.”

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15. Rivian (Section 12): •

Supplier assigns all ownership of all right, title and interest in the product and any associated intellectual property to Rivian.

•

Supplier grants Rivian an irrevocable, non-exclusive, royalty-free, worldwide license, with the right to grant sublicenses, to use any technical information, know-how, copyrights and patents, or other intellectual property owned or controlled by Supplier or its affiliates to make, have made, use, sell and import the products.

•

Any third-party proprietary materials, information, or intellectual property may be used or incorporated into the product only if Supplier obtains from the third-party a perpetual, worldwide, fully paid-up, royalty-free, non0exclusive license permitting Rivian and its affiliates to use, sublicense and distribute the third-party material and information.

•

Supplier shall have contracts in place with all third-parties consistent with the above terms.

16. Scout Motors (Sections 24 and 27): •

Seller assigns to Scout all right, title, and interest in and to all deliverables, data, inventions, patents, patent applications, utility models, copyrights, trade secrets, trademarks, industrial designs, technical information, know-how, processes of manufactures and other intellectual property and information and must cause its employees to sign the necessary papers to enable Scout to file any applications to maintain, perfect or defend.

•

Seller grants Scout and its representatives a non-exclusive, irrevocable, worldwide license, including the right to sublicense others in connection with providing the Supplies to Scout under (i) patents, patent applications, utility models, trade secrets, industrial designs, technical information, know-how, processes of manufactures and other intellectual property, owned or controlled by Seller or its affiliates, and relating to the Supplies, to make, have, made, repair, reconstruct, rebuild, relocate, use, sell, offer to sell and import the Supplies, and (ii) any works of authorship fixed in any tangible medium of expression furnished by Seller in the course of Seller’s activity under an Order, to reproduce, distribute, and display such works, and to prepare derivative works.

•

The license is effective from the first date of acceptance of the Order and extends until the expiration of Seller’s services parts obligation (“License Period”). Scout will pay a reasonable royalty for the license, but the reasonable royalty is deemed to be included in the price paid to Seller for the Supplies. If Scout terminates the Order prior to the end of the License Period, Scout will pay an additional amount to Seller as a royalty.

•

Scout and Seller acknowledge and agree that the License granted and accepted will take immediate effect (if not already in effect) in the event that: 1) an Order for Goods is terminated by Scout, and/or 2) the Seller is unable to satisfy the quality, quantity, delivery or related requirements of Scout.

17. Toyota (2009) (Sections 4.5, 4.6 and 4.7): •

All information, documents, data, and other materials produced or acquired by Supplier in performing the contract, which is not Supplier’s intellectual property, become Toyota’s property.

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•

All other information and data of Supplier related to the parts must be disclosed to Toyota upon request, and Toyota may use this intellectual property without restriction other than any patent rights and Toyota’s confidentiality obligations.

•

Toyota may not disclose confidential information of Supplier.

•

Supplier must grant to Toyota a permanent, paid-up, non-exclusive, world-wide license with a right to sublicense to use for any purpose any patented or unpatented invention by Supplier conceived in the course of Supplier’s work under a contract issued by Toyota with the intent of having Supplier conceive of such inventions.

•

Supplier must grant to Toyota a non-exclusive, paid-up, world-wide license with a right to sublicense to Toyota affiliates only to other Supplier intellectual property as needed to manufacture, assemble, and produce Toyota vehicles.

•

There will be no fee for the limited license and use of Supplier intellectual property if Toyota terminates the Terms and Conditions and contract documents due to breach by Supplier. Otherwise, a reasonable fee will be negotiated among the parties for use of Supplier’s intellectual property.

18. Toyota (2021) (Section 5.7): •

The following supersedes the 2009 summary. o Supplier’s Intellectual Property is not explicitly defined, but the definition of Intellectual Property and of Toyota’s Intellectual Property (summarized in the previous section) should be reviewed in assessing what constitutes Supplier IP. o Toyota receives specific license rights in Supplier’s Intellectual Property, including a Production License; Software License and Rights to Supplier IP Upon Supply Delay. 

The Production license grants Toyota Parties an expansive royalty-free license to use Supplier IP as appropriate for the use of Tooling, Specifications and use with Items. The duration is limited to for the duration of the Program in which an Item is used.



The Software License grants a non-exclusive, paid-up, royalty-free, transferrable, perpetual, irrevocable, worldwide, with rights to sublicense. The license provides Toyota Parties with the perpetual use of the Software on any of its program, including future programs.



The “Supply Delay” license applies if Toyota determines there is a substantial likelihood that production will be imminently interrupted as a result of an actual or perceived threat. It is a non-exclusive, paid-up, royalty-free, worldwide license, with rights to grant sublicenses until threat is over or supply relationship is terminated.

•

Toyota may not reverse engineer, decompile or disassemble the Supplier’s property that reflects Supplier’s Confidential Information.

•

If Open Source Software is used, Supplier must: o Disclose it in the bill of materials,

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o Obtain Toyota’s approval, and ensure that the license does not require that the software or derivatives need not be disclosed or distributed in Source Code. 19. Volkswagen (Section 24): •

Supplier transfers to VW all ownership of all intellectual property rights created under the Order for which VW has agreed to reimburse Supplier.

•

Supplier grants to VW and its subcontractors a free right to repair, reconstruct or rebuild the Supplies delivered under the Order.

•

Supplier grants VW a non-exclusive, irrevocable, worldwide license with the right to sublicense to others Supplier’s intellectual property relating to the Supplies to manufacture and sell the Supplies. VW will pay Supplier a “reasonable royalty for the License” except during first two model years such reasonable royalty shall be deemed included in piece price and thereafter is royalty free.

•

The License granted to VW is effective from the first date of acceptance of the Order and extend until the expiration of Supplier’s services parts obligation. Further, the License shall survive the events described above, including termination of the Order and continue (even beyond the License Period) until terminated by VW and shall be deemed fully paid up and royalty-free except as provided in the next sentence. If VW terminates the Order before the end of the License Period (except in the case where VW terminates the Order due to a breach by Supplier), Buyer shall pay an additional amount to Supplier as a royalty during the License Period (or earlier termination date if VW terminates the License prior to the end of License Period) and VW and Supplier shall negotiate a commercially reasonable amount for such royalty.

•

License granted by Supplier to OEM is executory and is subject to 11 U.S.C. 365(n) such that OEM has right to maintain license rights, provided it continues to meet its obligations under the supply license.

•

Supplier shall ensure that all of its sub-suppliers and subcontractors are bound by terms and conditions of Section 24.

20. Volvo (Sections 10.2, 10.3, 10.4 and 10.6): •

Supplier shall provide Volvo with technical information required to install, assemble and otherwise use the goods including but not limited to, information necessary to support Volvo’s engineering release and software source code.

•

The technical information will be categorized as either Level One Material or Level Two Material. If Supplier and Volvo cannot agree on the designation of any technical information as Level One Material or Level Two Material, the information will be deemed Level One Material.

•

Volvo may use and disclose Level One Material without restriction, regardless of whether they have been marked “Confidential” or “Proprietary” or something similar.

•

Level Two Material constitute Confidential Information.

•

If Supplier supplies software for use with the goods, the object code is Level One Material and, unless otherwise agreed, the source code is Level Two Material.

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•

The party that creates Foreground intellectual property owns the intellectual property. If created jointly, it is owned jointly.

•

Supplier grants, for itself and its affiliates, a permanent, paid-up license for any intellectual property owned or controlled by Supplier or its affiliates (now or in the future) necessary remanufacture and/or have remanufactured, but not to newly manufacture, the goods.

•

Supplier grants, and must cause its affiliates to grant, Volvo a world-wide, non-exclusive, fully paid-up, sub-licensable license to use any copyright embodied in the technical information and software. Only Level One Material, however, may be distributed to third parties.

•

Supplier will indemnify Volvo for any claims of intellectual property infringement or misappropriation. Supplier shall take on the defense and investigation. Volvo may, at its own expense, handle and defend the same. No settlement agreements may be entered into that involves Volvo commitment or obligation without Volvo’s consent.

21. MEMA OE Suppliers (Sections 11, 16 and 17.2): •

This topic is addressed in Part 4, Section I.

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Supplier grants OEM a license to use Supplier’s background Intellectual Property rights to obtain supply from another source solely to supply Parts Supplier grants OEM ownership/free license for Supplier’s Intellectual Property for inventions made in developing Part for supply that OEM may use to obtain supply from another source Supplier is obligated to disclose its intellectual property rights for Parts to OEM Supplier grants rights to its intellectual property if OEM pays for engineering, design or development OEM has right to license to Supplier’s intellectual property to maintain supply of Parts if Supplier is terminated or Supplier fails

Specific Provisions Provided in Terms and Conditions

BMW 2018 S

BMW 2022

FCA US 2021 S

FCA/Stellantis 2022 Y

Ford 2004 S

Ford 2021 S

GM Y

Honda

II. Supplier’s Intellectual Property – Dashboard Hyundai S

Kia S

Lucid Y

Mazda S

MBUSI S

Nissan S

Rivian Y

N(d)

Toyota 2009 S

Toyota 2021 S

VW Y(c)

Y(c)

Volvo

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

Supplier transfers ownership to OEM or grants free license for Embedded Software to OEM S

Copyrights are “work made for hire” or, if not a work made for hire, ownership of copyright is transferred to OEM

BMW 2022

BMW 2018

Supplier is obligated to obtain similar intellectual property rights Terms and Conditions with its Suppliers

OEM agrees to keep Supplier information confidential with requirements Supplier obligated to mark information as “CONFIDENTIAL” in writing Supplier may enforce only its patent and copyrights against OEM and not any trade secrets

Specific Provisions Provided in Terms and Conditions

FCA US 2021 S

FCA/Stellantis 2022 S

Ford 2004 Y

Y(a)

Ford 2021 Y

Y(a)

GM S

Honda S

Y(b)

Hyundai S

Kia S

Lucid S

Mazda S

MBUSI S

Nissan S

Rivian S

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2009 S

Toyota 2021 S

VW Y

Volvo N

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MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(e) Supplier assigns its ownership right, title, and interest in all associated intellectual property and grants irrevocable, royalty free worldwide license and right to sublicense.

(d) Supplier grants OEM and its affiliates a non-exclusive, irrevocable royalty-free, fully paid worldwide license to sue Supplier’s Intellectual Property.

(c) VW’s Terms and Conditions state that VW agrees to pay to Supplier a reasonable royalty for the License except as stated therein. The exceptions stated leave the Supplier with limited ability to collect a royalty.

(b) Under Honda’s terms a Supplier may enforce its intellectual property rights against Honda provided the Supplier informed Honda of the existence of the intellectual property rights within 30 days of when the Parts (or the design for the Parts) covered by the intellectual property rights were first provided to Honda. This is an onerous burden on any Supplier and requires a Supplier to have a proactive administrative option to disclosing its intellectual property rights or risk losing its ability to enforce its intellectual property rights against Honda.

(a) Ford has a two-tier approach to protecting a Supplier’s information as confidential and expressly states that Level One materials are NOT confidential and that Level Two materials may be kept confidential if non-public and specific.

Specific Notes

The Dashboard is intended to provide a simple, high-level comparison among the OEM and MEMA OE Suppliers Terms and Conditions on certain basic issues. It is necessarily over simplified, omitting limitations, exceptions and nuanced distinctions regarding the contract terms, and it should be used accordingly.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

III. Infringement – Context and Questions 1. Scope of Indemnification for Intellectual Property Infringements All OEMs’ Terms and Conditions require the Supplier to indemnify the OEM for third party intellectual property infringements asserted against the supplied parts. Many expressly require indemnity even where the Supplier is not design-responsible (when the Supplier has simply used the OEM-mandated design/specification). The Supplier’s duty to indemnify the OEM for such liability typically extends beyond the parts themselves, including the parts in combination with other components or systems. Additional principles under the UCC may apply to Intellectual Property infringement, including the implied warranty of merchantability, which may require that the supplied parts not infringe any third-party intellectual property. 2. Global Indemnification Obligation The Supplier is typically responsible for all alleged infringements that occur anywhere in the world. The Supplier will be obligated to defend or pay the costs of defense anywhere in the world that the OEM may ship the parts or vehicles. The OEMs’ view arises from the belief that the Supplier is in the best position to investigate and manage the clearance of intellectual property infringement, even when the OEM mandates design specifications. 3. Notice / Control of Defense/Duty to Coordinate Most OEMs’ Terms and Conditions require that notice be provided for both suspected and actual intellectual property infringements. While all of the OEMs’ Terms and Conditions expressly require indemnification, it is unknown how such indemnification obligations will work in practice. Uncertainties include which party has the right to control the defense and who may determine whether to settle. Several OEMs’ Terms and Conditions expressly state the Supplier bears the full cost and responsibility to obtain a license or to modify infringing components. 4. MEMA OE Suppliers Model Terms The MEMA OE Suppliers terms are focused and balanced regarding intellectual property infringements and the Supplier’s duty to indemnify. There is an express duty to indemnify the OEM for all third-party intellectual property infringements, but the MEMA OE Suppliers model terms expressly exclude a Supplier’s duty to indemnify and be liable for third party intellectual property infringements when the parts have been modified by the OEM.

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III. Infringement – OEM Comparative Analysis 1. BMW (2018) (Section 15): •

Supplier must indemnify BMW and its affiliates for any intellectual property infringement claim based on the parts or BMW’s use of the parts, except to the extent Supplier has manufactured the parts in accordance with BMW’s instructions and could not reasonably be expected to know that these instructions would result in infringement.

•

Each party must notify the other of any suspected or actual infringements of which they become aware.

•

Supplier must assist in the investigation of any third-party infringement claims.

•

In any infringement action, BMW may select its own counsel, subject to Supplier’s reasonable approval. When BMW selects its own counsel, the Supplier’s obligation extends to the reasonable costs and fees incurred.

•

If there is a claim of infringement, Supplier must provide a non-infringing source of supply which may require obtaining licensing or redesign of the product.

•

If an infringement claim is brought against BMW, BMW may request that Supplier intervene, but Supplier retains discretion whether to do so.

•

Supplier will have sole control over the defense of any infringement claim.

•

Supplier required to disclose copyrights used in manufacture or design.

2. BMW (2022) (Section 15): •

Supplier must indemnify BMW against all liabilities, costs, damages, claims and expenses (including in- and out-of-court costs and legal fees), as well as costs arising from settlement agreements for any claim arising out of the intellectual property rights of a third-party.

•

Notwithstanding the above, Supplier has no indemnification obligation to the extent the infringement resulted from the production of Goods in accordance with BMW’s technical instructions and Supplier did not know and could not know that infringement would occur.

•

Each party must notify the other of any suspected or actual infringements of which they become aware.

•

Supplier must assist in the investigation of any third-party infringement claims.

•

BMW may select its own counsel. If no exception applies, Supplier is obligated to pay for the reasonable costs and fees associated with BMW’s counsel.

•

In the event that Supplier is notified of an alleged infringement, Suppler must take all necessary steps to secure a supply of Goods without use of such infringement.

3. FCA US (2021) (Sections 8 and 18): •

Supplier warrants that the parts are free of any actual or claimed patent, copyright or trademark infringement claims.

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•

Supplier must defend and indemnify FCA US and its customers for any intellectual property infringement claim resulting from use or sale of the parts or services provided and must pay all expenses and fees of counsel incurred in defending such suits.

•

Supplier agrees to investigate any intellectual property infringement claim made against FCA US and its customers.

•

No exception is stated where FCA US is design responsible.

4. F CA US / Stellantis (2022) (FCA US (2021) Sections 8 and 18 and Stellantis Global Section 20): •

No material additions or changes from FCA 2021, except: o Indemnified parties are expanded to include Stellantis and its affiliates.

o If there is a third-party infringement claim, Supplier must, at FCA’s option and Supplier’s expense: (i) obtain the right to continue use of the infringing Goods; (ii) obtain substitute Goods; or (iii) modify the goods to avoid infringement. 5. Ford (2004) (Section 21): •

Supplier must defend and indemnify Ford and third parties using the parts for any intellectual property infringement claim based on Supplier’s work under the contract or based on the manufacturing, sale, or use of the parts alone or in combination with other components (either by reason of their content, design, or structure or based on Supplier’s recommendations).

•

Supplier’s indemnification obligations specifically apply even if Ford furnishes all or a portion of the design and specifies all or a portion of the processing.

•

Ford will determine the extent of Supplier’s financial responsibility based on Supplier’s relative involvement in the design of the parts, Supplier’s awareness of potential for infringement claim, the extent to which Supplied goods gave rise to the infringement claim, the duration and nature of the Supplier relationship, and other relevant factors.

6. Ford (2021) (Sections 19, 20, 21): •

Extensive revisions from 2004. The following summary supersedes 2004 summary.

•

Supplier must indemnify against any claims for any alleged infringement of any IPR based on the Supplier’s activity under the Purchase Order, or the manufacturing, marketing, sale, or use of Goods and Tech Products (i) alone; (ii) in combination by reason of their content, design, or structure; or (iii) in combination in accordance with Supplier’s recommendations. Supplier’s indemnification obligations specifically apply even if Ford furnishes all or a portion of the design and specifies all or a portion of the processing.

•

If a claim of infringement is asserted, Supplier may: o at its cost, replace or modify the Goods and Tech Products if Ford agrees in writing that such replacement or modification achieves the substantive results of the original version of such Goods and Tech Products. o Procure at its expense a license for Buyer to use the allegedly infringing Goods and Tech Products.

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•

The Supplier grants Ford a “permanent, paid-up, non-exclusive, worldwide” license that is limited to the “use, repair, modification, or sale” for any software or SaaS.

•

The Global Terms supersede any EULA, click-through terms, or consent that is used in association with Goods or Tech Products.

•

Goods and Tech Products include support, updates and enhancements in accord with the Purchase Order or, if the Purchase Order is silent, “support services, including updates and enhancements, which it makes generally available.”

•

In the case that a Supplier ceases to provide maintenance and support, files a petition for bankruptcy or is subject to an involuntary petition, the Supplier will grant Ford a license to use and modify the source code. The Supplier will then provide the source code and related technical documents to Ford in order to continue the use of the software or SaaS.

•

Ford can export all Buyer Data or request the Supplier to provide a copy of all Buyer Data in an agreed format.

•

Ford has the right to copy the Goods and Technical product containing software in order to: understand the products, to backup or archive the software, and to install and run the software.

•

Ford has the right to modify Goods and Tech Products as long as the modifications are destroyed upon termination or expiration.

•

Ford owns all Buyer Data (defined above in § 1.01).

•

Supplier has limited revocable license solely as needed to provide the Goods and Tech Products.

•

Supplier prohibited from using de-identified, aggregated or anonymized data in a way that would make it identifiable.

•

If Supplier breaches data protection obligations, it is responsible for all reasonable data notification response, including notification, forensics, credit protection and other mitigation.

•

Supplier Data (defined above in §1.01) shall be provided to Ford on request.

•

Ford has right to use Supplied Data for analytics, operations and manufacturing.

•

Ford has right to use Supplied Data with third parties.

•

Ford has right to merge Supplied Data.

•

Formatting and specifications of Supplied Data must comply with “Supplier Production Data Supplier Guide.”

•

Supplier must comply with “PII Supplement” and Information Security Supplement.”

7. General Motors (Section 24): •

Supplier must defend and indemnify GM, affiliates, dealers, its successors and its customers for any intellectual property infringement claim related to parts or services, including trade secret misuse and misappropriation.

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•

Supplier expressly waives any claim against GM that the infringement arises from compliance with GM specifications.

8. Honda (Section 6.1): •

Supplier must defend and indemnify Honda for any intellectual property infringement claim related to the parts and Honda’s uses thereof, or use of Honda’ or its affiliates trade names, trademarks, service marks, copyrights, patents, trade secrets, or any other intellectual property rights associated with the Goods or Honda’s purchase, sale or use thereof.

9. Hyundai (Sections 12(c) and 19(a)): •

Supplier warrants that the parts will be free from any actual or claimed infringement of third-party intellectual property rights.

•

Supplier must defend and indemnify Hyundai for any intellectual property infringement claim based on Supplier’s acts or omissions regarding the parts, even if the parts are only part of the component subject to the infringement claim and regardless of whether the infringement arose because of compliance with Hyundai’s specifications.

10. Kia (Sections 12(c) and 19(a)): •

Same as Hyundai.

11. Lucid (Sections 6.2 and 10.2): •

Supplier expressly warrants that the Goods will not infringe any Intellectual Property Right of any third party.

•

Supplier agrees to defend, hold harmless, and indemnify the Indemnified Parties against any Losses resulting from claims of infringement.

•

If supplied parts are no longer supplied due to infringement action Lucid may exercise termination.

•

If any Goods become or are likely to become the subject of an infringement or misappropriation claim, Supplier must promptly notify Lucid and at Supplier’s expense: (a) secure the right to continue manufacturing and selling the Goods; or (b) if this cannot be accomplished, then replace or modify the Goods to make them non-infringing or without misappropriation; or (c) if neither (a) or (b) can be accomplished, then no earlier than 180 days after the date of Supplier’s infringement notice, Supplier may stop selling the affected Goods to Lucid.

•

For any infringement of Supplier Technology, Supplier agrees its sole remedy is compensatory damages from the manufactures and/or distributors of said components. Supplier shall hold harmless Lucid, its Affiliates, and their respective directors, officers, employees, successors and assigned with respect to any Component Claims.

12. Mazda (Sections 9.1, 11.1, 11.2): •

Seller warrants against infringement.

•

Seller’s indemnity obligations for infringement are addressed in Indemnity (Part Three, Section 4).

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13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 14.2 and 14.4): •

Supplier warrants that all supplied parts will not infringe any third-party intellectual property rights.

•

The parties will advise each other without undue delay when a third-party intellectual property claim or right may affect the use of a product or service part.

•

Supplier will defend and indemnify MBUSI against any infringement claim.

•

Supplier has duty, at its cost, to take actions to obtain a license to continue to supply the applicable parts or to redesign the parts to avoid infringement.

14. Nissan (Section 16): •

Supplier must defend and indemnify Nissan and its affiliates for any intellectual property infringement claim in connection with the parts, either alone or in combination with other components (no exception is provided if Supplier is not design-responsible).

•

Supplier must immediately notify and furnish all information relating to any intellectual property disputes to Nissan.

•

Nissan may at its option assume the defense and resolution of any infringement claim (and Supplier must still indemnify Nissan for the costs of any resolution that Nissan unilaterally accepts).

15. Rivian (Section 18.3): •

If a product or service becomes or, in Supplier’s reasonable opinion, is likely to become, the subject of an infringement or misappropriation claim, Supplier must, at its sole expense, either (i) procure for Rivian the right to continue to use the product or services; or (ii) replace or modify the product or service to make it non-infringing, provided that the modified product or service meets the specifications and all other contract requirements.

16. Scout Motors (Section 24f): •

Supplier agrees to defend, hold harmless and indemnify Scout, and its successors and assigns against any suit, claim or action for actual or alleged direct or contributory infringement of or inducement to infringe any proprietary right and against any resulting damages or expenses (including attorney’s fees and other professional fees, settlement and judgments).

•

Supplier expressly waives any claim against Scout that such infringement arouses out of compliance with Scout’s specifications.

•

Supplier expressly waives any claim against Scout in any way related to a third-party claim of any kind or nature whatsoever, including claims arising out of specifications furnished by Scout.

•

Supplier expressly waives any claim that if the sale or use of the Supplies is enjoined or, in Scout’s sole judgement, is likely to be enjoined, Supplier will, at Scout’s election and Supplier’s sole expense, procure Scout’s right to continue using the Supplies, replace the same with the equivalent goods or modify such so they become non-infringing.

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17. Toyota (2009) (Section 4.6(e)): •

Supplier will indemnify and defend Toyota against all Tooling-related or Supplier-partrelated infringement claims in the US, E.U., Japan and any other jurisdiction if Supplier has knowledge of alleged infringement and fails to promptly disclose such to Toyota.

•

If such a claim exists or is likely to exist, Supplier must (1) secure a license that permits Supplier to keep using or producing and Toyota to continue using the part at issue; (2) modify the part so as to become non-infringing; or (3) replace the items with noninfringing but equivalent items.

•

Supplier will have no liability unless Toyota provides Supplier with full information, cooperation, and assistance regarding an infringement claim.

•

Supplier will have no liability based upon Item or Tooling modification made by Toyota.

•

Supplier will have proportional liability as mutually agreed upon or in the reasonable exercise of Toyota’s business judgment.

18. Toyota (2021) (Sections 7.1 and 7.2): •

The following supersedes the 2009 summary.

•

Where an Intellectual Property Infringement Claim results, or is likely to result, in an injunction or order that prevents Toyota from using the Intellectual Property, Supplier must either (at Toyota’s discretion) secure a license, modify the Item, or replace the Item.

•

The territorial scope of the non-infringement obligation has expanded from NAFTA (in thee 2009 Terms) to include the EU, Japan, and, in some circumstances, any other jurisdiction in which Supplier is on notice of a potential claim.

•

Supplier will indemnify the Toyota Party and harmless from and against any and all Losses alleged to have been caused by Supplier in connection with an Intellectual Property infringement claim.

19. Volkswagen (Sections 24 (e) and (f)): •

Supplier warrants the Supplies are original to Supplier and shall not incorporate or infringe upon any intellectual property rights of any third party unless authorized by VW.

•

Supplier must indemnify VW for any intellectual property infringement claim resulting from Supplier’s performance of the contract and against any resulting damages or expenses (including all costs, attorney fees, settlements and judgments).

•

Supplier indemnifies VW even if it only supplies a portion of the Supplies.

•

Supplier expressly waives any claim against VW that such infringement arose from compliance with VW’s specifications.

•

If VW believes Supplies may likely be enjoined, Supplier will, at VW’s election and Supplier’s sole expense (1) procure right to permit VW to keep using Supplies; (2) replace the items with non-infringing but equivalent items; or (3) modify the Supplies to become non-infringing.

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20. Volvo (Section 10.6): •

Supplier must indemnify Volvo and its affiliates, directors, officers, and employees from any and all losses arising out of a claim of infringement of intellectual property or trademarks or misappropriation of third-party confidential information.

•

Supplier’s indemnification obligation applies even if Volvo or its affiliates furnished a portion of the design of the goods or specified all or part of the manufacturing process.

•

Supplier’s indemnification obligation, however, does not apply to build-to-print goods.

21. MEMA OE Suppliers (Section 11.7): •

Supplier must defend and indemnify the OEM and its customers for any intellectual property infringement claim in the US, the European Union, or Japan, or in another jurisdiction if Supplier is aware of a claim of infringement in that jurisdiction and fails to disclose it to OEM within 10 days after accepting the Purchase Order.

•

If a claim results or is likely to result, in an order that limits use of the parts, Supplier must either secure a license or replace or modify the parts so that they become noninfringing.

•

Supplier’s liability is conditioned on receiving full cooperation from Buyer. Supplier will have no liability for infringement if the claim is based on modification of the parts by Buyer, by a third party, by Supplier at OEM’s request, or through interconnection of the parts with other components or parts made to specifications which were not provided by Supplier.

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BMW 2018 Y

BMW 2022

FCA US 2021

Supplier has a duty to defend and indemnify the OEM from intellectual property infringement involving the supplied Parts Supplier expressly warrants that Parts are free from intellectual property infringement claims Supplier implicitly warrants that Parts are free from intellectual property infringement claims by expressly warranting transfer of title Supplier is responsible to obtain license, alternate non-infringing source of Parts or to modify Part design to resolve intellectual property infringement Supplier is responsible for intellectual property infringement for Parts made pursuant to OEMs specifications or modified by OEM

Specific Provisions Provided in Terms and Conditions

FCA/ Stellantis 2022

III. Infringement – Dashboard Ford 2004 Y

Ford 2021 Y

GM Y

Honda S

Hyundai Y

Kia Y

Lucid S

Mazda Y

MBUSI S

Nissan Y

Rivian Y

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota 2009 S

Toyota 2021 S

VW Y

Volvo Y

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MEMA OE Suppliers

Supplier is responsible for intellectual property infringement for Parts as incorporated into vehicle by OEM

Must notify other party of suspected and actual intellectual property infringement

Supplier’s liability for indemnification is conditioned upon OEM cooperating with Supplier

OEM may control defense of indemnified intellectual property infringement action and Supplier still responsible

Supplier must pay for OEMs legal fees and costs for indemnified intellectual property claim

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BMW 2018

Specific Provisions Provided in Terms and Conditions

BMW 2022 Y

FCA US 2021 Y

FCA/Stellantis 2022 Y

Ford 2004 Y

Ford 2021 Y

GM Y

Honda Y

Hyundai Y

Kia Y

Lucid Y

Mazda Y

MBUSI Y

Nissan Y

Rivian Y

Toyota 2009 Y

Toyota 2021 Y

VW Y

Y(e)

N(d)

Volvo

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to construed in light of the UCC and other law which may provide a “gap filler term or a gloss on an express contract term.

(e) VW implicitly has the right under the general indemnification provisions in Section 17, which cover failures to comply with any terms or conditions of an Order.

(d) OEM a its option may participate in the defense with its own counsel.

(c) Only MBUSI requires a Supplier to transfer ownership of its intellectual property rights for any inventions that correct a third-party infringement.

(b) Only Ford and Toyota indicate they will apportion liability for third party intellectual property infringement based upon considerations of each Party’s responsibility and the relationship of the parties.

(a) All OEMs require a Supplier to indemnify the OEM for third party intellectual property infringements relating to the Parts supplied to the OEM, and most require indemnification even if OEM specification or design caused infringement.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

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IV. Cybersecurity – Context and Questions 1. Cybersecurity The automotive industry is becoming the target of an increasing number of cyber threats and attacks. Not only are company enterprise systems a focus for hackers, but so too is the technology in vehicles. In response, many OEMs have established requirements for protecting these systems. 2. Significant Variation There is significant variation in the contractual cybersecurity within the OEMs. Some OEMs create additional provisions in their terms and conditions. Some provide additional agreements that are incorporated by reference. Others address compliance through “compliance with all laws” and similar provisions, where cybersecurity is regulated. 3. MEMA Approach to Cybersecurity Consistent with most OEM terms, under the MEMA model terms, cybersecurity should be taken into consideration both in products under the agreement and in reasonable reporting for Supplier enterprise systems.

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PART FIVE I.

EM-Owned Tooling and Other O Property 276

II. Payment for OEM-Owned Tooling

293

III. Supplier-Owned Tooling 302

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I. OEM-Owned Tooling and Other Property – Context and Questions 1. Introduction This Section discusses common provisions contained in OEM Terms and Conditions relating to OEM-owned tooling and other property. While all OEM tooling provisions are similar, subtle nuances exist that can significantly impact a Supplier’s rights from both a commercial and legal perspective. 2. Tooling Ownership All current OEM terms state that OEM-owned tooling and property remain the property of the OEM and that placement of the tooling with the Supplier provides the Supplier with no ownership right to the tooling. However, implicitly or explicitly, the OEM only owns the tooling once title has passed to it from the Supplier (and from any third-party toolmaker to the Supplier). The terms of the various OEMs vary significantly as to the time of passing of title. In broad terms, the OEMs can be placed in one of several categories. First, a number of OEMs provide that they own the tooling as soon as it promises to pay for it, which will usually occur upon issuance of a “Tooling PO.” These OEMs own the tooling prior to payment. Second, other OEMs tie ownership to full payment. Third, certain OEMs tie ownership to other events, such as PPAP or similar standards. Finally, BMW provides only that time of transfer will be specified in the Tooling PO. Several UCC principles supplement the OEM terms. First, under the UCC, title cannot transfer until the tooling exists and is identified to the contract. Although the law is not entirely clear, that probably means that for those OEMs that provide for transfer upon promise to pay, or equivalent, title cannot transfer if the tooling is not in existence and identifiable. Second, there are several UCC “gap-fillers” if the contract does not specify the time of transfer. Because the OEM terms do address those questions, the gap-fillers generally will not come into play. 3. Tooling Use All OEM Terms and Conditions expressly limit the use of any OEM-owned tooling or other property for the benefit of the contracting OEM only. 4. Tooling Location The majority of OEMs require that the Supplier identify the location of the tooling and/or prohibit the Supplier from moving the tooling from its facility or to a third party without the OEM’s express consent. The purpose of this provision is to allow the OEM to inspect or audit the tooling at its discretion and, perhaps even more importantly, to allow the OEM efficiently to retrieve the tooling either voluntarily or through the aid of a court order in the event of a dispute. Generally, and particularly in Michigan, if a Supplier refuses to relinquish possession of OEM-owned property voluntarily, the OEM must pursue an action for recovery of the tooling in the county or venue in which the specific OEM-owned property is located. Page 276

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Thus, if the property has been moved to a different county or venue, the OEM may need to pursue relief from a different court or may be hindered in its ability to obtain a timely court order requiring release of the property. Relatedly, where tooling is located outside the United States, recovering the tooling through judicial action generally becomes more difficult and complex. Assuming a US court still has jurisdiction over the Supplier, an order requiring the Supplier to take the necessary actions to deliver the tooling to the OEM is possible, but the process will likely be less streamlined, and the court will not have the ability to assist in facilitating the seizure of the tools in the same way as when the tools are physically located within the court’s jurisdiction. 5. Tooling Maintenance All OEMs require that the Supplier maintain the OEM-owned property, but most exclude from this obligation normal wear and tear. Some OEMs specify, however, that normal wear and tear is the Supplier’s responsibility. This purports to require the Supplier to repair or replace tooling that wears out through normal use at Supplier’s own cost, regardless of increases in forecasted production volumes, program extensions, or other circumstances beyond the Supplier’s control. 6. Tooling Lien Waivers Many OEM terms include language purporting to obligate Suppliers to keep all tooling and other OEM-owned property free and clear of all liens. Some OEMs state that the Supplier prospectively waives all lien claims that the Supplier may have for unpaid work performed on or with the OEM-owned property. These provisions are so broad that they could be read to constitute waiver of a Supplier’s rights to lien tooling for amounts incurred and paid to third party tooling shops at the direction and request of the OEM, but for which the OEM has not yet paid the Supplier. A supplier may be able to argue that these broad, prospective waiver provisions are against public policy or otherwise contrary to the lien statutes, and thus should not be enforced, but this question remains unsettled. 7. Practice Pointer Regarding Tooling Liens and Possession Tooling liens and possession of tooling can afford a Supplier significant leverage in a dispute with an OEM.18 The law of most states allows a Supplier to retain tooling to force payment of amounts owed from the OEM for both the tooling and for parts produced with the tooling. The lien waivers outlined above are an attempt by the OEMs who include them in their terms to circumvent these laws and to eliminate the Supplier’s leverage. Consequently, serious thought should be given at the inception of a contract to attempt to negotiate exceptions, variances, or modifications of the prospective lien waivers discussed above.

See e.g. MCL 570.541 et seq. and MCL 445.611 et seq.

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8. Intellectual Property Considerations and Transfer of Tooling Certain tooling may be the product of significant innovation and development and may itself contain intellectual property. As discussed in Part Four above, OEMs typically retain extensive rights in intellectual property associated with or necessary to produce the OEMs’ goods, and these intellectual property rights typically extend either implicitly or expressly to tooling, particularly when the tooling is OEM-owned. While intellectual property considerations are not addressed in detail in this Part Five, Suppliers seeking to retain any intellectual property rights in any OEM-owned tooling must be extremely cautious in negotiating their agreements, particularly given the extensive rights that OEMs acquire in OEM-owned tooling, and particularly also in light of the risk that the OEM will require the tooling or specification or know-how relating to the tooling to be transferred to the OEM itself or to an alternate supplier (e.g., in the event of contract termination). 9. Warranty Considerations OEM-owned tooling also can present significant warranty implications. Not only are the tools necessary for Suppliers to make the goods are themselves subject to exacting specifications and onerous warranty requirements, but if the useful life of the tools is shorter than anticipated, the Supplier often bears the cost of repairing or replacing the tools. Warranty issues also can arise in connection with the scope of any warranty, or warranty disclaimer, by the OEM with respect to the OEM’s own specifications for the tools, such that building tools to an OEM’s specifications still may not insulate the Supplier from warranty exposure. For this reason, Suppliers must be especially mindful of not only the extent of their own warranty obligations, but those of their sub-suppliers involved in producing the tooling. Certain OEM Terms and Conditions expressly require that sub-suppliers’ warranties to the Supplier also be extended to the OEM.

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I. OEM-Owned Tooling and Other Property – OEM Comparative Analysis 1. BMW (2018) (Section 13): •

There were significant changes in 2018 from the 2014 terms.

•

The time of transfer of title is specified in the Purchase Order.  It is thus important to review each tooling Purchase Order to determine whether, for example, BMW claims title prior to the time of payment (§ 13.1).

•

Supplier must mark BMW property as such.

•

Supplier may not relocate tooling without BMW written consent.

•

Supplier does not acquire any ownership rights in BMW property and may use it only to fulfill its obligations to BMW.

•

Supplier must provide to BMW a list of all tooling used to make parts within four weeks after delivery of first goods for series production and identify the location of the tooling.

•

Supplier must at its expense maintain BMW property and non-BMW property used to manufacture parts for BMW in “unobjectionable” condition during production and in good working condition for 15 years after manufacture of series production ends.  There is no explicit carve out for “ordinary wear and tear” or the like. Arguably the Supplier is responsible for refurbishment or replacement, even if required for ordinary wear and tear.

•

Tooling may not be scrapped without BMW written consent.

•

Insurance required for all tooling required to produce the Goods, whether or not tooling is owned by BMW.

•

Supplier must surrender BMW property to BMW upon request, unless necessary for Supplier to fulfill its obligations to BMW.

•

If a tooling contract terminates before the tooling is completed, BMW may purchase the unfinished tooling at a proportionate share of the contract price.

•

Upon issuance of a Purchase Order for tooling, the Supplier will provide all information regarding the tooling in the MBW “Quotation Analysis Form” and “Tooling Analysis Form.”

•

At or before the time initial samples are produced, Supplier will provide BMW with (i) information on the tooling, (ii) drawings, photos and CAD data, and (iii) a complete list identifying the exact location of the tooling.

2. BMW (2022) (Section 13): •

BMW’s tooling section (Section 13) was again revised in the 2022 terms.

•

If a Purchase Order for tooling is issued, BMW’s “Terms for Transfer of Title of Production Means” shall apply.

•

Whether or not a tooling purchase order has been issued, Supplier has the following obligations:

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o Supplier must have (and show evidence of) adequate insurance coverage for the tooling. o Supplier must treat the tooling with due care and diligence and always keep it in working conditions with the latest design status. o Supplier is responsible for correct and accurate dimensions of the tooling, particularly gauges provided by BMW. o The cost for the repair, care and maintenance is borne by Supplier.

o Supplier must maintain the tooling for fifteen (15) years post-production supply of the Goods. o No later than the time initial samples are produced by means of the tooling for the PPAP, Supplier must provide BMW with (a) information concerning the tooling as required in the QAF and WAF, (b) drawings and CAD-data, and (c) a complete list of tooling and written statement of the exact location of the tooling. •

Supplier must ensure that its subcontractors are bound by the above obligations.

3. FCA US (2021) (Section 10): •

All tooling: (i) for which it has issued a PO and paid for or (ii) if no PO is issued, which is used exclusively for the FCA parts, is owned by FCA and is held as a bailee-at-will.

•

Tooling for which FCA has not paid is “Unpaid Tooling.”

•

All tooling furnished directly or indirectly by FCA US, or for which Supplier is reimbursed by FCA US, is owned by FCA US, and Supplier must mark it as FCA US property and store it separate from Supplier’s property.

•

Supplier bears all risk of loss to FCA US property.

•

Supplier may use FCA US Tooling only on behalf of FCA US.

•

Supplier is responsible for all costs associated with any unauthorized transfer of tooling.

•

Supplier is to maintain tooling in good condition and is responsible for any lost, damaged or destroyed tooling.

•

Supplier is to insure FCA US property for loss or damage.

•

Supplier is not to commingle FCA US property with property of Supplier or third parties.

•

Supplier will keep tooling free of all liens and encumbrances other than statutory liens.

All FCA US tooling or property is to be transferred as directed by FCA US at any time. 4. FCA US / Stellantis (2022) (FCA US Section 10 and Stellantis Global Sections 17 and 18): •

No material additions or changes from FCA 2021.

5. Ford (2004) (Sections 14, 32.01 and 34): •

All tooling and other property furnished by Supplier and to be purchased by Ford becomes Ford property as soon as it is fabricated or acquired by Supplier, regardless of whether Ford has paid for it, and will be held by Supplier on a bailment basis.

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•

Supplier may use Ford tooling or property only on behalf of Ford.

•

Supplier may not move Ford tooling from one location to another one of Supplier’s facilities or to a third-party facility without Ford’s prior written consent.

•

Supplier bears all risk of loss or damage to Ford tooling in its possession or control and must insure it for loss or damage.

•

Supplier must maintain Ford property in good condition including maintenance for ordinary wear and tear (ordinary wear and tear is excluded only for non-tooling items).

•

Supplier may not commingle Ford tooling with other property.

•

Supplier prospectively waives any lien rights it has or may have in any Ford tooling.

•

Supplier must make Ford tooling available for delivery to Ford upon request, and the Supplier is responsible for paying the costs of dismounting, dismantling, and staging the Ford property for return.

•

Supplier must mark Ford tooling as such.

•

Ford may enter Supplier’s premises to inspect Ford tooling and Supplier’s records relating to the tooling.

•

If Supplier provides tooling pursuant to a Ford tooling Purchase Order, the tooling must be capable of producing the volume projections stated in the Purchase Order during the life of the parts (both production and service).

6. Ford (2021): •

No material changes from 2004, except the following replaces the 2nd bullet point above: o Tooling may be used solely to make Goods, including “any additional tools made from Buyer drawings paid for outside of the Buyer’s Tooling Order.”

7. General Motors (Section 22): •

Property becomes Buyer’s Property if GM paid for it, other than through piece price amortization. However, Section 23 also states that “if title in any Buyer’s Property has not otherwise passed to Buyer, title will pass” on the earlier of PPAP or any partial payment.  It is difficult to reconcile the provision that requires payment with the provision that transfers title upon partial payment or PPAP. GM’s intent is unclear.  The piece price amortization exclusion is puzzling, as it is not obvious why GM would not expect to own specifically amortized property. GM’s intent is unclear.

•

All property, including tooling, prototype and production property, related software and accessions, appurtenances, modifications, repairs, refurbishments and replacements furnished by GM or for which Supplier has been reimbursed by GM, is and remains GM property, and it will be held by Supplier on a bailment basis.

•

Supplier may use GM tooling only on behalf of GM.

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•

Supplier shall not move GM property without prior written approval.

•

Supplier is responsible to properly house and maintain GM property.

•

Supplier bears the risk of loss to GM tooling.

•

Supplier must mark GM tooling as being owned by GM and must not commingle GM tooling with property of Supplier or any third party.

•

To the extent permitted by law, Supplier waives all liens, claims, encumbrances, [or] interests rights to GM’s property for work performed on the property or otherwise.

•

Supplier must make GM tooling available for delivery to GM upon request, either F.C.A. Supplier’s plant or to any location designated by GM in which case GM will pay Supplier for associated costs.

•

GM may enter Supplier’s premises to inspect GM tooling and Supplier’s records relating to that property.

8. Honda (Section 8.1): •

Honda’s terms do not specifically address tooling other than to provide that all tools, returnable containers, specifications, related intellectual property and other property furnished, paid for or to be paid for by Honda are “Buyer Materials” and remain Honda property.

9. Hyundai (Section 16): •

All tooling furnished directly or indirectly by Hyundai or for which Supplier is reimbursed by Hyundai is owned by Hyundai, and Supplier must mark it as Hyundai property.

•

Supplier may use Hyundai tooling only on behalf of Hyundai.

•

Supplier must insure Hyundai tooling for loss or damage at its cost for the full replacement value of such tooling. Supplier bears all risk of loss to Hyundai tooling, other than reasonable wear and tear.

•

Supplier cannot commingle Hyundai tooling with property of Supplier or third parties.

•

Supplier waives any current or prospective lien rights on Hyundai tooling.

•

Supplier must upon demand deliver Hyundai tooling to Hyundai in Alabama or another location selected by Hyundai. Hyundai will reimburse the reasonable costs of delivering the tooling.

•

Supplier must pay all taxes related to Hyundai tooling.

10. Kia (Sections 16 and 41): •

Same as Hyundai, except returned property is to be taken to Georgia rather than Alabama.

•

Additionally, the Kia terms deal expressly with Amortized Supplier Property, which includes goods, patterns, and specifications identified by Kia and furnished by Supplier, the cost of which is amortized as agreed upon by the parties.

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•

No third parties may acquire any interest in Amortized Supplier Property, except purchase money security interests on certain terms that allow Kia to exercise control over the property’s disposition in the event of Supplier’s default to the creditor.

11. Lucid (Sections 9.1-9.3): •

Supplier must purchase and maintain all Equipment and Tooling according to Lucid’s specifications and only use Tooling for Lucid.

•

After Lucid’s full payment for Tooling, Supplier will hold such as a bailee.

•

Lucid must be notified of any tooling maintenance required with enough lead time to replace such.

•

Lucid has the right to inspect and/or remove Tooling without liability.

•

Lucid may buy Supplier’s Good Producing Equipment for the lesser of its unamortized or otherwise expended cost or its cost amortized over five (5) years.

12. Mazda (Section 14.4, 14.7, 14.8 and 14.9): •

Mazda owns all tools and materials (and replacements) and other property (“Tooling and Materials”) that it has provided to or for which it has reimbursed Seller. Title will pass upon reimbursement. Seller holds such property as a bailee. Tooling and Materials will be used solely for supply of the Products.

•

Seller will, (i) to the extent practical mark all Mazda Property; (ii) use Mazda Property solely as authorized in, and for performance of, the Contract; (iii) not allow liens or security interests to attach; (iv) not allow any third party to take possession; and (v) separately account for the Mazda Property.

•

Seller is responsible for replacing, repairing and maintaining Tooling and Materials, including in the case of loss, theft or damage. Seller sill promptly notify Mazda of such occurrence.

•

Seller will not substitute and items or materials for Mazda Property.

•

If Mazda provides a component of the Product, Seller must promptly inspect and report any quality or quantity non-conformities.

•

Seller shall return Mazda Property on request.

•

Seller shall insure all Mazda Property at full replacement value.

•

Seller grants Mazda a purchase money security interest in the Tooling and Materials, exercisable upon Seller’s default. Mazda may file financing statements bearing Seller’s signature.

•

Mazda has the option to take possession of the Tooling and Materials. If the Tooling and Materials was reimbursed through piece price amortization and the cost has not been fully amortized, Mazda will pay the lower of net book value or the then current fair market value, less amounts previously paid.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 1.1 (j-l), 5, 10, 22 and 25): •

Buyer Owned Equipment is equipment that has been or is to be paid for by MBUSI.

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•

MBUSI does not take title to Buyer Owned Equipment until PPAP and 80% payment. However, MBUSI has right to immediate possession of tooling regardless of payment or PPAP approval.

•

Following title transfer, MBUSI is the sole and exclusive owner of Buyer Owned Equipment and Supplier has possession as a bailee with a license to use the Equipment solely on behalf of MBUSI and for the purposes permitted in the applicable Purchase Contracts. Supplier expressly acknowledges that it has no ownership interest in such tooling.

•

MBUSI takes a “precautionary” security interest in Buyer Owned Equipment.  The MBUSI terms are ambiguous as to whether the precautionary security interest attaches prior to title transfer.

•

All tooling must be maintained at the location identified in MBUSI Equipment Database and cannot be moved without the express written consent of MBUSI.

•

Supplier is responsible for maintaining the tooling.

•

Supplier is responsible for insuring the tooling against risk of loss. Supplier bears all risk of loss to the tooling.

•

Supplier waives all current and prospective liens on all MBUSI tooling, and further requires that Supplier keep such tooling clear of all liens and encumbrances of any third parties.

•

MBUSI may enter Supplier’s premises to inspect tooling at any time and may immediately remove the tooling if MBUSI determines that the tooling is being improperly used or maintained.

•

MBUSI must be third party beneficiary of any toolmaker warranties.

•

On expiration or termination of the agreement, except for cause, Supplier has the right to purchase the Buyer Owned Equipment for the fair market value, scrap value, or a mutually agreed price.

•

On expiration or termination of the agreement, MBUSI has the option to require Supplier to purchase the Buyer Owned Equipment for $1.00.

•

Supplier is responsible for sales and use taxes on tooling.

•

Responsibility for personal property taxes on Buyer Owned Equipment following title transfer is unclear.  § 25.2(b) states that MBUSI will be responsible for personal property taxes following title transfer but will deduct such taxes from the piece price. § 5.3(j) indicates that Supplier is responsible for payment of such taxes.

14. Nissan (Sections 17, 18 and 39): •

Vendor Tooling is defined as all tooling paid or to be paid for by Nissan and used by Supplier in manufacturing the Parts. Vendor Tooling is lent to supplier and shall be marked as Nissan Property.

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•

Nissan Property is defined to include only those supplies, materials, or other items that are paid for or reimbursed by Nissan to perform Supplier’s obligations.  There is an ambiguity in the Nissan terms. According to the terms, Vendor Tooling is Nissan Property; however, in order for tooling to qualify as Vendor Tooling, the OEM need not have reimbursed the Supplier. Contrarily, Nissan Property is specifically defined as items that have been paid for or reimbursed by Nissan.  It is difficult to reconcile the definitions of Vendor Tooling and Nissan Property. However, the tension can potentially be resolved by the contract maxim that when general and specific clauses conflict, the specific governs the meaning of the contract. Here, Vendor Tooling is the narrower, more specific term, and, under this maxim, would prevail over Nissan Property.

•

Supplier may use Nissan tooling only for the manufacture of Nissan parts.

•

Supplier may not remove Nissan tooling from Supplier’s premises without prior written approval from Nissan.

•

At its cost, Supplier must maintain, repair and replace Nissan property, including normal wear and tear.

•

Supplier assumes all risk of loss and is responsible to repair or replace all damaged tooling, including from normal wear and tear.

•

Supplier may not commingle Nissan tooling with property of Supplier or third parties.

•

Supplier shall immediately deliver Nissan tooling to Nissan upon Nissan’s request.

•

Supplier must mark Nissan tooling as such.

•

Nissan may enter Supplier’s premises to inspect Nissan tooling.

•

Supplier must assure that no liens related to Supplier are attached to Nissan’s Vendor Tooling.

•

Supplier is responsible for all taxes related to Nissan tooling while it is in Supplier’s possession.

•

Suppliers are bound by Nissan’s Vendor Tooling Guidelines, which may be revised, amended, or replaced by Nissan.

15. Rivian (Sections 5.3, 15 and 21.6): •

Rivian may enter Supplier’s property during normal business hours and, without the necessity of a court order, may remove property belonging to Rivian, including tooling, goods and inventory.

•

Rivian holds the right, title, interest to all supplies, materials, tooling, jigs, dies, gauges, fixtures, molds, patterns, equipment, designs, drawings, specifications, and other items furnished or paid by Rivian (“Purchaser’s Property”).

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•

Supplier shall maintain, at its expense all Purchaser’s Property on its premises, shall affix identification to it, not comingle it with other third-party or Supplier property, not move it to another location, and shall adequately insure it.

•

Rivian has the right to enter Supplier’s premises at reasonable times to inspect Purchaser’s Property.

•

Supplier is responsible for the replacement of any of Purchaser’s Property due to normal wear and tear or other reasons, at Supplier’s cost. Title remains with Rivian.

•

Rivian does not warrant the accuracy or suitability of any of Purchaser’s Property and Supplier assumes sole responsibility for inspection, testing and approving prior to use.

•

Supplier waives and releases and agrees not to file or prosecute any statutory, equitable or other liens of any kind, that Supplier has or may have in connection with Purchaser’s Property.

16. Scout Motors (Section 25 and 27): •

All tooling furnished to Supplier for which Scout has agreed to reimburse, has been reimbursed to Supplier, or paid for by Scout is the sole and exclusive property of Scout.

•

Scout does not guarantee the accuracy of, or the availability or suitability of any tooling or other Buyer’s Property supplied by Scout. Supplier assumes all risk associated with the use.

•

Scout has no liability to Supplier or anyone claiming by or through Supplier for any liability and Supplier waives any right to, incidental or consequential or other damages of any kind whatsoever relating to Buyer’s Property.

•

Scout disclaims all warranties, express or implied, with respect to Buyer’s Property, including warranty of merchantability, and fitness for a particular purpose.

•

Supplier waives for itself and its successors and assigns, all claims of negligence and strict liability.

•

Supplier holds Buyer’s Property as a bailee-at-will and bears the risk of loss of and damages to the property.

•

Supplier is solely responsible for inspecting, testing and approving all Buyer’s Property and assumes all risk of injury to persons and property arising from it.

•

Supplier is responsible for housing, maintaining, repairing and replacing Buyer’s Property, at Supplier’s expense, so that it can produce Supplies as required by Scout.

•

Buyer’s Property shall be marked with tags or other means and not comingled with other Supplier’s property.

•

Supplier must insure Buyer’s Property with full fire and extended coverage at its replacement value.

•

Scout has the right to inspect and take possession of Buyer’s Property. Scout can enter Supplier’s premises and take possession.

•

Supplier waives, to the extent permitted by law, any lien or other rights Supplier might otherwise have on Buyer’s Property.

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17. Toyota (2009) (Sections 3.1(f), 3.2(c), 3.6, 3.10-3.11 and 4.5): •

Title to tooling transfers to Toyota when two events occur: (1) Toyota has entered into a tooling contract with a Supplier and (2) the vehicle that contains the part for which the tooling is used is in production or at least past the prototype stage.  If tooling is acquired for a new Toyota program, title will not pass until the program reaches the prototype stage. Otherwise, it will pass at the time of contracting.

•

Tooling is defined as all “production-based tooling, jigs, dies, gauges, fixtures, models, molds, and/or patterns as are required for Items already identified to a vehicle in production or for Items of a vehicle which is beyond the prototype stage of engineering or production....”

•

Supplier may use Toyota property only on behalf of Toyota.

•

Supplier may not move tooling without Toyota’s prior written consent.

•

Supplier must maintain Toyota tooling in good condition and must replace and repair tooling as needed including for normal wear and tear.

•

Supplier must insure tooling for loss or damage.

•

Supplier may not commingle tooling with property of Supplier or third parties.

•

Supplier is required to defend and indemnify Toyota from any third-party liens or encumbrances on the tooling.

•

Supplier must mark Toyota property as such using asset tags provided by Toyota; however, title to tooling will pass regardless of whether the tooling is tagged.

•

Supplier must return Toyota property to Toyota at Supplier’s expense upon demand.

•

Toyota has the right to inspect the tooling at Supplier’s or a lower tier’s facility with reasonable notice.

•

Upon breach, cancellation or termination of a tooling Purchase Order, Toyota may: (1) cancel the tooling Purchase Order, (2) setoff damages against amounts payable to Supplier, (3) deal directly with the toolmaker, and/or (4) require Supplier to stop production of the tooling, gather the tooling for Toyota, and protect Toyota from mechanic’s liens and other claims from third parties.

18. Toyota (2021) (Sections 3.1(f), 3.2(c), 3.6, 3.10-3.11 and 4.5): •

The following supersedes the 2009 summary.

•

All Tooling is solely and exclusively the property of the Toyota Parties. When Tooling is in the possession of Supplier or a Tooling Third Party, such possession is a bailment.  The 2021 terms contain lengthy and very precise definitions of “Tooling” and “Tooling Authorization,” under which tooling that Toyota does not purchase is not “Tooling” and is not owned by Toyota. In other words, the Terms do allow for the possibility of Supplier owned Tooling. See Part V, Section 3.

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•

Supplier may use Toyota property to perform under the Agreement and not for any other purpose.

•

Supplier may not move tooling without Toyota’s prior written consent.

•

Supplier must maintain Toyota tooling in good condition and must replace and repair tooling as needed including for normal wear and tear.

•

Supplier must insure tooling for loss or damage.

•

Supplier may not commingle tooling with property of Supplier or third parties.

•

Supplier is required to defend and indemnify Toyota from any third-party liens or encumbrances on the tooling.

•

Supplier must mark Toyota property as such using asset tags provided by Toyota; however, title to tooling will pass regardless of whether the tooling is tagged.

•

Supplier must return Toyota property to Toyota at Supplier’s expense upon demand.

•

Toyota has the right to inspect the tooling at Supplier’s or a lower tier’s facility with reasonable notice.

•

19. Volkswagen (Sections 24, 25, 26 and 28): •

All tooling provided by VW, made for VW or for which VW has agreed to reimburse or has reimbursed Supplier, is and remains the sole and exclusive property of VW, provided that VW shall become the owner of any item of tooling (as well as any associated intellectual property rights) upon payment for such item of tooling.

•

Supplier will use VW tooling only for the benefit of VW and may only transfer VW tooling to third parties on a bailment basis as a bailee-at-will. Movement of tooling, however, can only be made with VW permission.

•

Supplier assumes all risk of loss, and Supplier must insure VW property for loss or damage.

•

Supplier will store VW’s tooling separate and apart from Supplier’s property whenever practical.

•

Supplier shall keep VW’s tooling clear of all liens and encumbrances and waives any lien rights supplier might have in such tooling. Further, VW’s Tooling shall not be sold, assigned by way of security, pawned, mortgaged, charged or otherwise encumbered or disposed of, or used to manufacture goods for parties other than VW, without the prior written consent of VW.

•

Supplier must return VW tooling upon written request in the same condition as originally received except for normal wear and tear.

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•

All tooling shall be plainly marked or otherwise adequately identified as property of VW.

•

All tooling shall be insured by Supplier, at its expense, against loss or damage (including insurance for its full replacement value). Supplier, at its expense, shall maintain the tooling in good condition, wear and tear included, and immediately replace any items associated with the tooling which are lost, destroyed or worn out. Regardless of ownership, Supplier shall retain and maintain the tooling in accordance with these provisions for 20 years after the termination or expiration of Supplier’s provision of the Supplies to VW. Seller shall ensure that all of its sub-suppliers and subcontractors in possession of VW tooling are bound by terms and conditions of this provision. The obligations set forth in this provision shall survive the expiration, termination or cancellation of any Order.

•

VW can inspect the tooling at all reasonable times and is authorized to enter Supplier’s facilities upon such request.

•

VW can enter Supplier’s property upon written notice and without further notice or legal action and take possession of VW’s property without payment of any kind. Supplier also grants VW a power of attorney to execute and record on Supplier’s behalf any notice financing statement related to VW’s property.

•

Upon request of VW, Supplier shall release and deliver VW tooling to VW either for pickup by VW at Supplier’s dock or to a location designated by VW at VW’s cost.

20. Volvo (Section 18): •

Regardless of ownership, if tooling is in Supplier’s possession, Supplier must (i) maintain it in a condition necessary to produce production goods, (ii) properly store it, (iii) refrain from comingling, (iv) refrain from modifying or replacing without Volvo’s approval, and (v) maintain it for fifteen (15) years for the continued supply of Service Parts. Supplier must also enter into a contract with each of its Sub-Tier Suppliers so that they are similarly obligated.

•

If Volvo purchases Tooling from Supplier, title to the Tooling will pass to Volvo when Volvo issues the tooling purchase order and the Supplier fabricates or purchases the tooling, regardless of whether Volvo has paid for the tooling.

•

Volvo is not required to accept Volvo owned tooling unless it meets the requirements to produce and capable of meeting the Volume Projections for the Goods.

•

Volvo is responsible for insuring Volvo owned tooling. The Supplier will bear the risk of loss and damage to Volvo owned tooling beyond reasonable wear and tear.

•

Volvo has the right to enter onto Supplier’s and sub-supplier’s premises with no advance notice to inspect, retrieve, or recover Volvo tooling and related records.

•

On or before samples of goods are produced, Supplier must provide Volvo with drawings, CAD-data and other technical information required to install, assemble and otherwise use and maintain Volvo owned tooling, including a list of all such tooling.

•

Supplier is to mark all Volvo owned tooling as the property of the Volvo.

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•

Supplier shall not relocate, destroy, scrap, or use Volvo owned tooling without permission.

21. MEMA OE Suppliers (Section 12): •

All tooling (1) furnished by Buyer, or (2) for which Supplier is reimbursed by Buyer is owned by Buyer and will be held by Supplier on a bailment basis.

•

Buyer has right to possession of Buyer tooling on demand, subject to payment of amounts owed for the tooling. If the parties dispute the amount owed, Buyer has right to possession upon payment of undisputed amount, with Supplier retaining all right to payment of the disputed amount.

•

Supplier may use Buyer’s tooling only for the manufacture, storage and transport of parts for Buyer.

•

Supplier may not remove Buyer’s property from Supplier’s premises without Buyer’s written approval.

•

Supplier must maintain Buyer’s tooling in good condition except for normal wear and tear during the useful lifetime of the tooling.

•

Supplier is responsible for loss or damage to Buyer’s tooling.

•

Supplier shall indemnify Buyer for adverse claims of Buyer’s property, except those arising out of acts or omissions of Buyer or its customer.

•

Supplier waives any lien rights with respect to Buyer’s tooling.

•

At Buyer’s request and expense, Supplier must mark Buyer’s property as such.

•

Buyer is responsible for personal property taxes on Buyer’s tooling.

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Tooling is to be used only for the benefit of OEM

Supplier must identify location of tooling and/or is prohibited from moving the tooling without OEM consent

Supplier is responsible for maintenance of tooling

Supplier is responsible for risk of loss and/or to insure tooling

Supplier must keep tooling free of all liens

Tooling must be returned to OEM upon demand

OEM retains right to inspect Supplier’s facility and/or tools S

Y19

BMW 2022

Only if a Tooling PO is issued.

Tooling is owned by OEM

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA US 2021 S

FCA/Stellantis 2022 S

Ford 2004 Y

Ford 2021 Y

GM Y

Honda S

Hyundai

I. OEM-Owned Tooling and Other Property – Dashboard

Kia S

Lucid Y

Mazda Y

MBUSI Y

Nissan Y

Rivian Y

Y(b)

Scout Motors

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota Y

VW Y

Y(c)

Volvo Y

Y(b)

MEMA OE Suppliers Page 291

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(b) Only if the tooling is paid for by OEM.

(a) Kia’s Terms and Conditions also contain an extensive provision regarding a special class of tooling known as “Amortized Supplier Property.” Different terms apply to such “Amortized Supplier Property,” and such terms appear in Section 41 of the Kia Terms and Conditions.

Specific Notes

The Dashboard is intended to provide a simple, high-level comparison among the OEM and MEMA OE Suppliers Terms and Conditions on certain basic issues. It is necessarily over-simplified, omitting limitations, expectations and nuanced distinctions regarding the contract terms, and it should be used accordingly.

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

II. Payment for OEM-Owned Tooling – Context and Questions 1. Introduction This section relates solely to issues regarding payment by an OEM for tooling it has directed a Supplier to produce. 2. Payment Timing Given the expense associated with producing tooling, payment timing is an important issue that can present significant cash flow challenges to Suppliers. Some OEMs address it in their Terms, while others do so in a tooling PO or similar document. OEMs will typically make payment contingent upon the completion of PPAP (with the OEM determining whether and when to accept the PPAP submission) or start of vehicle production. The specific payment milestones and the timing of payment are often the subject of negotiation. 3. Program Cancellation and Launch Delay Various OEMs’ General Terms and Conditions do not squarely address payment for tooling upon program cancellation. Some OEMs will honor cancellation claims; others will not. It can be a very high-dollar, significant issue. Tooling development costs and payment in the event of program cancellation should be negotiated carefully and aggressively with the OEM at the time of contracting. It may be possible to allocate the risks and costs of program cancellation. Similar considerations apply to the risk of a delay in program launch. These delays may leave the Supplier unable to meet the necessary triggering milestones for one or more payments, and delays in a program launch (and, in turn, production) can be particularly problematic for Suppliers that have built the cost of tooling into the piece price. Generally, OEM General Terms and Conditions provide little if any relief for Suppliers in the event of launch delays. Thus, this issue also should be considered as a negotiation point. 4. Tooling Cost Audits All OEMs expressly reserve the right to audit their Suppliers’ records, including records related to the production of tooling. While some of the OEM Terms and Conditions do not directly address a right to audit as it relates to OEM-owned tooling, a Supplier should assume that a right to audit tooling records exists with respect to all customers. OEMs often will use this audit procedure to reduce tooling costs based upon their own tooling guidelines, regardless of the actual amount spent by the Supplier on the tooling. Some OEMs have internal guidelines limiting the recoverable amount to an amount that they have deemed to be “reasonable,” regardless of a Supplier’s actual costs. 5. Tooling Profits An increasing number of OEMs are prohibiting Suppliers from recovering a markup or profit on tooling by limiting the reimbursable price to actual costs to manufacture the tooling.

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6. Time and Cost Adjustments for OEM-Directed Changes Tooling projects frequently involve design and other changes that affect the cost of the tool and the time required to complete it. When these changes are OEM-directed and do not arise from any fault of the Supplier, the Supplier must ensure that it timely submits its adjustment request for the corresponding additional cost or time. While the timing and other requirements for these adjustment requests are not addressed in detail below and generally are subject to or consistent with the Contract Changes provisions addressed in Part One above, Suppliers must remain mindful of these provisions. The deadlines and other submission requirements vary from OEM to OEM and can be the basis of a waiver argument by the OEM that can limit or defeat a Supplier’s adjustment request.

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II. Payment for OEM-Owned Tooling – OEM Comparative Analysis 1. BMW (2018) (Section 13.8): •

Does not specifically address timing or conditions of payment for tooling.

•

Upon issuance of a Purchase Order for tooling, the Supplier will provide all information regarding the tooling in the MBW “Quotation Analysis Form” and “Tooling Analysis Form.”

•

2. BMW (2022) (Section 13): •

Does not address timing or conditions of payment for tooling.

3. FCA US (2021) (Section 10): •

Supplier is required to complete a Tool Record Form (a separate document) and comply with other procedures for submitting requests for reimbursement.

•

Requests for reimbursement are subject to review, approval, and audit by FCA US.

•

Supplier will give FCA US a “Purchase Money Security Interest” in any and all FCA US tooling.

4. FCA US / Stellantis (2022) (FCA US Section 10 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global does not address this topic.

5. Ford (2004) (Sections 34.04, 34.15 and 34.16): •

Supplier must provide sufficient samples, using the tooling and other requisite documentation, to satisfy Ford PPAP and provide a Part Submission Warrant as a prerequisite to reimbursement.

•

Unless a tooling Purchase Order is issued for a fixed price, the price for tooling is the lower of the maximum reimbursable amount stated in the production tool order, the Supplier’s actual cost of acquiring the tooling from a toolmaker without markup or the Suppliers actual costs of fabrication pursuant to Ford’s guidelines.

•

If the tooling is being fabricated for Supplier by a toolmaker, any reimbursement payments by Ford must be held in trust for the benefit of the toolmaker.

6. Ford (2021) (Sections 34.04, 34.15 and 34.16): •

No changes from 2004.

7. General Motors: •

Does not specifically address this topic, but see invoicing and payment generally in Part Two, § VI.

8. Honda: •

Does not address this topic.

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9. Hyundai: •

Does not specifically address this topic, but see invoicing and payment generally in Part Two, § VI.

10. Kia (Section 41): •

Same as Hyundai.

•

Additionally, see Part Five, § I, discussing possibility of purchase money security interest in Amortized Supplier Property and Kia’s right to satisfy Supplier’s obligations to lenders holding such interests.

•

“Purchase Money Security Interest” is defined as a security interest that is taken or retained by the seller of the Amortized Suppler Property to secure all or part of its price or taken by a lender who by making advances or incurring an obligation allows Supplier to acquire the Amortized Supplier Property.

11. Lucid (Section 9.3): •

Supplier shall invoice Lucid only for the actual and verifiable costs of the Tooling. If requested, Supplier must provide competitive quotes.

•

Unless otherwise provided, Lucid shall own all right, title and interest in the Tooling.

12. Mazda (Section 14.7): •

If Seller procures tooling in accordance with a Mazda tooling order or other Contract Document, it is procured on Mazda’s behalf. Mazda will pay for the tooling either through inclusion in the piece-price or through reimbursement. Reimbursement will be the lower of the Purchase Order amount or (i) if procured from a third party, Seller’s actual out of pocket costs or (ii) if manufactured internally, actual direct costs.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 5.1 and 5.2): •

Invoicing for tooling costs are to be invoiced pursuant to the general provisions regarding invoicing (Section 10) subject to the provisions of Section 5.2.

•

The purchase price for any Buyer Owned Equipment shall be equal to the amount of all prices reflected in Purchase Orders and change orders to such Purchase Orders.

•

MBUSI will pay 80% of the purchase price for MBUSI tooling after: (i) MBUSI accepts the Buyer Owned Equipment through PPAP; (ii) a proper invoice is submitted; (iii) if requested, Supplier confirms transfer of ownership.

•

If Supplier fails to complete the Buyer Owned Equipment audit requirements, MBUSI may withhold any outstanding payments after 90 days of Buyer providing notice to Supplier.

Notwithstanding the above, the terms of payment of Buyer Owned Equipment shall be as set forth in the version of the Master Terms Direct Purchasing which are in effect on the date of the issuance of the Purchase Order for the applicable equipment. 14. Nissan (Section 18): •

Nissan requires that Supplier acknowledge that the quoted price by a Supplier for tooling is only an estimated price, but it requires agreement that such estimated price is the maximum

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cost to be paid for tooling. This language means that pricing can only go down, not up. •

The amount Nissan pays for the tooling shall not exceed the actual cost to purchase/ manufacture the tooling incurred by the Supplier.

•

Supplier is to use best efforts to produce tooling at the lowest possible cost.

•

Nissan expressly reserves the right to audit tooling cost at tool sign-off (Section 18.2.1): o The price for tooling is the lower of the price quote by Supplier (acknowledged to be an estimate) or actual cost. o Supplier must use its best efforts to keep tooling costs to a minimum. o Nissan may audit tooling costs at tooling sign-off. o No due date for payment is specified.

•

Supplier must prevent liens on Tools, Nissan must be named as loss-payee on Property policy, each policy must waive subrogation, removal of previous requirement that Supplier must post a large bond in response to a demand for assurances.

15. Rivian: •

Does not specifically address this topic, but see invoicing and payment generally in Part Two, § VI.

16. Scout Motors (Sections 9 and 28): •

All Tooling is to be made to Scout’s specifications. Any exception must be in writing.

•

Scout shall pay in full for any Tooling it orders upon completion of Note 1 status (as defined by Scout). Once the Tooling Payment has been paid by Scout, all right, title, and interest in and to the Tooling, including any intellectual property rights, immediately passes to Scout.

•

Supplier must permanently mark all such Tooling as Scout’s property.

•

Supplier may not comingle Scout’s Tooling with other Supplier property. The Tooling must remain on Scout’s premises unless otherwise agreed in writing by Scout.

•

Scout must maintain the Tooling in good condition, wear and tear included, and immediately replace any items associated with the Tooling. Supplier must maintain the condition of the Tooling for fifteen (15) years after the termination or expiration of Supplier’s supply obligation.

•

Supplier must ensure that all its sub-suppliers and subcontractors in possession of Scout Tooling are bound by the terms and conditions of Section 21.

•

Supplier must provide Scout access to the Tooling to inspect work performed and verify charges submitted by Supplier. Supplier must also ensure that Scout has access to the premises of sub-suppliers and subcontractors that are in possession of Scout Tooling.

17. Toyota (2009) (Sections 3.45 and 3.11): •

Toyota will establish a price for tooling after good faith negotiations with Supplier based on the cost of tooling for past models and reasonable variations from quotes provided by Supplier.

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•

If any changes to tooling will have a material effect on costs of such tooling, Toyota and Supplier will negotiate in good faith a reasonable allocation of such costs; but Toyota will decide on the amount of the price adjustment, if any.

•

See Part Two, § VI for tooling payment terms.

18. Toyota (2021) (Sections 3.2.2, 3.3, 4.1.3 and 4.6): •

The following supersedes the 2009 summary.

•

Toyota will establish a price for tooling based on the expense of comparable Tooling for the same as or similar to the Items, adjusted for changed circumstances.

•

The Tooling Price will be set by Toyota after consultation with Supplier and will be specified in the Tooling Purchase Order.

•

See Part Two, § VI for tooling payment terms.

19. Volkswagen (Section 28): •

VW shall pay in full for any tooling it orders upon completion of Note 1 status (as defined by VW). Once the tooling payment has been paid by VW, title to the tooling, including but not limited all associated intellectual property rights, shall immediately pass to VW.

•

Supplier must provide VW with access to facilities and documentation relating to tooling to verify charges for such tooling. Supplier must provide similar access to facilities and records of third-party tool shops that actually manufactured the tooling.

•

Upon receiving notice of intent to audit Supplier must provide the requested access and documents within 90 days. Information submitted after 90 days need not be considered by VW.

•

A supplier who is not the manufacturer of the tooling is entitled to recover only its actual costs for the tooling (“The price set forth in the Order shall be adjusted to credit [OEM] in the amount, if any, by which the price exceeds [Supplier’s] actual cost as verified.”).

•

A third-party tooling supplier is entitled to a reasonable profit, but note that if not mutually agreed, VW will determine the reasonable profit percentage. This could impact a Supplier’s reimbursements from VW if VW determines that a Supplier’s contractual obligation to a third-party tooling supplier provides an unreasonable profit percentage.

•

Supplier shall not disclose to any third party, except its attorneys and professional advisors who are required to maintain confidentiality, the results of a tooling audit.

•

Documentation regarding tooling costs must be saved for 3 years after receiving final payment.

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•

Amounts paid by VW to a Supplier to be paid to a third-party tool manufacturer are to be held in trust, and the third-party is an intended beneficiary of any contract between VW and Supplier for the tooling.

•

Supplier cannot join VW in a dispute between Supplier and third-party tooling vendor.

20. Volvo (Section 18.2): •

Volvo is not required to pay for tooling until the tooling has been completed and approved by Volvo pursuant to Volvo Car Instruction.

21. MEMA OE Suppliers (Section 12.3): •

The price for tooling is the specified contract price or, if no price is specified, Supplier’s actual cost.

•

Unless otherwise specified, final payment for tooling is due on the Buyer’s PPAP approval date or, if no action has been taken on a PPAP request, 90 days after the tooling is submitted for PPAP approval.

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Timing of payment for tooling.

Toolmakers treated as 3rd party beneficiaries of payment to Supplier/ payment held in trust for toolmakers.

Reservation of right by OEM to pay toolmaker directly.

OEM reserves right to audit tooling costs/ records.

Limit on amount to be reimbursed to actual costs or actual amount paid (no markup).

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BMW 2018

Specific Provisions Provided in Terms and Conditions

BMW 2022

FCA US 2021 S

FCA/ Stellantis 2022 S

Ford 2004 Post PPAP Y

Ford 2021 Post PPAP

GM S

Honda S

Hyundai S

Kia S

Lucid Y

Mazda Y

MBUSI At PPAP S

Nissan S

Rivian S

Scout Motors S

Toyota 2009 Staged terms based on PPAP

Toyota 2021 60 days (c)

VW Completion of Note 1 Status

II. Payment for OEM-Owned Tooling – Dashboard Volvo When approved

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

MEMA OE Suppliers At PPAP Yes, if no price stated.

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

(b) Kia’s Terms and Conditions also contain an extensive provision regarding a special class of tooling known as “Amortized Supplier Property.” Different terms apply to such “Amortized Supplier Property,” and such terms appear in Section 41 of the Kia Terms and Conditions.

(a) It should be noted that this analysis relates only to the OEM’s general Terms and Conditions. Specific Purchase Orders related to tooling will often contain more specific terms regarding payment and other issues. Such specific terms will control and should be negotiated when practical.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

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III. Supplier-Owned Tooling – Context and Questions 1. Cost Amortization Suppliers typically will seek to recover from the OEM their costs for Supplier-owned tooling in the price charged for the parts being sold. This requires careful consideration in providing a quotation. This analysis should include not only a part price factor based on estimated projections, but it also should contemplate potentially reduced production volumes that could significantly impact a Supplier’s recovery of its tooling expenses. Additionally, the risks of program delay or cancelation discussed in the Context and Questions portion of Section II of this Part Five also are present here for the same reasons and should be considered accordingly. 2. OEM Purchase Rights and Tooling Transfer Various OEMs’ standard Terms purport to grant the OEM the right to purchase tooling that is specialized for the production of the goods or otherwise is not used in the Supplier’s general business. Similarly, OEMs generally have very broad rights in their standard Terms in the event of a transition of supply to a new supplier, and these rights can extend to supplierowned tooling. The implications of these rights are significant in at least two respects. First, in the event the OEM seeks to exercise these rights, Suppliers must pay particular attention to the methodology used by the OEM to determine the purchase price for the tools, which generally has some correlation to the tool’s book value or cost of production, with a reduction for prior payments made by the OEM for such tools. Second, the Supplier-owned tools may contain or rely on the use of the Seller’s intellectual property. As such, transfer of the tools to the OEM, or another supplier, which may be a competitor of the Supplier, can present intellectual property risks and concerns similar those discussed generally in Part Four above, as well as in the Context and Questions portion of Section I of this Part Five.

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III. Supplier-Owned Tooling – OEM Comparative Analysis 1. BMW (2018) (Sections 13.4-13.6 and 13.8): •

Supplier must treat all Tooling, regardless of ownership, with due care and diligence and keep it operational and incompliance with latest design status.

•

Supplier must adequately insure all tooling.

•

Supplier must at its expense maintain all tooling in “unobjectionable” condition during current-model production and in good working condition for 15 years after current-model production ends. Such tooling must be maintained in such fashion that it is continually ready for operation and in compliance with the latest design status.

2. BMW (2022) (Section 13.2): •

No significant changes from the 2018 terms.

3. FCA US (2021): •

Does not specifically address this topic.

4. FCA US / Stellantis (2022) (FCA US n/a and Stellantis Global Section 17): •

Supplier must maintain and replace as needed Supplier’s Tooling.

•

Supplier must insure its tooling at replacement value.

•

If FCA terminates for cause, it may purchase all machinery, tooling and other personal property owned by Seller used in the production of goods, unless used for other customers. The price will be the net book value less any amounts previously paid by FCA.

5. Ford (2004) (Section 35): •

The cost of Supplier tooling is taken into account in the piece price for the parts (thus, no separate payment or reimbursement will be made). With respect to perishable tooling (tooling with an expected life of less than 12 months), Ford will supply the first set of tooling and the Supplier will supply all remaining sets.

•

Supplier will, at its expense, maintain Supplier owned tooling in a condition that ensures continued production and delivery of parts.

•

Supplier will not incorporate the Ford logo or trademarks on Supplier owned tooling.

•

The Supplier grants Ford an exclusive option to purchase Supplier owned tooling for the Supplier’s actual cost of the tooling minus amounts already recovered in the piece price of the goods. Supplier must provide Ford with substantiation of the actual costs for the tooling.

6. Ford (2021): •

These provisions have been eliminated from the 2021 Terms.

7. General Motors (Section 21): •

Unless otherwise agreed to by GM, Supplier is responsible for maintaining, at its expense, any tooling necessary for production of parts.

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•

Supplier must insure its tooling for all losses for its replacement value.

•

If GM terminates for cause or insolvency, then GM has an option to purchase at its net book value, less any amounts previously paid by GM to Supplier for the tooling, Supplier tooling that is specific to the production of the parts, and is not being used to produce parts that are standard stock of Supplier or to produce a substantial quantity of like parts for others.

8. Honda: •

Does not specifically address this topic.

9. Hyundai (Section 15): •

Unless otherwise agreed to by Hyundai, Supplier is responsible to furnish and maintain, at its expense, all tooling and other property necessary for the production of goods.

•

Supplier must insure its tooling with full fire and extended coverage insurance for its replacement value.

•

If Supplier tooling is specific to the production of the parts, and is not being used to produce parts that are standard stock of Supplier or to produce a substantial quantity of like parts for others, Hyundai has the option to purchase the Supplier tooling at its net book value, less any amounts previously paid by Hyundai to Supplier for the tooling.

10. Kia (Sections 15 and 41): •

Same as Hyundai.

•

Also, See Part Five, §§ I and II, discussing Amortized Supplier Property.

11. Lucid (Section 9.3): •

Lucid may purchase Supplier’s Equipment used to produce Goods, for a price equal to the lesser of the unamortized or otherwise expended cost of Supplier’s Equipment as reflect in Supplier’s federal income tax returns or supplier’s cost amortized over five (5) years.

12. Mazda (Section 14.7): •

If Seller procures tooling in accordance with a Mazda tooling order or other Contract Document, it is procured on Mazda’s behalf. Mazda will pay for the tooling wither through inclusion in the piece-price or through reimbursement. Reimbursement will be the lower of the Purchase Order amount or (i) if procured from a third party, Seller’s actual out of pocket costs or (ii) if manufactured internally, actual direct costs.

•

Topic is not directly addressed; implicitly, tooling that is not Mazda’s property is Seller’s.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 5.7): •

Supplier is responsible for all maintenance and upkeep necessary to keep Supplier owned equipment in good working order and condition to fulfill Supplier’s obligations to MBUSI.

•

If Supplier owned equipment wears out or fails during the term of the agreement, Supplier is responsible for repairing or replacing such equipment.

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14. Nissan (2023) (Section 18.1): •

Supplier must maintain all tooling (including Supplier owned tooling) in good condition so as not to interrupt the manufacture of parts.

•

Supplier bears the cost of all changes to Supplier Property, even if required by a Toyota directed change to the Items.

•

Supplier agrees to be bound by the Vendor Tooling Guidelines (“Guidelines”), which may be revised, amended, or replaced from time to time by Nissan. Upon any such revision, amendment, or replacement, Nissan shall timely provide any updated version of the Guidelines to Supplier.

15. Rivian: •

Rivian does not address this topic.

16. Scout Motors (Section 27): •

Supplier’s Property is defined as the materials, equipment, tools, designs, etc. that are not Buyer’s Property.

•

Supplier grants Scout an irrevocable option to take possession of and title to Supplier’s Property that is special for production of Supplies under an Order, upon payment to Supplier of its net book value less any amounts Scout has previously paid to Supplier for the cost of such items.

17. Toyota (2009) (Section 3.3): •

Terms never define Supplier Property, but implicitly it is tooling and other property necessary to produce the Items that is not Toyota Property.

•

Supplier bears all costs of maintenance and replacement of Supplier Property.

•

Toyota may direct that Supplier purchase tooling to be used solely for the Items (“Supplier Owned Toyota Production Tooling”). If so, Supplier may charge Toyota for the tooling, to be paid through a piece price adjustment.

•

Toyota will reimburse Supplier for the actual and necessary costs of such tooling pursuant to an adjustment to the piece price for parts, and the amount paid, as well as timing of payment, will be arranged in a separate Contract Document.

•

Supplier tooling is property of Supplier unless otherwise designated by Toyota.

•

Toyota has an exclusive option to acquire such tooling equal to the value of the Supplier tooling, less amounts paid by Toyota to Supplier for such tooling.

•

Any Supplier Owned Toyota Production Tooling is the property of Supplier unless otherwise designated by Toyota.

•

Toyota has an exclusive option to acquire any and all Supplier Owned Toyota Production Tooling at an amount equal to the value of the applicable Supplier Owned Toyota Production Tooling less the SPT Costs, which option may be exercised by any Toyota Party at such times and on such terms as are determined by Toyota.

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18. Toyota (2021) (Sections 3.6.5, 4.4): •

The following supplements the 2009 summary.

•

Terms never define supplier property, but implicitly it is tooling and other property necessary to produce the Items that is not Toyota Property.

•

Replace the 3rd and 4th 2009 bullet with: o Toyota may direct that Supplier purchase tooling to be used solely for the Items (“Supplier Owned Toyota Production Tooling”). If so, Supplier may charge Toyota the “amount paid” for the tooling, to be paid as a one-time payment, as with other Tooling.

•

In the final 2009 bullet, “value” is now “fair market value.”

•

Returnable packaging is Supplier Property unless otherwise specified by Toyota.

19. Volkswagen (Section 27): •

Supplier must provide and maintain all tooling necessary to produce parts for VW.

•

Supplier must insure all tooling owned by Supplier to manufacture parts for VW.

•

VW has option to purchase Supplier owned tooling used for production of VW parts upon payment of its net book value less amounts previously paid to Supplier. This option does not apply to tooling used to produce stock parts or a substantial quantity of like goods sold by Supplier to others.

20. Volvo (Section 18.3): •

Supplier is responsible for all costs related to supplier owned tooling.

•

If the Supplier owned tooling has been paid for in part by Volvo or has intellectual property or trademarks in the tooling or in the goods manufactured by the tooling, then Supplier cannot use the tooling to produce Goods or Components for anyone other than Volvo or its affiliates.

21. MEMA OE Suppliers (Section 13): •

Supplier owns any property not identified in the contract as OEM’s property, not furnished by Buyer, and not paid for by Buyer.

•

Supplier must furnish and maintain Supplier tooling and other property as needed to provide the parts.

•

If Supplier tooling is used exclusively to produce parts for Buyer and is not needed by Supplier to produce parts for other customers, Buyer has the option to purchase the tooling at the greater of fair market value or Supplier’s unamortized acquisition cost.

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OEM’s Terms and Conditions contemplate amortizing costs of Supplier owned tooling in piece prices.

OEM reserves the right to purchase Supplier owned tooling.

BMW 2022

FCA US 2021 S

FCA/Stellantis 2022

BMW 2018

Specific Provisions Provided in Terms and Conditions Ford 2004 Y

Ford 2021 N

Y(b)

III. Supplier-Owned Tooling – Dashboard Honda S

Hyundai Y

Kia Y

Lucid Y

Mazda Y

MBUSI S

Nissan S

Rivian Y

Scout Motors Y

Toyota 2009 Y

Y(c)

Toyota 2021

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VW Y

Volvo Y

MEMA OE Suppliers Page 307

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(b) Option only if GM terminated for cause or insolvency.

(a) Kia’s Term and Conditions also contain an extensive provision regarding a special class of tooling known as “Amortized Supplier Property.” Different terms apply to such “amortized Supplier Property,” and such terms appear in Section 41 of the Kia Terms and Conditions.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

PART SIX I.

Advertising

310

II.

Audit and Inspection Rights

314

III.

Labor Disputes

322

IV.

Import and Export

327

Suppliers with Special Needs

339

VI.

Electronic Communication

342

VII. Compliance with Laws and Applicable Law

347

VIII. Relationship of the Parties

356

IX.

Ingredients

360

Insurance

364

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I. Advertising – Context and Questions 1. Public Advertisement of Contract Prohibited Most OEMs prohibit Suppliers from advertising or otherwise publishing the fact that they furnish parts to the OEM without the OEM’s consent. This prohibition is often overlooked; as Suppliers routinely make public announcements of new contracts they have been awarded. 2. Public Disclosure Since public companies are required by law to disclose to shareholders information about their larger customers, the MEMA model terms address this issue by making an exception for disclosures required by law and as required to perform the contract. Pure advertising is still prohibited, however, without the OEM’s consent.

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I. Advertising – OEM Comparative Analysis 1. BMW (2018) (Section 12.3): •

Without BMW’s written consent, Supplier may not publish in any manner through any marketing or other medium that Supplier has contracted as a supplier to BMW unless such publication is required by mandatory law.

2. BMW (2022) (Section 12): •

No change from 2018 terms.

3. FCA US (2021) (Section 16): •

Without FCA US’s prior written consent, Supplier may not publish the fact that it has contracted to supply parts to FCA US or use the FCA US name or trademarks in advertising or other publications.

4. FCA US / Stellantis (2022) (FCA US Section 16 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global Terms do not address this topic.

5. Ford (2004) (Section 46): •

Any reference to Ford or any use of its trademarks and logos must comply with Ford’s Supplier Advertising Web-Guide (a separate document).

•

Ford must approve in advance any news release or other publicity about Ford or the parts per Ford’s News Release & Publicity Web-Guide (a separate document).

6. Ford (2021) (Section 45): •

Unchanged, except “Web Guides” are now “Supplier Guides.”

7. General Motors (Section 30): •

Without GM’s written consent, Supplier may not advertise or publish the fact that the Supplier has contracted to furnish parts to GM under the contract or use any trademarks or trade names of GM.

•

Suppliers may not use GM information in any form of electronic communications external to GM such as websites, blogs or other postings.

8. Honda (Section 11.2): •

Without Honda’s prior written consent, Supplier may not advertise or publish in any manner the existence of a contract or business relationship with Honda.

•

Supplier may not use any name, trade name, logo, marks (whether or not registered), or any confusingly similar formatives thereof, photos, materials or documents belonging to Honda.

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9. Hyundai (Section 24): •

Without Hyundai’s written consent, Supplier may not in any manner advertise or publish the fact that the Supplier contracted to furnish parts to Hyundai or use any trademarks or trade names of Hyundai.

•

Supplier may not place its own name or trademarks on parts that bear Hyundai’s name or trademarks.

10. Kia (Section 24): •

Same as Hyundai.

11. Lucid (Section 20): •

Without Lucid’s written consent, Supplier may not publish the fact that Supplier has furnished or contracted to furnish Lucid with Goods or Services.

•

Neither party has the right or license to use the trademarks, service marks or logos of the other Party without prior written consent.

12. Mazda (Section 14.3): •

Seller may not advertise itself as a Mazda supplier or use Mazda’s name or trademarks without Mazda’s written consent.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 32): •

Without MBUSI written consent, Supplier may not in any manner advertise or publish the fact that Supplier has furnished or contracted to furnish parts to MBUSI under the contract or use any trademarks or trade names of MBUSI.

14. Nissan (Section 23): •

Without Nissan’s prior written consent, Supplier may not advertise Nissan trademark or logo in any advertising.

15. Rivian (Section 38): •

Supplier may not advertise or otherwise disclose its relationship with Rivian or any information relating to the projects or business of Rivian.

•

Supplier shall not use or publicly display Rivian’s name, trademarks, service marks or logos without Rivian’s prior written consent.

16. Scout Motors (Section 31): •

Supplier may not advertise, publish or disclose to any third-party (other than to its professional advisors on a confidential and need-to-know basis) in any manner the fact that Supplier has contracted to furnish Buyer the Supplies covered by the Order or any terms of the Order.

•

Supplier may not use any trademarks or trade names of Scout in any press release, advertising or promotional materials without first obtaining Scout’s consent.

17. Toyota (2009) (Section 6.7): •

Supplier may not use the “Toyota” name without Toyota’s consent in connection with the marketing of parts.

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•

Without Toyota’s prior written consent, Supplier may not advertise or publish the fact that Supplier has contracted with Toyota.

18. Toyota (2021) (Section 6.7): •

No change except section numbering.

19. Volkswagen (Section 31): •

Without VW’s prior written consent, Supplier may not advertise or publish the fact that they have established a business relationship with VW.

•

Supplier may not use any VW trademark or trade name without VW’s prior written consent.

20. Volvo (Section 24): •

Without Volvo’s prior written consent, Supplier may not publish the fact that it has contracted to supply parts Volvo or use Volvo’s name or trademarks in advertising or other publications.

21. MEMA OE Suppliers (Section 23.1): •

Without Buyer’s written consent, Supplier may not advertise or disclose the business relationship, except as required to perform the contract or as required by law.

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II. Audit and Inspection Rights – Context and Questions 1. Broad Audit Rights Many OEM terms contain broad audit rights, allowing virtually unrestricted access to a Supplier’s books and records, facilities, and manufacturing processes. This access may also include records of the Supplier’s costs even though the parts are being purchased on a fixed piece price basis, as well as access to areas of a Supplier’s facility where work is being performed for other customers. Many OEMs also require a specific timeframe for record retention for purposes of preserving such records for OEM or third-party audits. 2. Confidentiality Provision Most OEM terms require the OEM to maintain the confidentiality of non-public information learned during an audit or inspection of the Supplier’s facilities or books and records. Many, however, require the Supplier to follow certain procedures to protect this right to confidential treatment. The remaining OEMs do not promise to keep confidential anything they learn during an audit or inspection.

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II. Audit and Inspection Rights – OEM Comparative Analysis 1. BMW (2018) (Sections 9.4, 22.5, 22.8 and 22.9): •

Material changes from 2014. Below replaces 2014 summary.

•

BMW may inspect all documents related to the contract or the parts, subject to third party confidentiality rights, during normal business hours on at least 48 hours prior notice.

•

Supplier must maintain these documents for at least ten (10) years after the last delivery of parts to BMW, or longer if required by law.

•

On reasonable request, Supplier must provide financial statements and other financial information.

•

Supplier must provide access to governmental safety authorities if demanded.

•

Supplier must provide information on non-financial “indicators,” such as environmental, social, labor, anti-corruption, etc. The information shall be presented in compliance with “recognized standards,” such as GRI sustainability reports.

•

Supplier warrants the accuracy of the financial and non-financial information provided to BMW.

2. BMW (2022) (Sections 9.4, 21.7, 21.8 and 21.9): •

No changes from 2018 terms other than section number changes.

3. FCA US (2021) (Sections 10, 12 and 21): •

Requests for reimbursement of tooling costs are subject to review, approval, and audit by FCA US.

•

FCA US may audit relevant information and Supplier’s facilities to verify Supplier’s claim for a price adjustment.

•

FCA US may audit relevant information to verify Supplier’s termination claim (if FCA US terminates without cause).

•

Supplier must provide quarterly and annual financial information.

•

Upon request, Supplier must provide any other information regarding its operations, finances and business.

4. F CA US / Stellantis (2022) (FCA US Sections 10, 12, 20, 21 and 29 and Stellantis Global Section 12): •

No material additions or changes from FCA 2021, except: o The Global Terms require Supplier to provide, on request: 

Balance sheets.



Business plans for current year and subsequent years.



Other information relevant to Supplier’s ability to perform.



Any supply chain audits.



Information on its “cost structure.”

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o Audit rights extend to sub-suppliers. 

Supplier must flow this right down to its sub-suppliers.

 Suppliers should review and revise their purchasing terms as needed. •

Supplier must retain records for 10 years from final payment.

5. Ford (2004) (Sections 17 and 32): •

Ford may examine “all pertinent documents, data and other information” related to the parts, Supplier’s obligations, or any claim made by Supplier.

•

Ford may view and audit any Supplier facility or process related to the parts or the contract during normal business hours upon written notice.

•

Upon request, Supplier must provide specified financial information and reports.

•

Supplier is required to retain all relevant records for at least two years after the last delivery of parts.

•

Ford may be required to keep confidential certain information disclosed in an audit if it meets the requirements of Section 17.

6. Ford (2021) (Sections 16 and 32): •

The following summary supersedes the 2004 summary.

•

Ford may examine “all pertinent documents, data and other information” related to the Goods, Tech Products, Tooling, Supplier’s obligations, or any claim made by Supplier.

•

Ford may view and audit any Supplier facility or process related to the Goods, Tech Products, or the Purchase Order, including those relating to production quality or capacity, during normal business hours upon written notice.

•

Upon request, Supplier must provide specified financial information and reports to Ford’s Material Cost Business Office.

•

Supplier is required to retain all relevant records for at least two years after the last delivery of parts.

•

Ford may be required to keep confidential certain information disclosed in an audit if it meets the requirements of Section 16.

7. General Motors (Sections 15 and 34): •

GM has the right to access Seller’s premises and records for the purpose of auditing compliance with the terms of the Contract (including, without limitation, charges) or to inspect or conduct an inventory of finished goods, work-in- process, raw materials, any of Buyer’s Property and all work or other items to be provided.

•

GM may audit Supplier’s books and facilities to verify Supplier’s termination claim (if GM terminates without cause).

•

Documents must be maintained for 1 year after final payment under the agreement.

8. Honda (Sections 8.1 and 13.3c):

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•

Honda has the right to inspect Honda Property at Supplier’s premises at any time during business hours.

•

Honda shall have access to Supplier’s premises and records, before and after payment, to verify charges supporting any cancelation claim.

9. Hyundai (Sections 11, 23 and 29): •

Hyundai or its representatives may audit “pertinent documents and materials” related to Supplier’s contract obligations or any payments requested by Supplier under the contract.

•

Supplier must maintain these documents and materials for at least three (3) years after the last delivery of parts, or any longer period required by law.

•

Hyundai may audit Supplier’s books and facilities to verify Supplier’s termination claim (if Hyundai terminates without cause).

•

Hyundai also may audit Supplier’s quality control system, production process, and material destined for Hyundai when Hyundai deems necessary. After the audit, Supplier and Hyundai will cooperate to make improvements to Supplier’s quality-control processes as necessary.

10. Kia (Sections 11, 23 and 29): •

Same as Hyundai.

11. Lucid (Sections 19.1 and 19.2): •

If Lucid asks, Supplier must let Lucid and its representatives look at the books and records of Supplier to make sure Supplier is following each purchase order.

•

If Supplier has problems with delivery or operation, Lucid may send a representative to watch how Supplier works.

•

Supplier will pay Lucid back for any costs, such as attorney and other professional fees, that Lucid must pay to help Supplier because of delivery or operation problems.

•

Lucid or its authorized representative has the right to visit Supplier’s premises at any reasonable time to inspect them.

12. Mazda (Section 25): •

Seller must maintain books and records consistent with sound accounting practices for 3 years post expiration or termination.

•

Mazda may audit all books, records, documents or other materials in the control of Seller or its subcontractors with respect to requested payments or contract compliance. Seller must maintain such information for three years post-Purchase Order.

•

Seller warrants that it has controls and testing procedures to assure Mazda that: (i) transactions under the Contract Documents are authorized and compliant with Seller’s policies and procedures. (ii) transactions are complete and accurate; (iii) Mazda Property is safeguarded; (iv) financial information is reliable and the integrity of data maintained; (v) duties are adequately segregated and defined; (vi) Laws are complied with; (vii) Seller has adequate business continuity plans and periodically tested; and (viii) access to

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Seller’s data and data centers are properly controlled. Seller must document compliance with items (i)-(vii) in an SSAE 16 Type II report. 13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 19 and 24): •

MBUSI has the right to full and complete access to Supplier’s and subcontractors’ books and records relating to (i) assets, liabilities, and general financial solvency; (ii) Supplier’s ability to pay its debts; (iii) all actual, threatened, and asserted liens;(iv) any labor, government, or other issues that might result in the slowing or stoppage of Supplier’s production of products and/or service parts for MBUSI; and (v) Supplier’s compliance with the Agreement.

•

Supplier must pay MBUSI an audit fee (not exceeding $10,000 annually) to the extent MBUSI pays a third-party to audit.

•

Any proprietary information disclosed by one party to the other party during the course of the contract shall be held in confidence (subject to applicable notice requirements on the part of Supplier under Section 24).

•

Upon expiration of the Agreement or at MBUSI’s request, Supplier will return or destroy all Proprietary Information.

14. Nissan (Sections 22, 23A, 23B, and 24): •

Nissan has right to inspect Supplier’s facilities and operations at any time during business hours and upon reasonable notice.

•

Supplier must keep accurate and complete records of all expenses incurred under the contract, and Nissan may audit these records. The records must be maintained in accordance with GAAP.

•

Supplier agrees to permit Nissan or its representatives to examine and/or audit such records at a reasonable time during the period of the Agreement and for two years thereafter.

•

Supplier’s records are subject to audit for up to two years after contract termination.

•

Unless exempt (Public companies are exempt except in connection with a “Change in Circumstances” that results in Supplier becoming a non-public company), supplier agrees to provide Nissan within four month after Supplier’s fiscal year end, at other times upon Nissan’s request, certain non-public Supplier financial statements and financial information including, but not limited to: balance sheets, income statements, cash flow statements, accompanying notes, and auditor’s opinion letter.

•

Supplier’s fiscal year-end financial statements are to be audited by a third-party independent auditor, in accordance with GAAP.

•

Supplier must notify Nissan if there is a material adverse change in its financial conditions and Supplier represents and warrants to Nissan that all Supplier Financial Information is true and correct.

•

Nissan Inspection rights expanded to include supply chain security.

15. Rivian (Sections 19.2 and 20): •

If Rivian requests, Supplier must permit Rivian and its representatives to review

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Supplier’s books and records concerning Supplier’s compliance with each purchase order. •

If Supplier has any delivery or operation problems, Rivian may have its designated representative to be present to observe Supplier’s operation.

•

Supplier shall reimburse Rivian for any costs, including attorney and other professional fees and costs associated with Rivian providing Supplier with any accommodation due to delivery or operational issues.

•

Rivian or its authorized representative has the right at any reasonable time to access Supplier’s premises to examine all relevant documents, records or other relevant information to verify Supplier’s compliance with the contract and ability to perform.

16. Scout Motors (Sections 8 and 19): •

On reasonable notice, Scout may conduct audits at Supplier’s production facility for the purpose of quality, cost or delivery verification.

•

Supplier must ensure that the terms of its contracts with its sub-suppliers and subcontractors provide Scout with the same right.

•

At Scout’s request, Supplier must allow Scout or its representative to audit Supplier’s or its sub-suppliers and subcontractors’ books, records and other information relating to the Order to the extent necessary to verify compliance, including accuracy of charges and invoices to Scout.

•

Supplier shall maintain its books, records and other information for at least seven (7) years after expiration or earlier termination of the Order.

17. Toyota (2009) (Sections 3.6 and 4.6): •

See Part Two, § II, and Part Five, § I for Toyota inspection rights.

•

Toyota must keep confidential any confidential or proprietary information about Supplier, and Supplier agrees to cooperate with Toyota to ensure that the Terms and Conditions remain confidential.

18. Toyota (2021) (Sections 1.6.2, 3.6.6, 6.4.5, and 5.6): •

The following supplements the 2009 summary.

•

Supplier’s information provided to a Toyota Party is Confidential Information. Supplier may limit or restrict Toyota’s access to Supplier’s premises to the extent necessary to protect confidential information of or relating to Supplier’s other customers. In exercising any access rights to Supplier’s premises, Toyota will take commercially reasonable steps to protect the confidentiality of and not interfere with the business relationship between Supplier and any of its other customers.

19. Volkswagen (Sections 8 and 19): •

VW, or its representative, has the right to enter Supplier’s premises to inspect all VW property and any property or goods related to the Order.

•

Supplier must provide access to financial records and statements, forecasts, business plans, banking contacts and loan documents.

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•

VW must keep confidential proprietary non-public information that it learns about Supplier during the course of the contract and any financial review. Confidential information about Supplier shall not include any information (i) that is public, (ii) that VW can establish by written documentation that was properly in its possession prior to the financial review, (iii) that was independently developed by VW without use of or reference to Supplier’s confidential information, (iv) that constitutes information unrelated to Supplier’s financial information, but otherwise relating to the Supplies, the Order or VW or (v) that is disclosed pursuant to law, regulation or lawful order or process. In the event of (v) (information that is disclosed pursuant to law, regulation or lawful order or process), VW shall promptly notify Supplier of the disclosure requirement to permit Supplier to oppose or limit such disclosure.

20. Volvo (Sections 20 and 23): •

Supplier musts allow Volvo to audit and inspect Supplier’s premises on at least five (5) days’ notice to determine whether Supplier has complied with its obligations under the Purchase Agreement. Supplier shall cause its sub-tier suppliers to allow the same. Volvo has the right to audit and inspect on shorter notice if it reasonably believes that advance notice will interfere with the audit/inspection.

•

Supplier must cooperate with the audit and provide all requested information unless disclosure would be unlawful or would violate a stock exchange regulation or breach a confidentiality obligation.

•

Buyer is responsible for the cost of the audit unless it reveals that Supplier has breached one or more obligation, in which case Supplier is responsible for the cost.

•

On an annual basis the Supplier must provide Volvo with an annual report, including a balance sheet, profit and loss statement, and cash flow reports and a Supplier group consolidated annual report.

•

If requested, Supplier musts provide any additional financial and business information related to Supplier or any of its affiliates.

•

If the Supplier enters into a receivership proceeding, is declared bankruptcy, goes into liquidation or for any other reason can be assumed insolvent, or any other event that might have a material adverse effect on Supplier’s financial status or its performance under the Purchase Agreement, the Supplier must immediately notify Volvo.

•

If Supplier breaches any of the reporting or notification requirements under this section, the Supplier must allow Volvo to perform an audit of Supplier at Supplier’s expense.

•

If Supplier provided any information to a governmental authority that has a right to regulate or inspect the goods, Supplier shall promptly notify Volvo and, upon Volvo’s request, provide the information to Volvo within ten (10) business days.

21. MEMA OE Suppliers (Sections 4, 14 and 23.2): •

Supplier must maintain records to support amounts charged to Buyer, and Buyer or its representatives may audit these records for transactions up to one year old, but only to the extent necessary to verify amounts charged.

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•

Buyer may audit Supplier records directly related to the Supplies.

•

Buyer must provide reasonable advance notice and must conduct the audit during normal business hours.

•

Buyer must pay for the audit unless the audit uncovers material errors in the amounts charged.

•

Buyer must keep confidential any confidential information it learns about Supplier in connection with the contract.

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III. Labor Disputes – Context and Questions 1. Labor Dispute Provisions Labor dispute provisions in the OEM Terms and Conditions generally address the following areas: •

Whether the Supplier must give notice of a potential labor dispute and/or expiration of a labor contract.

•

Whether the Supplier must build a parts bank in anticipation of a labor dispute or prior to the expiration of a labor contract. If a parts bank is required, the OEM Terms and Conditions may dictate the size of the parts bank and where it should be stored.

•

Whether a labor dispute, including strikes, lock-outs, etc., constitutes a force majeure event (where many of the OEM terms expressly state labor disputes do not constitute a force majeure event).

2. Notice of Dispute Many OEM terms require the Supplier to provide lengthy advance notice of the expiration of a labor contract and an additional notice to the OEM of an actual or potential labor dispute. 3. Parts Bank Many OEM terms require the Supplier to build a parts bank or ensure the supply of parts in anticipation of a possible strike. Many OEM terms also provide specific requirements for where the parts bank must be stored to avoid disruptions caused by the labor dispute.

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III. Labor Disputes – OEM Comparative Analysis 1. BMW (2018) (Sections 3.6-3.8): •

Strikes and labor disputes are “Non-fault non-compliance” events.

•

If the parties agree that Supplier will maintain a buffer stock, Supplier must notify BMW monthly of the status of its buffer stock.

•

Supplier must notify BMW of actual or potential labor disputes that may delay the timely performance of the contract.

2. BMW (2022) (Section 3.6): •

Significant change from 2018 (and 2014) terms. Labor disputes are no longer identified as an excusable event.

•

The nomenclature has changed. BMW no longer uses the term “non-fault noncompliance” events, but rather refers to “force majeure” which is defined as an event beyond reasonable control of the incapable party and which cannot be averted and foreseen even if utmost care is taken.

3. FCA US (2021) (Section 7): •

Supplier must notify FCA US immediately of any actual or potential labor dispute delaying or threatening to delay timely performance of a Purchase Order, and Supplier must also notify FCA US three months in advance of the expiration of any current Supplier labor contract.

•

At least 10 days prior to the expiration of a Supplier labor contract, Supplier must have built, at its expense, a 40-day supply of inventory of parts and store the parts in neutral warehouse sites that are at least 50 miles from Supplier’s manufacturing locations.

4. FCA US / Stellantis (2022) (FCA US Section 7 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global Terms do not address this topic.

5. Ford (2004) (Section 38): •

Supplier must provide written notice to Ford about any potential labor dispute. Supplier must provide written notice at least thirty days in advance of expiration of a Supplier labor contract.

•

At Ford’s request, Supplier must present to Ford and implement a plan to assure at least a thirty day supply of parts following expiration of a labor contract or commencement of a labor dispute.

•

Ford will keep confidential information submitted by Supplier.

6. Ford (2021) (Section 37): •

No changes except section numbering.

7. General Motors (Section 8): •

Supplier must take all required actions to ensure at least a thirty day supply of parts to GM in anticipation of a labor dispute or expiration of a Supplier labor contract.

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8. Honda (Section 4.8): •

A strike, lock-out, or shortage does not give rise to an “Excusable Delay.”

9. Hyundai (Section 9): •

Supplier must notify Hyundai about any actual or potential labor dispute and provide all relevant information.

•

Supplier must notify Hyundai of the pending expiration of any current Supplier labor contract at least six months before the expiration date.

•

At least fifteen working days prior to the expiration of a Supplier labor contract, Supplier must have built, at its expense, a forty day supply of inventory of parts and store the parts in neutral warehouse sites that are at least fifty miles from Supplier’s manufacturing locations.

•

Labor disputes are not a force majeure event.

10. Kia (Section 9): •

Same as Hyundai.

11. Lucid (Sections 2.5 and 15): •

Supplier must provide notice if it has reason to believe its ability to deliver Goods or Services is or will be constrained (including for reasons of quality, labor disputes or otherwise).

•

If the Supplier has reasons to believe its ability to deliver Goods or Services will be delayed, Supplier must establish a thirty day supply of Goods, stored at a neutral warehouse site designated by Lucid, and use its best efforts to resolve the dispute.

•

Labor disputes are not a force majeure event.

12. Mazda (Section 19.3): •

Labor disputes are not Force Majeure events.

•

Seller must give Mazda at least six months’ notice of the expiration of a labor contract. Seller must give immediate notice to Mazda of any actual, potential, or threatened labor dispute that may delay Seller’s performance. Not less than ten days prior to labor contract expiration, Seller must establish a ninety day parts bank, at its own expense, at a neutral warehouse site.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 13.3): •

Strikes, lockouts or labor disturbances are not force majeure events.

•

Supplier must notify MBUSI of any potential labor dispute and provide all relevant information.

•

Supplier must notify MBUSI of the pending expiration of any current Supplier labor contract at least six months before the expiration date.

•

At least ten days prior to the expiration of a Supplier labor contract, Supplier must have built, at its expense, a ninety day supply of inventory of parts and store the parts in neutral warehouse sites that are at least fifty miles from Supplier’s manufacturing locations.

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14. Nissan (Section 33): •

Labor disputes and strikes are not Force Majeure events.

15. Rivian (Section 24): •

Supplier must notify Rivian of any labor contract expiration at least six months before the expiration.

•

Supplier will deliver a parts bank at least thirty days prior to the expiration of any labor contract, in quantities and at storage sites directed by Rivian.

•

Supplier must notify Rivian in writing of any actual or potential labor dispute.

16. Scout Motors (Section 23): •

Labor issues are not Force Majeure events.

•

Supplier must give Scout advanced written notice of any anticipated labor disruption or the expiration of a labor contract. Supplier must have built, at its expense, a thirtyday supply of inventory of parts to provide during any anticipated labor disruption or expiration of a labor contract.

•

If upon Scout’s request, Supplier fails to provide within ten days (or such shorter period if Scout requires) adequate assurance that any delay will not exceed thirty days, or if any delay lasts longer than thirty days, Scout may terminate the Order without liability and Supplier must reimburse Scout of costs associated with the termination and the transition of the supply.

17. Toyota (2009) (Section 2.7(d)): •

Labor and supply problems do not constitute a force majeure event (see Part Three, § VI).

18. Toyota (2021) (Section 3.9.3): •

No change except section numbering.

19. Volkswagen (Section 23): •

A labor dispute is not a force majeure event (see Part Three, § VI).

•

Supplier will provide advance written notice of any anticipated labor disruption or expiration of any of Supplier’s labor contracts.

•

Supplier at its expense will take all necessary actions to ensure the supply of products for a period of at least thirty days during any anticipated labor disruption or any disruption resulting from the expiration of any of Supplier’s labor contracts.

•

If upon Volkswagen’s request, Supplier fails to provide within ten days (or such shorter period if Volkswagen requires) adequate assurance that any delay will not exceed thirty days, or if any delay lasts longer than thirty days, Volkswagen may terminate the Order without liability and Supplier must reimburse Volkswagen of costs associated with the termination and the transition of the supply.

20. Volvo (Section 27.1 &): •

Supplier will notify Volvo at least thirty days in advance of expiration of a labor contract.

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•

Supplier will provide immediate written notice of any anticipated labor dispute that could affect Supplier’s supply of goods or services to Volvo.

•

The notice must include Supplier’s plan to avoid adverse effects to Volvo’s operations or to ensure Volvo that Supplier will meet its supply obligations without disruption for at least thirty days after expiration of the labor contract.

21. MEMA OE Suppliers (Sections 19 and 20): •

A labor dispute is an excusable non-performance event (see Part Three, § VI).

•

Supplier must notify Buyer of the contract expiration date six months before termination of a Supplier labor contract that has not been extended or replaced.

•

At Buyer’s request, Supplier must build and store up to a thirty day supply of parts as directed by Buyer.

•

Buyer is required to purchase all conforming parts in a supply bank that Supplier has built at Buyer’s direction.

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IV. Import and Export – Context and Questions 1. Overview The OEMs include in their general Terms and Conditions of purchase specific terms related to the import and/or export of Parts (“Foreign Trade Terms”). The provisions on imports focus primarily on compliance with: (a) Harmonized Tariff Schedule (“HTS”) classification rules; (b) applicable duties and tariffs, including antidumping duties and countervailing duties, if any; (c) country of origin designation and marking rules; and (d) any other information requirements for clearing Customs. The clauses regarding exports tend to require Supplier compliance with export requirements. Generally, Suppliers are required to assist the OEMs in obtaining benefits (e.g., drawbacks) arising from import and/or export of Parts. 2. Duties and Customs Clearance All of the Foreign Trade Terms provide for some basic obligations, such as the designation of responsibility for payment of applicable duties or tariffs, and for provision of required documentation for Customs clearance. 3. Drawback Right Drawback rights are rights to refunds of certain amounts paid to governments in connection with the import of Parts. Generally, the Foreign Trade Terms do not limit the OEM’s claims to drawbacks only to those arising from customs duties included in the purchase price paid by the OEM or otherwise to be reimbursed by the OEM. Some OEMs expressly claim the drawback right of tier 2 Suppliers of components. In those cases, it is advisable for tier 1 Suppliers to make sure that they provide to themselves in their own Terms and Conditions of purchase that drawback rights relating to the tier 2’s components shall belong to tier 1 Suppliers (to pass along to the OEMs).  Managing import duties can be very time consuming and requires cooperation of the OEM, Supplier, and lower tier Suppliers. Often a third-party consultant is used. 4. Responsibility for Export Licenses and Compliance with Customs Rules and Procedures Some Export Terms state that it is the Supplier’s responsibility for export licenses. Other Export Terms rely on Incoterms to determine the responsibilities. It is important to note, however, that use of Incoterms will not relieve an exporter of the duty to obtain an export license for a transaction involving goods or technology that are export-controlled in the country of manufacture. 5. Unusual Duties Antidumping duties can be imposed when US prices are below fair or normal value and it results in material injury to US producers. Countervailing duties are based on the existence of illegal subsides by a foreign government that are received by the manufacturer or exporter and result in injury or threat of injury to a US industry. Not all subsidies are illegal. Generally, they are governed by the World Trade Organization subsidies code. Generally, subsidies are illegal that give an unfair advantage to exports. © 2026 MEMA Original Equipment Suppliers

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6. Valuation Customs valuation is a complex area and undervaluation can result in fines and penalties. Importers are advised to consult with counsel. 7. Certificates of Origin Certificates of origin are often required to claim certain duty preferences under various free trade agreements (FTA’s).

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IV. Import and Export – OEM Comparative Analysis 1. BMW (2018) (Section 8): •

There were significant changes from 2014 to 2018 terms.

•

Unless otherwise agreed, customs clearance shall be the responsibility of BMW. If Supplier assumes responsibility without approval, Supplier will bear the cost of clearance.

•

Supplier must provide BMW with all necessary support for BMW to reduce or minimize its liability to customs duties.

•

Invoices must be in duplicate, in English.

•

Invoice must itemize tooling costs, assembly, freight and similar costs (if included in the price) and “value of components contributed by Buyer (Beistellungen) related to the Goods delivered.”  The itemization is potentially significant, because tooling costs and “value of components” can be added to dutiable value of goods.

•

Even if deliveries are made free of charge, Supplier must indicate value, at market price, with note “Only for customers duty” and reason of the free of charge.

•

Supplier must notify BMW of the “non-preferential and preferential origin of the goods.” The method and timing requirements for notice are described in § 8.2.

•

If Supplier participates in special programs like the US Foreign Trade Zones program or the Mexican IMMEX program it must comply with the requirements of these programs and provide buyer with information on its compliance with duties under these programs.

•

Supplier must assure supply chain security and the adherence to legal policies.

•

The Supplier will inform BMW of any export restrictions applicable in the country of manufacture, such as restrictions on dual-use technologies, as well as available exemptions.

•

Unless otherwise agreed, BMW is responsible for customs clearance only in the country of import and Supplier is responsible for customs clearance in the country of export. If Supplier assumes responsibilities for customs clearance in the import country, it is responsible for such costs.

•

If requested by BMW, Supplier must implement customs procedures and comply with customs rules, in particular, for deliveries within the EU, with Art. 84 of Regulation (EC) No. 2913/92. Also, for goods shipped with the EU, the terms provide certain procedures as required under Art. 3, §§ 26 and 27 Regulation (EC) No. 300/2008 that the Supplier must follow to avoid further security checks of the goods.

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2. BMW (2022) (Section 8): •

The 2022 Terms remain the same as the 2018 terms with the following additions: o If proof of origin is required by virtue of other local import rules in the country of import, Supplier shall likewise provide BMW with such proof. (§8.2). o Supplier shall inform BMW in writing of applicable anti-dumping measures (e.g., for aluminum, steel) and punitive tariffs on imports into the corresponding importing countries. (§8.3).

3. FCA US (2021) (Sections 15 (a) – (f)): •

Responsibility for customs duty shall be determined in accordance with the FCA US “transportation code.” (§ 15(c)).

•

Supplier must provide FCA US or the governmental authority all documentation and information necessary to determine the proper minimum duty or to obtain drawback of duties paid. (§ 15(d)).

•

Rights to and benefits of any duty drawback and export credits are property of FCA US. (§ 15(b)).  FCA US claims ownership of drawbacks and export credits. “Drawback” includes duties, taxes and fees.

•

Supplier must advise FCA US on necessity of any license for importation and/or exportation of Parts and assist FCA US in obtaining the license. (§ 15(e)).

•

Supplier must notify FCA US in writing of all materials or with any documentation and information necessary to establish the country of origin. (§ 15(a)).

•

Supplier must notify FCA US in writing of all materials or components of Parts which are from a country other than the country of “delivery.” (§ 15(a)).  It is often difficult to determine when and in which country the Parts are delivered.

•

FCA US will be responsible for only normal duties, not dumping or countervailing duties. (§ 15(c)).

•

Supplier warrants fair value pricing to avoid anti-dumping duties. (§ 15(f)).

4. FCA US / Stellantis (2022) (FCA US Sections 15 (a) – (f) and Stellantis Global Section 15): •

No material additions or changes from FCA 2021, except, Supplier must: o Include information on applicable duties in its quotation and is responsible if duties exceed the quoted amount. o Notify FCA of any ongoing investigation by a customs authority.

5. Ford (2004) (Section 10.04): •

Supplier must provide Ford with any documents and information Ford may require to support tax paid, tax reporting, or recovery of VAT.

•

Purchase Order regulates whether Supplier is required to pay duty or not.

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•

The total price must include applicable duty and taxes unless otherwise specified in the Ford Tax Web-Guide. Supplier must show on its invoice all duties and taxes levied on the Parts.

•

Supplier must comply with Ford’s Delivery Taxes Web-Guide and Tax Web-Guide.

6. Ford (2021) (Section 9.03): •

Unchanged except changes in section numbering and nomenclature.

7. General Motors (Sections 18 and 32): •

Credits or benefits, including trade credits, export credits and drawback of duties, taxes or fees, belong to GM.

•

Supplier must provide information necessary for GM to receive the credits and benefits and to fulfill customs obligations, origin marking and labeling requirements.

•

Supplier is responsible for export license unless otherwise agreed, in which case the Supplier must provide necessary information for GM to obtain the license.

•

Supplier must undertake necessary arrangements so that the Parts are covered by any duty deferral or free trade zone program of the country into which the Parts are imported.

•

Supplier must comply with “recommendations or requirements of all applicable Authorized Economic Operator (AEO), governmental security/anti-terrorism and enhanced border release programs,” such as requirements of C-TPAT.

•

Supplier must comply with export control laws.

8. Honda (Sections 12 and 15): •

Supplier must review the requirements of the Customs-Trade Partnership Against Terrorism (“C_TPAT”) and, if applicable, comply with the security procedures.

•

Supplier transfers to Honda all customs duty and/or drawback rights and agrees to provide all documentation or information related to the Good.

9. Hyundai (Sections 22 (a) – (e)): •

Same as FCA US Section 15.  It is unusual to have two OEMs with the identical provision.

•

Responsibility for customs duty shall be determined in accordance with the Hyundai “transportation code.” (§ 22(c)).

•

Supplier must provide Hyundai or the governmental authority all documentation and information necessary to determine the proper minimum duty or to obtain drawback of duties paid. (§ 22(c)).

•

Rights to and benefits of any duty drawback and export credits are property of Hyundai. (§ 22(b)).  Hyundai claims ownership of drawbacks and export credits. “Drawback” includes duties, taxes and fees. It is not clear what export credits are targeted.

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•

Supplier must advise Hyundai on necessity of any license for importation and/or exportation of Parts and assist Hyundai in obtaining the license. (§ 22(d)).

•

Supplier must notify Hyundai in writing of all materials or with any documentation and information necessary to establish the country of origin. (§ 22(a)).

•

Supplier must notify Hyundai in writing of all materials or components of Parts which are from a country other than the country of “delivery.” (§ 22(a)).  It is often difficult to determine when and in which country the Parts are “delivered.”

•

Hyundai will be responsible for only normal duties, not dumpling or countervailing duties. (§ 22(c)).

•

Supplier warrants fair value pricing to avoid anti-dumping duties. (§ 22(e)).

10. Kia (Sections 22 (a) – (e)): •

Same as Hyundai.

11. Lucid (Section 18): •

Supplier will notify Lucid of goods originating from a country other than the country Lucid receives goods.

•

Supplier will provide Lucid with documentation needed to establish country of origin and comply with applicable regulations.

•

Supplier will provide Lucid or the appropriate governmental authority all documentation and information required by law or regulation to determine the proper minimum duty to be paid upon importation of the Goods into any country or to obtain refunds or drawbacks of duties paid.

•

Supplier will inform Lucid if Goods import/export requires a license. Supplier will assist Lucid get a license.

•

Supplier warrants that all information regarding the import or export of the Goods supplied to Lucid is true and correct.

•

The rights to and benefits of any duty drawback, to the extent transferable to Lucid, are the property of Lucid.

12. Mazda (Sections 15, 31): •

Seller must ship using providers certified by US CBP CTPAT or a program of another country that has a mutual recognition agreement with CTPAT or has otherwise been approved by Mazda. Seller must certify and document compliance with the above.

•

Seller is solely responsible for the physical integrity and security of all deliveries and shipments.

•

Seller must comply with export control laws.

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13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7): •

Responsibility for customs duty will be determined in accordance with the MBUSI “transportation code.” (§ 6.4).

•

Supplier must provide MBUSI or the governmental authority all documentation and information necessary to determine the proper minimum duty or to obtain drawback of duties paid. (§ 6.4).

•

MBUSI owns all rights to drawback of customs duties, including those arising from duties on components of Parts. Supplier must provide MBUSI all information and documentation necessary for MBUSI to obtain drawback. (§ 6.2).  This means tier 1 Suppliers should make sure that any drawback right of tier 2 Suppliers belongs to tier 1 Suppliers by contract between the tier 1 and the tier 2 Suppliers.

•

Supplier must advise MBUSI on necessity of any license for importation and/or exportation of Parts and assist MBUSI in obtaining the license. (§ 6.5).

•

Supplier must obtain a license of import if the Goods are provided DDP. (§ 6.5)

•

Supplier must ensure that Service Parts and containers comply with country origin making requirements. (§ 6.1).

•

Supplier must comply with the marking requirements of the US, Canada and Mexico. (§ 6.1).

14. Nissan (Sections 4, 6.5 and 40): •

Supplier must timely and accurately fulfill all requests by Nissan, or its designated agents, for country of origin certification for all Parts supplied to Nissan whether or not preferential origin or tariff treatment applies. Nissan or its designated agents will provide Supplier with all information, documents and/or support necessary. If Supplier is unable to obtain any certificate due to circumstances beyond its control, it must immediately inform Nissan or the agent.

•

Supplier must adopt the C-TPAT Best Practices security standards.

•

Supplier must ensure all subcontractors and entire supply chain for Parts comply with all Applicable Laws of countries and regions in which they operate as well as with the concepts in the United Nations Global Compact.

•

Supplier must notify Nissan immediately upon discovery of any apparent or threatened breach of the provisions of Article 40 and shall take remedial actions immediately. Supplier must establish and maintain internal controls to comply with this Section. o Supplier must provide Nissan with a certificate of compliance with the Uyghur Forced Labor Prevention Act (UFLPA). Supplier must provide Nissan with a “Component Supply Chain Chart.” Supplier must supply extensive information and documentation (collectively “Supply Chain Information” of compliance with the UFLPA and the “US Customs and Border Protection’s Operational Guidance for Importers,” if so requested. Supplier warrants accuracy of Supply Chain Information and Nissan may

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audit Supplier’s Supply Chain Information. Nissan may audit Supplier’s Supply Chain Information. Supplier must notify Nissan of any supply chain changes affecting Supply Chain Information. Supplier must Notify Nissan prior to shipment is Parts are subject to Export Administration Regulations (“EAR”) and provide cryptographic specifications. •

Supplier shall provide an Export Control Classification Number (ECCN) for any product/ technology that is controlled under EAR.

•

Supplier must comply with export control requirements and “take any action necessary” to ensure that Supplier and Nissan are complaint with US law.

•

Supplier must ensure compliance by “subsidiaries, contractors, suppliers, service providers, agents, carriers, and freight forwarders.”

•

Supplier must not export “Product / Technical Information” where prohibited by US Law without required government authorization.

15. Rivian (Sections 6.2 and 16): •

Supplier must comply with all applicable laws that regulate the sale, manufacture, labeling, transportation, licensing, approval or certification of the products, including export control in the US and all relevant countries, and those relating to environmental matters, data protection, privacy, wage, hours and conditions of employment, occupational health and safety and motor vehicle safety.

•

Supplier agrees that during the period it ships goods to Rivian, it and its sub-contractors who ship directly or package good for shipment shall either be certified under C-TPAT or comply with applicable trade security programs.

16. Scout Motors (Section 7): •

Supplier must ship using providers certified by US CBP CTPAT. Supplier must certify and document compliance with the above.

•

Supplier is solely responsible for all customs or FTA related obligations, origin marking or labeling requirements, and local content origin requirements.

•

Supplier must comply with all export control laws, including but not limited to export licenses and necessary authorizations.

•

Supplier warrants that any information that is supplied to Scout about the import or export of Supplies is true and that all sales covered by the Order shall be made at not less than fair value under the anti-dumping laws of the countries to which Supplies are exported.

•

All credits or benefits resulting from the Order, including trade credits, export credits or the refund of duties, taxes, or fees, belong to Scout. Supplier must provide Scout with documents necessary for Scout to obtain benefits including trade credits, export credits or drawback of duties, taxes and fees.

17. Toyota (2009) (Sections 5.7 (a) and (b)): •

Supplier must fulfill any custom and local content obligations. (§5.7(a)).

•

Supplier must provide Toyota documents necessary for Toyota to obtain benefits including trade credits, export credits or drawback of duties, taxes and fees. (§5.7(a)).

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•

Supplier is responsible for export license unless otherwise agreed in which case Supplier must provide necessary information for Toyota to obtain the license. (§5.7(b)).

•

Supplier must undertake necessary arrangement so that the Parts are protected by any duty deferral or free trade zone program of the country the Parts imported. (§5.7(b)).

•

Unless contrary instructions, Supplier must arrange for a consumption entry prior to sale to Toyota. (§ 5.7(b)).

•

Toyota reserves the right to direct Supplier to supply Parts to a foreign-trade zone or subzone. (§ 5.7(b)).

18. Toyota (2021) (Section 6.8): •

The following supersedes the 2009 summary.

•

The new terms eliminate both the Supplier’s former obligation to procure export licenses and requirements regarding import duties.

•

Supplier must cooperate with and provide to the Toyota Parties all information and documents as requested by the Toyota Parties for the purpose of (1) obtaining any applicable benefits related to or arising from the Agreement, including trade credits, export credits, or the refund of duties, taxes, or fees available to any Toyota Party; and (2) fulfilling any customs or export obligations, local content obligations, or other Legal Requirements.

•

Supplier must certify that it has not claimed or taken and will not claim or take at any point during the term of the Agreement, any refund or credit for any portion of any excise tax regarding any Items sold to and later exported by a Toyota Party. Supplier waives any claim for refund of the foregoing tax in favor of such Toyota Party.

•

The Toyota Parties are not liable for any federal, state, provincial, or local taxes unless separately stated on a Contract Document and billed to Toyota as a separate line item. No sales or use tax may be added to the price of Items when an exemption is indicated on the face of the applicable.

19. Volkswagen (Section 7): •

Credits or benefits including trade credits, export credits or drawback of duties, taxes or fees belong to VW.

•

Supplier must provide all information and certificates (including FTA certificates and USMCA Certificates of Origin) necessary for VW to receive such benefits or credits.

•

Supplier is responsible for fulfilling all customs obligations, including origin marking and labeling requirements.

•

Supplier is responsible for export license or authorizations unless otherwise stated in the Order, the RFQ Documents or a Prior Agreement, in which case Supplier must provide necessary information for VW to obtain the licenses or authorizations. This is similar to the confusing provision in GM’s Ex-Im Terms.

•

Supplier must furnish all documentation and information to establish the country of origin.

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•

Supplier must notify VW in writing of all materials or components of Parts which are from a country other than the country of “delivery.” (15(a)).  It is often difficult to determine when and in which country the Parts are delivered.

•

Supplier must advise VW of any material or components imported into the country of origin. The duty is included in the Supplier’s purchase price.

•

“Made in [country of origin]” must be marked if the Parts are manufactured in country other than that the Parts are shipped to.

•

Supplier shall notify VW in writing of any Supplies subject to US export laws and regulations including any changes to local or USMCA content, which in each case are subject to VW approval.

20. Volvo (Section 22.2): •

Supplier must obtain and maintain any export license(s) required to sell the goods to Volvo.

•

Supplier must provide Volvo with all other information and documentation necessary or useful to Volvo for Volvo to comply with laws relating to the import of the good.

•

Before the parties agree on the final Technical Specification, the Supplier must provide Volvo with the following information under EU and/or US laws and regulations or of other relevant jurisdictions: (i) export control classifications numbers, (ii) origin of goods, (iii) percentage, by value, of the content of the goods that is of US origin and export control number of the US content, (iv) a description of any economic sanctions that apply to the goods, and (v) the applicable customs classification codes and, if requested, the Supplier’s declaration for preferential origin and a copy of the export license.

•

Supplier must provide updated information in the event of any change in the goods, the law, export licenses, or in Supplier’s international trade compliance.

21. MEMA OE Suppliers (Section 21): •

Unless otherwise stated in the Contract, it is Supplier’s obligation to pay all export taxes duties and fees.

•

Benefits including rights to receive drawback of duties belong to Buyer.

•

Supplier must provide Buyer with all information necessary for Buyer to receive the benefits to fulfill any customs obligations, to claim preferential duty treatment, and to participate in any duty deferral or free trade zone programs.

•

It is Supplier’s obligation to obtain all export licenses and authorizations unless otherwise stated in the Contract in which case Supplier must provide necessary information for Buyer to obtain the license.

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S(b)

Y(b)

S S

N(a)

S(b)

Y(b)

Supplier responsible for customs clearance Supplier must provide necessary information and documentation for customs obligation Benefit of drawback belongs to OEM OEM Drawback rights extend to export duties, trade credits, and other trade incentives OEM Drawback rights extend to “customs engineering” Supplier responsible for export license Supplier must provide necessary information and documentation for export license Supplier responsible for declaration of origin Supplier must provide necessary information and documentation for declaration of origin Supplier responsible for dumping and countervailing duties Y

N(c)

FCA US 2021

BMW 2022

N(a)

BMW 2018

Specific Provisions Provided in Terms and Conditions

FCA/ Stellantis 2022 Y

N(c)

Ford 2004 Ford 2021

IV. Import and Export – Dashboard GM S

Y(a)

Honda S

Y(d)

Hyundai Y

N(c)

Kia Y

N(c)

Lucid Y

Y(a)

Mazda S

MBUSI Y

S(f)

Y(e)

Y(d)

N(c)

Nissan S

Rivian S

Scout Motors S

Y(a)

Toyota 2009 Toyota 2021

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

VW Y(g)

Y(a)

Volvo S

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Y(a)

MEMA OE Suppliers

All Terms and Conditions of Purchase provisions have to be construed in light of the UCC and other law which may provide a “gap filler” term or a gloss on an express contract term.

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(g) Supplier warrants that any information supplied to VW about the import or export of Supplies is true and that all sales covered by the Order will be made at not less than fair value under the anti-dumping laws of the countries to which the Supplies are exported.

(f) Limited to service Parts.

(e) If the Parts are provided DDP.

(d) Drawback rights of tier 2 Suppliers shall be transferred to OEMs as well as that of tier 1.

(b) It only refers to “benefit generated by a trade credit scheme.”

(a) Unless otherwise agreed.

Specific Notes

General Notes

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

V. Suppliers with Special Needs – Context and Questions 1. Absorption into “ESG” Policies Only a few OEM Terms expressly address this topic within the four corners of the terms, but it may fall within the ambit of the OEM’s ESG or similar policy. This broader topic is now addressed in Part Six, Chapter VII of this book.

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V. Suppliers with Special Needs – OEM Comparative Analysis 1. BMW (2018) (Section 21): •

Does not address this topic, except as part of general “social responsibility” requirements.

2. BMW (2022) (Section 20): •

Does not address this topic, except as part of general “social responsibility” requirements.

3. FCA US (2021) (Section 25): •

FCA US encourages its Suppliers to utilize subcontractors with special needs, which include businesses that are owned by women, socially and economically disadvantaged individuals, etc.

•

Supplier must annually advise FCA US the percentage, based on the dollar value of Supplier’s sales of parts to FCA US, of the content provided to Supplier by subcontractors with special needs.

4. FCA US / Stellantis (2022) (FCA US Section 25 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global Terms do not address this topic.

5. Ford (2004) (Section 36.02): •

Supplier must comply with laws applicable to government contractors, including laws related to contracting with small and disadvantaged business concerns.

6. Ford (2021) (Sections 35.03, 36.06): •

Supplier must comply with laws applicable to government contractors, including laws related to contracting with small and disadvantaged business concerns, as described in the US Government Contracts Supplier Guide.  Supplier must “actively attempt” to contract with “Diverse Businesses,” including small businesses, businesses owned by socially or economically disadvantaged individuals, and women owned or controlled businesses.

•

Supplier must report annually on its efforts per the applicable Ford regional Supplier Guide.

7. General Motors: •

Does not address this topic.

8. Honda: •

Does not address this topic.

9. Hyundai (Section 33): •

Hyundai encourages its Suppliers to utilize subcontractors that are minority-owned business entities (MBEs).

•

Supplier must advise Hyundai of the percentage of MBE content in the parts, based on dollar value, and update Hyundai any time that percentage changes.

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10. Kia (Section 33): •

Same as Hyundai.

11. Lucid: •

Does not address this topic.

12. Mazda: •

Does not address this topic.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 34): •

MBUSI encourages its Suppliers to utilize “diverse” workforce and supplier base, which may include businesses that are owned (50% +) by women, by socially and economically disadvantaged individuals, etc.

•

Supplier must annually advise MBUSI the percentage, based on the dollar value of Supplier’s sales of parts to MBUSI, of the content provided to Supplier by subcontractors which meet one or more of the preceding criteria.

14. Nissan: •

Does not address this topic.

15. Rivian: •

Does not address this topic.

16. Scout Motors: •

Does not address this topic.

17. Toyota (2009): •

Does not address this topic.

18. Toyota (2021): •

Does not address this topic.

19. Volkswagen: •

Does not address this topic.

20. Volvo: •

Does not address this topic.

21. MEMA OE Suppliers: •

Does not address this topic.

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VI. Electronic Communication – Context and Questions 1. Inclusion of Electronic Communication Provision All of the OEMs provide for an “electronic communication” clause somewhere within the Terms and Conditions, which affects the treat of EDIs under the contract.

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VI. Electronic Communication – OEM Comparative Analysis 1. BMW (2018) (Sections 7.1, 16 and 17): •

BMW will settle Supplier’s accounts using EDI unless otherwise agreed in writing.

•

Supplier must comply with BMW’s EDI requirements, including those set out in other documents.

•

Any software delivered cannot contain features which allow for unwanted transmission or extraction of data, unwanted changing of data or logic, unwanted insertion of data or unwanted feature enhancements.

•

All data including BMW data and the Supplier’s own data must be secured to the state of the art against unauthorized access, modification destruction or misuse.

•

BMW data must be strictly maintained and handled separately from other customer data.

•

BMW may observe and monitor Supplier’s compliance with BMW’s Information Security terms, including proof (which may include certificates from ISO/IEC 27001 or VDA Model “TISAX”).

•

Suppliers will ensure that no damage-causing software (including viruses, worms or Trojans) are included in the goods and will confirm in writing following the performance of a state-of-the-art check for such malicious programs.

•

Upon Supplier knowledge of a breach or suspicion of such an incident (including, but not limited to, security gaps, data loss, data misuse), Supplier will, without delay and free of charge, provide BMW notice, support data recovery efforts, provide security reports for a period of time, and perform audits as requested by a qualified external company.

•

Supplier will provide BMW with a contact person for Information Security prior to the first shipment.

2. BMW (2022) (Sections 7.1-7.2, 16 and 17): •

The 2022 Terms remained the same as the 2018 Terms with the exception of the following additions or deletions: o The exchange of billing documents is now done electronically via BMW eInvoicing, available under B2B-Portal />Anwendungen/>eDocument Portal eInvoice. (§7.1). o Supplier shall invoice using the Self-billing Procedure where permitted by law. If Supplier is not invoiced by means of a self-billed invoice, Supplier shall submit a commercial invoice using the invoice procedure. (§7.2). o At BMW’s request, Supplier shall prove the implementation of “Information Security” measures. Supplier shall also strictly segregate and handle separately BMW’s Data (with the exception of email) from other customers, and employ appropriate protective measures. (§17.2) o If a Supplier obtains knowledge of an incident and acts as required under section 17.5, the actions are no longer “free of charge” and the Supplier’s obligations arising from the supply relationship remain unaffected. (§17.5).

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3. FCA US (2021) (Section 27): •

FCA US “will prescribe the methods of communication” and Supplier must follow these prescribed methods.

4. FCA US / Stellantis (2022) (FCA US Section 27 and Stellantis Global n/a): •

No material additions or changes from FCA 2021. Stellantis Global Terms do not specifically address this topic.

5. Ford (2004) (Section 44): •

Written notices may be electronic through Ford’s system of electronic communication with Suppliers, and a written notice may be signed electronically.

6. Ford (2021) (Section 43): •

Unchanged except section numbering.

7. General Motors (Section 17): •

Payment may be made electronically.

8. Honda (Section 2.2): •

Each Order will be transmitted by hand, mail, courier, facsimile or EDI.

9. Hyundai (Section 38): •

Hyundai will specify the method of electronic communication, and Supplier is required to follow the method specified.

10. Kia (Section 38): •

Same as Hyundai.

11. Lucid (Section 23.6): •

Supplier must follow the method of electronic communications specified by Lucid.

12. Mazda: •

Mazda does not address this topic.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Sections 11.3-11.6): •

Supplier must comply with MBUSI’s IT Requirements Directive, Data Protection and Information Security Requirements, Accept Terms of Use, Production Supplier Data Standards, and Payment for Null Series and Production Trial Parts Directive, which are located on the Supplier Portal and may be amended from time to time.

14. Nissan (2023) (Sections 1 and 45): •

The definition of a “Release” includes an electronic communication of the release information.

•

Supplier agrees to manage and maintain Nissan Records in compliance with current approved Nissan Records Management Policies and Procedures, which may be in electronic form.

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15. Rivian (Section 32): •

Supplier shall comply with any method of electronic communication specified by Rivian, including electronic funds transfer, purchase order transmission, production releases, electronic signatures, and communication.

16. Scout Motors (Section 33): •

Scout may use electronic purchase orders, Material Releases and other electronic forms and Supplier must comply with the method of electronic communication used by Scout.

•

Scout reserves the right to set policies and procedures for implementation or modification of electronic communication.

17. Toyota (2009) (Sections 1.4 and 6): •

Toyota may use electronic Purchase Orders and other electronic forms to supplement the written documents used with the Agreement.

•

Supplier acknowledges that any decision or action to “click” on “I agree” or “I consent” or other similar term constitutes consent or agreement to such action and will be legally binding and acts as the equivalent of a handwritten signature.

•

The Toyota electronic record governs any discrepancy between electronic records maintained by Toyota and Supplier.

18. Toyota (2021) (Sections 2.3 and 2.5): •

The following supersedes the 2009 summary.

•

Toyota may use electronic Purchase Orders and other electronic forms to supplement the written documents used with the Agreement.

19. Volkswagen (Section 33): •

VW may use electronic purchase orders, Material Releases and other electronic forms.

•

Supplier will comply with the method of electronic communication specified by VW.

•

VW reserves the right to set policies and procedures for implementation or modification of VW’s specified method of electronic communication.

20. Volvo (Sections 22.3 and 29.1): •

The parties agree to apply electronic data interchange (EDI) with respect to certain communication. Supplier agrees that all EDI shall comply with the terms of Volvo’s EDI agreement as stated in Volvo Car Instruction.

•

Supplier agrees that it will process any Personal Data in compliance with all applicable laws. Personal Data is information that relates to an identified or identifiable natural person, including the other party’s employees and customers, that directly or indirectly can identify that person, or personal data according to national, federal, state and international laws and regulations now or later in effect).

•

Either party must notify the other prior to processing any Personal Data.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

21. MEMA OE Suppliers (Section 23.3): •

Supplier must comply with the method of electronic communication specified by Buyer, and Supplier must make commercially reasonable efforts to comply with any modification to Buyer’s System.

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OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

VII. Compliance with Laws and Environmental, Social, and Corporate Governance Principles – Context and Questions 1. Standard Obligation The general obligation to comply with applicable laws and regulations is standard. 2. ESG Policies Each OEM requires, to a greater or lesser extent, that its suppliers comply with, and require lower-tier suppliers to comply with, ESG Policies. There is significant variance between OEMs on the scope, substance and reporting requirements, as well as the enforcement tools available to the OEMs for the ESG Policies. Further, they are very rapidly changing and often incorporate by reference other fast-changing ESG documents, rules, or procedures. As a result, compliance is becoming increasingly burdensome for suppliers.

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VII. Compliance with Laws and Environmental, Social, and Corporate Governance Principles – OEM Comparative Analysis 1. BMW (2018) (Sections 10.1, 21 and 23): •

Supplier must comply with all applicable laws and regulations.

•

BMW and Supplier must comply with listed social responsibility principles, including a ban on child labor, maintenance of adequate working conditions, and no discrimination based on religion, origin, handicap, and the like.

•

The law of the BMW contracting party’s principal place of business applies.

•

Litigation involving the contract must be brought in the BMW contracting party’s principal place of business.

•

The 1980 United Nations Convention on Contracts for the International Sale of Goods (“CISG”) is excluded. Supplier must have a “certified occupational health and safety system” per OHSAS 18001 or ISO 45001.

2. BMW (2022) (Section 20): •

Significant change and rewrite from the 2018 terms.

•

It is paramount that Supplier corporate activities take social responsibility towards its employees and society into account. Supplier must be committed to respecting the principles and rights adopted by the International Labor Organization (ILO) in the Declaration on Fundamental Principles and Rights at Work.”

•

BMW outlined a list of principles that are especially important, including but not limited to: preservation of human rights, elimination of forced, compulsory and child labor, positive and negative freedom to association, elimination of discrimination (lengthy list of basis), compliance with health and occupational safety regulations, social working conditions, enable employees to enjoy a reasonable standard of living, indigenous rights, ban on bribery and extortion, and animal welfare.

•

Supplier must comply with all applicable laws, standards and official rules and regulations.

•

Supplier has several obligations to provide BMW information or comply with BMW or VDA standards, including but not limited to those related to energy consumption, emissions, waste water, VOC emissions, life cycle assessment, recycling optimization, marking of Goods and/or materials, hydrocarbon emission compliance, and complying with BMW Group Standard GS 93008 “Substances of concern” throughout the entire life cycle of the Goods.

•

Supplier is obligated to take appropriate training and implement internal control and sanction measures to ensure compliance.

3. FCA US (2021) (Sections 24 and 26): •

Supplier must comply with all applicable laws and regulations and must indemnify FCA US if Supplier or its employees or agents fail to do so.

•

For US contracts, Michigan law applies.

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•

For Canadian contracts, Ontario law applies.

•

For all contracts, the CISG is excluded.

4. F CA US / Stellantis (2022) (FCA US Sections 24 and 26 and Stellantis Global Sections 11, 23 and 25): •

In addition to prior obligations, significant new obligations (§11). Supplier must: o Notify Buyer immediately if Supplier or its sub-suppliers are not in full compliance with any Law. o Use resources effectively and efficiently to minimize environmental impact, o Not purchase or sub-contract from any illegal or non- compliant channel or supplier and Remain committed to promote a responsible supply process.

P It is likely that some or all of these will become reporting obligations or audit topics. •

Seller must comply with Laws relating to product safety and vehicle emissions including CO2. (§23).

•

Seller must adopt a code of conduct at least as stringent than Stellantis N.V. group Code of Conduct. (§23).

•

Sellers of “Emission-Related Goods or Services” are now subject to various training, process, and documentation requirements to ensure compliance with standards and to ensure that no “Defeat Device” is contained or created. (§25).

5. Ford (2004) (Sections 36, 37 and 39.07): •

Supplier must comply with all applicable laws related to the design, production, sale, or distribution of the parts.

•

Supplier must comply with all laws applicable to government subcontractors.

•

Supplier may not use forced labor, employ anyone under age 15, or engage in physically abusive disciplinary practices, may not use subcontractors who do so, and must certify compliance when delivering parts.

•

The applicable law is the law of the Ford contracting entity’s principal place of business, which is Michigan for all US locations.

•

The CISG is excluded.

6. Ford (2021) (Sections 35 and 36): •

The following supersedes the 2004 summary.

•

Supplier must comply with all applicable laws related to the design, production, sale, or distribution of the parts.

•

The Goods and Tech Products must comply with all US and other applicable laws, statutes, regulations, codes and executive orders relating to export controls, sanctions and anti-boycott as described in Buyer’s Export Control and Sanctions Compliance Supplier Guide, as well as all applicable laws, rules, regulations, orders, conventions, ordinances,

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or standards of the country destination or use of the Goods, or which relate to the manufacture, labeling, transportation, importation, licensing, approval or certification. •

If Buyer requests, Supplier must certify in writing its compliance.

•

Supplier must comply with all laws applicable to government subcontractors.

•

Supplier must comply with all Competition Laws, which are laws that prohibit, restrict, or regulate actions having the purpose or effect of monopolization, restraint of trade, or lessening of competition. Supplier must adhere to the Supplier Code of Conduct, which can be found via the Social Responsibility Supplier Guide.

•

The applicable law is the law of the Ford contracting entity’s principal place of business, which is Michigan for all US locations.

7. General Motors (Sections 14 and 31): •

Supplier must comply with all applicable laws, rules, regulations, etc. of the country of destination or that relate to the manufacture, labeling, transportation, import/export, licensing, approval, or certification of the parts or services, including matters relating to the environment, data protection and privacy, wages, hours, and conditions of employment, subcontractor selection, discrimination, occupational health, safety, the handling and transportation of dangerous goods or hazardous materials and motor vehicle safety.

•

Supplier must comply with all anti-corruption laws and must not offer anything of value to any government official or “any government-owned, government-controlled or government-affiliated” entity to obtain a business opportunity or influence an official decision.

•

Supplier must represent that neither it nor any subcontractor vendors, agents or associated third parties utilizes child, slave, prisoner, or any other forced labor to perform the contract and agrees to so certify if requested, and Supplier must indemnify GM from any damages arising from non-compliance.

•

The applicable law is the law of the state, province, or country from which the contract was issued by reference to the GM address in the contract and excludes the CISG.

•

Litigation instituted by GM may be brought, at GM’s option, in a court having jurisdiction over Supplier or over GM’s location, while litigation instituted by Supplier may only be brought in a court having jurisdiction over the GM location that issued the contract.

•

Seller must notify GM of any failure to comply with law.

•

Supplier must, on request. “certify to Buyer in writing the origin of any ingredients or materials in the goods and provide in writing any other information so that “Buyer may comply in a timely manner with reporting requirements under applicable law with respect to consumer protection, ‘conflict minerals’ or similar materials or ingredients, if any.”

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8. Honda (Sections 2.2, 14.5, 14.7 and 15): •

Supplier agrees to review and, where required, comply with all requirements of the Customs-Trade Partnership Against Terrorism (C-TPAT).

•

All quotations and all prices set forth in a Purchase Order must be in compliance with all applicable laws and regulations.

•

The supplier expressly waives any and all statutory and/or constitutional immunity to which, but for the waiver, it might be entitled as an employer in compliance with Ohio’s workers’ compensation laws.

•

The terms of the agreement, unless otherwise defined, shall be deemed to have the meanings set forth in the Uniform Commercial Code as in effect from time to time in Ohio.

9. Hyundai (Sections 32 and 36): •

Supplier must comply with all applicable laws and regulations.

•

Supplier must represent that neither it nor any subcontractor utilizes slave, prison, or any other forced labor to perform the contract and must so certify if requested, and Supplier must indemnify Hyundai from any damages and fees arising from non-compliance.

•

The Agreement is governed by the laws of the State of Alabama.

•

Litigation against Hyundai must be brought in Alabama.

•

Litigation against Supplier may be brought in any court having jurisdiction over Supplier.

•

Supplier waives a right to a jury trial.

•

Supplier consents to venue in Montgomery County in Alabama.

•

Hyundai may invoke arbitration (see Part Three, § VII).

10. Kia (Sections 32 and 36): •

Same as Hyundai, except Georgia law governs, and venue is proper in Troup County, Georgia.

11. Lucid (Sections 22.1 and 23.9): •

Any Goods or Services supplied by Supplier must comply with all applicable laws, rules, regulations, orders, conventions, ordinances, standards, and other Government Requirements of the country(ies) of destination, the United States, and any foreign country or political subdivision having jurisdiction over any of Supplier’s activities.

•

Agreement is governed by California law.

12. Mazda (Sections 10, 24 and 31): •

Seller must inform Mazda of all Laws applicable to the Product which are known or should be known by Seller.

•

Seller must, at its expense, obtain all needed licenses and permits, and provide documentation to Mazda on request.

•

Seller must comply with all Laws.

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•

Seller shall ensure its subcontractors do not engage in any act that may result in penal liability due to fraud, embezzlement, bribery, kickbacks, violation of competition laws; “insolvency crimes, or any law of the US, including the FSLA, FCPA, export control laws or the American Automotive Labeling Act.”

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 30): •

Supplier must comply with all applicable laws and regulations. Supplier warrants and represents that it is aware of all applicable laws and commits to strict compliance.

•

Supplier must comply with technical laws and regulations regarding US vehicle emissions, certification, and product Safety. Supplier must have structures to ensure adherence to applicable laws. If Supplier learns or has reason to know of facts that may indicate a violation of legal requirements or regulations regarding certification, emission, and/or product safety with implications for MBUSI, Supplier must (1) immediately notify the appropriate contact person according to the Technical Compliance Management System (tCMS) escalation model and (2) immediately investigate the facts.

•

Supplier must comply with standards and requirements of Mercedes regarding social responsibility, compliance, sustainability, and environmental protection as specified in MBST 36 and Mercedes’ Responsible Sourcing Standards, located in the Supplier Portal and either may be amended from time to time.

•

Litigation against MBUSI must be brought in Alabama.

•

Litigation against Supplier may be brought in any court having jurisdiction over Supplier.

•

Supplier waives a right to a jury trial.

•

MBUSI may, at its option, require arbitration.

14. Nissan (Sections 35, 36 and 40): •

Supplier must comply, and ensure that all subcontractors and the entire supply chain for the parts comply, with all applicable laws and regulations.

•

Sections 40.1- 40.11 and its subparts i detail requirements regarding compliance with law and corporate social responsibility, including environmental, labor, child labor, forced labor, working environment, anti-trust, unfair competition, consumer protection, privacy laws and regulations.

•

Supplier must establish and maintain an effective and appropriate internal control structure and system in order to strictly comply.

•

Supplier must notify Nissan immediately upon discovery of any apparent or threatened noncompliance or threatened violation of any applicable law.

•

Supplier shall indemnify, defend and hold Nissan harmless against any claim, damage, or loss arising from, or in conjunction with, Supplier’s breach.

•

Nissan is entitled to terminate the Agreement or any PO without any liability to Supplier immediately upon written notice to Supplier, if Supplier’s breach significantly undermines the brand image or goodwill of Nissan and its products.

•

Supplier warrants that it has complied with and will continue, in performing, to comply with all applicable laws.

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15. Rivian (Sections 4.1, 4.4, 31, and 33): •

Supplier warrants that it is duly qualified and in good standing to do business in every jurisdiction required for purposes of the Contract.

•

Supplier warrants that it is in compliance with all applicable domestic and foreign antitrust laws.

•

Supplier warrants that neither it nor any of its representatives is under investigation by any governmental authority, is not debarred, suspended or disqualified from doing business in the United States, and is not subject to sanctions.

•

The contract is governed by the laws of the State of Michigan.

•

All Supplier claims must be commenced within one year after the breach or event giving rise to the claim.

•

If arbitration is not elected, Supplier consents to the exclusive jurisdiction of the appropriate state court in Wayne County, Michigan.

•

Supplier specifically waives the right to a jury and all objections to venue in such courts.

16. Scout Motors (Sections 13 and 16): •

Supplier must confirm to Scout’s and Volkswagen Group’s requirements for sustainable development regarding relationships with business partners.

•

Supplier must provide transparency about its supply chain when requested, including, but not limited to, name, location, and raw material sources.

•

Supplier must comply and ensure that all personnel, sub-suppliers, subcontractors, and affiliates, and all Supplies supplied by Supplier, with all applicable laws, rules, regulations, orders, conventions, ordinances and standards.

•

All materials used by Supplier related to the Supplies and their manufacture must satisfy the then existing governmental and safety constraints on restricted, toxic and hazardous materials as well as environmental, electrical and electromagnetic considerations.

•

Supplier and its employees, sub-suppliers and subcontracts must abide by the highest ethical standards. None shall utilize slave, child, prisoner, or any other form of forced, involuntary, or illegal labor, or engage in abusive worker treatment or corrupt business practices. If requested, Seller shall certify the foregoing and provide documentation as requested.

17. Toyota (2009) (Sections 4.3 and 7.2): •

Supplier must comply with all applicable laws and regulations.

•

Supplier must test, inspect, and certify that its parts satisfy legal and Toyota requirements, and provide Toyota with test reports that establish compliance.

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•

The Agreement is governed by the laws of the State of Kentucky.

•

Litigation brought by either party must be brought in Kentucky.

•

Except for seeking injunctive relief, the Parties agree to submit disputes to binding arbitration if the dispute is not resolved first through negotiation or non-binding mediation.

18. Toyota (2021) (Sections 5.3 and 8.3): •

The following supersedes the 2009 summary.

•

Supplier must comply with all applicable laws and regulations. Supplier must notify Toyota of non-compliance or “obstacles” to compliance with Trade Laws.

•

Toyota may expand territorial scope of compliance obligation to include any jurisdiction designated by Toyota, on terms to negotiated, including the jurisdictions of processing, delivery or supply.

•

Supplier will not export or transfer Items, software or technology to any country subject to applicable sanctions without obtaining required US licenses authorizations.

•

Supplier will not conduct business with a Prohibited Person.

•

Supplier will not provide or facilitate the provision of any Payment to any Foreign Official or related person if the Payment “could be construed” as unlawful.

•

Supplier must give Toyota notice before transmitting Items or information which are classified greater than EAR99; designated for control other than for Anti-Terrorism under the EAR or found on the USML.

•

Supplier must notify Toyota of errors in documentation relevant to duty deferral or free trade programs.

•

Supplier must participate in C-TAPT and other governmental supply chain security programs and obtain necessary certification in each jurisdiction where it manufactures, assembles, produces or exports Items.

•

Toyota’s determination of what testing and certification of Items are needed to comply with Legal Requirements does not relieve Supplier of its compliance obligations.

•

Michigan law governs under the new terms.

19. Volkswagen (Sections 16, 37, 38 and 41): •

Supplier must comply with all applicable laws, rules, regulations and orders.

•

Supplier and its employees and contractors must abide by the highest ethical standards.

•

The Agreement is governed by the laws of the State of Tennessee.

•

The CISG is excluded.

•

Both Supplier and VW consent to jurisdiction in Hamilton County, Tennessee for any disputes arising under the Agreement.

•

Supplier and VW waive the right to a jury trial.

•

The dispute resolution process in Section 38 shall be resolved by binding and confidential

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arbitration; provided, however, that either party may apply to a court for equitable relief, including a temporary restraining order, preliminary injunction or other interlocutory relief and such court order shall remain in full force and effect until so modified. 20. Volvo (Sections 22.1, 22.4, 22.5, 26 and 28): •

Supplier must comply with all laws in performing the Purchase Agreement. Supplier must also cause its sub-tier supplier to comply with all applicable laws.

•

Supplier represents and warrants that it and each of its directors, officers and employees have conducted all operations and transactions in compliance with all applicable laws and regulations relating anti-bribery, anti-money laundering and anti-corruption and that they have never been investigated, indicted, condemned or sentenced by any authority for any behavior considered corrupt or illegal.

•

Supplier must notify Volvo of any breach of compliance or of the terms and conditions related to compliance is a material breach of the Purchase Agreement.

•

Any Supplier claims arising out of the Purchase Agreement must be made in writing and notice provided to Volvo no later than fifteen (15) days after Supplier becomes aware of the basis of the claim or sixty (60) days after the date of the occurrence giving rise to the claim, whichever is earlier.

•

All claims arising out of or in connection with the Purchase Agreement must be brought for dispute resolution no later than twelve (12) months following the date the claim was presented to Volvo. Failure to do so will constitute a waiver.

•

Unless prohibited by law, Volvo is not liable for any indirect or consequential losses, loss of production, loss of product, loss of use, and loss of revenue, profit, or anticipated profit, whether or not the losses were foreseeable at the time of entering into the Purchase Agreement.

•

Injunctive and other forms of interim relief are available, as permitted by local law.

21. MEMA OE Suppliers (Section 10): •

Supplier must comply with all applicable laws and regulations in the country where the parts are manufactured.

•

On request, each party will supply the other with certifications and information needed to assist the requesting party in complying with law.

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VIII. Relationship of the Parties – Context and Questions 1. Scope of Topic Only GM, Hyundai, Mercedes, Nissan, Scout Motors, Toyota, VW and MEMA address this topic within the Terms and Conditions. 2. Independent Contractor GM, Mercedes, Scout Motors, Toyota and VW expressly note that the Supplier’s relationship to the OEM is that of an independent contractor. 3. Binding the Other Party Of the OEMs that address this topic, most of them state that neither party has the authority to legally bind the other party.20

OEMs generally designate suppliers as independent contractors. The underlying purposes for OEMs designating suppliers as independent contractors is to limit or entirely preclude an OEM’s liability for the actions or inactions of the supplier or injuries to or caused by the supplier’s employees. See e.g. Samodai v Chrysler, 178 Mich App 252; 443 NW2d 391 (1989). 20

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VIII. Relationship of the Parties – OEM Comparative Analysis 1. BMW (2018): •

Does not address this topic.

2. BMW (2022): •

Does not address this topic.

3. FCA US (2021): •

Does not address this topic.

4. FCA US / Stellantis (2022) (FCA US n/a and Stellantis Global Section 27): •

Supplier and FCA are independent contracting parties, and nothing in the contract makes either party the agent or legal representative of the other party for any reason.

•

Neither party has any authority to assume or to create any obligation on behalf of the other party.

5. Ford (2004): •

Does not address this topic.

6. Ford (2021): •

Does not address this topic.

7. General Motors (Section 38): •

Supplier and GM are independent contracting parties, and nothing in the contract makes either party the agent or legal representative of the other party for any reason.

•

Neither party has any authority to assume or to create any obligation on behalf of the other party.

8. Honda: •

Does not address this topic.

9. Hyundai (Section 35): •

Neither party is an agent for the other party and has no authority to represent or bind the other party.

•

See Part Two, § III, discussing Supplier’s hiring of temporary workers to perform rework.

10. Kia (Section 35): •

Same as Hyundai.

11. Lucid (Section 23.11): •

Nothing in the Agreement between the Parties creates a joint venture, partnership, or other form of business association.

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12. Mazda (Section 34): •

Seller is an independent contractor.

•

Neither party will bind or attempt to bind the other, nor hold itself out as having the right to do so.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 27): •

Supplier agrees that neither it nor its subcontractors or employees are deemed MBUSI employees or agents.

•

Supplier and its subcontractors are independent contractors for all purpose and at all times.

•

Supplier is solely responsible for withholding or payment of all federal, state, and local income and payroll taxes.

•

MBUSI affiliate or Mercedes may act as an agent of MBUSI. Mercedes and MBUSI affiliates are third party beneficiaries under the Agreement.

•

Supplier shall desist and refrain from all practices which may lead to penal liability due to fraud or embezzlement, insolvency crimes, crimes in violation of competition, guaranteeing advantages, bribery, acceptance of bribes or other corruption crimes.

14. Nissan (Section 31): •

Neither party is an agent for the other party and has no authority to represent or bind the other party.

•

Supplier’s personnel are not, and must not represent themselves as, Nissan employees or agents. No supplier employee, agent, or contractor is an employee, agent or contractor of Nissan.

•

Supplier assumes full responsibility for the acts of its employees.

15. Rivian (Section 26): •

The parties are independent contractors and nothing in the contract is intended to make either the agent or legal representative of the other, nor does it grant any authority to assume or to create obligations on behalf of the other party.

16. Scout Motors (Section 32): •

Supplier’s relationship to Scout is that of an independent contractor.

•

Neither party is an agent for the other party, and neither has authority to represent or bind the other party.

•

Supplier is solely responsible for withholding or payment of all federal, state, and local income and payroll taxes.

17. Toyota (2009) (Section 5.1): •

Supplier’s relationship to Toyota is that of an independent contractor.

18. Toyota (2021) (Section 6.1): •

No change form 2009 except section numbering.

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19. Volkswagen (Section 32): •

Supplier’s relationship to VW is that of an independent contractor.

•

Neither party is an agent for the other party, and neither has authority to represent or bind the other party.

•

Supplier is solely responsible for withholding or payment of all federal, state, and local income and payroll taxes.

20. Volvo (Section 29.6): •

Supplier is acting as an independent contractor. Supplier is not an agent of Volvo and has no authority to represent them as to any matters, except as expressly permitted in the Purchase Agreement.

•

The Purchase Agreement does not constitute a partnership or joint venture.

21. MEMA OE Suppliers (Section 23.4): •

Neither party is an agent for the other party, and neither has authority to represent or bind the other party.

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IX. Ingredients – Context and Questions 1. Supply of Information Although the details and nomenclature among OEMs, all OEMs require provision of Material Safety Data Sheets and the disclosure of information on changes in the use of hazardous or other materials.

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IX. Ingredients – OEM Comparative Analysis 1. BMW (2018) (Section 20): •

Supplier must use resources effectively during production to minimize environmental impact and implement an effective environmental management system.

•

Supplier is required to supply material safety data sheets for materials and chemical products.

•

Supplier must comply with the specified BMW standards for parts life cycle (a separate document).

2. BMW (2022) (Section 20): •

No material changes from 2018 terms.

3. FCA US (2021) (Section 28): •

Supplier must comply with all applicable Environmental, Health and Safety standards and furnish (i) sufficient warning and notice in writing of any material that is an ingredient that is or could become hazardous and (ii) special handling instructions for all such materials.

4. FCA US / Stellantis (2022) (FCA US Section 28 and Stellantis Global Section 11): •

No material additions or changes from FCA 2021.

5. Ford (2004) (Sections 24.04 and 24.05):

•

If requested by Ford, Supplier must provide formulas, analyses, and other information about the parts or materials in the parts that Ford needs in order to comply with governmental requirements.

•

Supplier must comply with Ford requirements regarding use or prohibition of certain materials as set forth in Ford’s Environmental Supplier Guide (a separate document).

•

To the extent information is not required to be disclosed to the government, Ford will keep confidential any information disclosed pursuant to Section 24.

Ford (2021) (Sections 24.04 and 24.05): •

No material change, except nomenclature.

•

See discussion of conflict minerals in Part Six, § VII.

7. General Motors (Section 14): •

Supplier must provide GM with a list of all ingredients in the parts, the amount of the ingredients, and information relating to any changes in or additions to the ingredients.

•

Prior to and with the shipment of parts, Supplier must provide GM with a notice of any hazardous substance that is an ingredient of any part sold to GM.

•

See discussion of conflict minerals in Part Six, § VII.

8. Honda: •

Does not address this topic.

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9. Hyundai (Sections 5 and 12(d)): •

Supplier must provide Hyundai with any requested material safety data sheets, lists of any potentially hazardous ingredients in the parts, and notice of any changes in the ingredients in the parts.

•

Upon request, Supplier must provide Hyundai with a notice of any hazardous substance that is an ingredient of any part sold to Hyundai.

•

Supplier warrants that the parts do not contain any traces of silicone or similar polymers.

10. Kia (Sections 5 and 12(d)): •

Same as Hyundai.

11. Lucid (Sections 2.8 and 22): •

Supplier shall promptly provide Lucid with a Material Safety Data Sheet (MSDS) in the form and format specified by Lucid, listing all potentially hazardous ingredients in the Goods and any changes or additions.

•

Supplier shall provide advanced notice prior to shipping any hazardous materials and affix appropriate warnings.

•

Supplier shall maintain a sustainable supply chain, in which vendors and suppliers at all levels comply with all applicable laws.

•

Supplier must contractually require its suppliers and sub-suppliers to only procure Minerals from facilities that comply with the Sustainability Standards for purposes of production of Goods. Supplier shall at its expense conduct a Minerals Audit, using an independent third-party audit firm.

12. Mazda (Exhibit C): •

Seller must supply MSDC for hazardous materials

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 35.2): •

Supplier must notify MBUSI if the parts are subject to environmental laws.

•

Supplier is required to furnish material safety data sheets.

•

Supplier must comply with MBUSI purchasing procedures for chemicals and related parts in accordance with a separate document.

14. Nissan (Section 38): •

Supplier must provide Nissan with material safety data sheets regarding parts to comply with OSHA, and any other information Nissan needs to comply with environmental laws.

•

Supplier must properly label Parts in accordance with OSHA, Hazard Communication Standards, or other Applicable Laws and provide the information to Nissan upon request.

•

Supplier must ensure compliance with the Toxic Substances Control Act.

15. Rivian (Section 16.1): •

Supplier must comply with all applicable laws that regulate the sale, manufacture, labeling, transportation, licensing, approval or certification of the Products. All such laws

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are incorporated by reference into the Purchase Order. At Rivian’s request, Supplier must certify in writing its compliance. 16. Scout Motors (Section 6(b)): •

Supplier must supply a list of ingredients, the amount of ingredients and information concerning any changes or additions to the ingredients incorporated in the parts.

•

Supplier must supply appropriate warnings, including material safety data sheets, of any hazardous or restricted material that is an ingredient in the products, containers or packaging, together with any special handling instructions.

•

Supplier agrees to comply with the US Toxic Substances Control Act and European Union Directive 2000/53/EC.

•

Supplier will immediately notify Scout in writing when it becomes aware of any ingredient, component, design or defect in Supplies that is or may become harmful to persons or property.

17. Toyota (2009) (Section 4.4): •

Prior to the shipment of parts, Supplier must furnish to Toyota material safety data sheets.

•

Supplier must provide to Toyota notice of any change in materials or ingredients incorporated in the parts, and any other ingredient information in any way related to the parts.

18. Toyota (2021) (Section 4.4): •

The following supplements the 2009 summary.

•

Supplier must provide Toyota with applicable Environmental Reports by the earlier of shipment, 30 days of Toyota’s request, or a contractually required date. Environmental Sheets includes Material Data Sheets.

19. Volkswagen (Sections 6 and 11): •

Supplier must supply a list of ingredients, the amount of ingredients and information concerning any changes or additions to the ingredients incorporated in the parts.

•

Supplier agrees to comply with the US Toxic Substances Control Act and European Union Directive 2000/53/EC.

•

Supplier will immediately notify VW in writing when it becomes aware of any ingredient, component, design or defect in Supplies that is or may become harmful to persons or property.

20. Volvo (Section 21.3): •

Supplier must comply with Volvo’s requirements relating to use (or prohibition on use) of certain materials and substances and utilize and comply with Volvo’s reporting processes and requirements.

21. MEMA OE Suppliers (Section 10): •

Upon request, must provide any other information required in order to comply with law.

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X. Insurance – Context and Questions 1. Insurance Requirements All OEMs have insurance requirements of some type or nature, but they vary, including requirements that do not directly relate to the goods being sold to the OEM (e.g. automobile, property damage, and operations). Some OEMs require that they be named as an additional issued party on such insurance.

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X. Insurance – OEM Comparative Analysis 1. BMW (2018) (Section 19): •

Supplier must carry general insurance, as well as products liability and recall insurance, with financially responsible insurers, and Supplier’s insurance must be in line with industry norms to cover Supplier’s liability to BMW and third parties.

•

Upon request, Supplier must furnish certificates of insurance to BMW.

•

Unless the applicable Incoterms do not place risk of loss on Supplier, Supplier must insure the parts in transit.

2. BMW (2022) (Section 19): •

No change from 2018 terms.

3. FCA US (2021) (Section 11(a)): •

Supplier must carry worker’s compensation, comprehensive general liability, automobile, public liability, and property damage insurance “in amounts and coverage sufficient to cover all claims” under the contract.

•

Each policy must name FCA US as an additional insured and must contain endorsements that the insurance is primary and not excess over any other insurance that FCA US might carry.

•

Upon request, Supplier must furnish evidence of insurance to FCA US.

4. FCA US / Stellantis (2022) (FCA US Section 11(a) and Stellantis Global Section 22): •

No material additions or changes from FCA 2021, except Supplier must properly and timely declare every claim and immediately notify Buyer of any change in coverage.

5. Ford (2004) (Section 34.18): •

Supplier must provide adequate insurance for Ford-owned tooling in its possession.

6. Ford (2021) (Section 34.18): •

No changes.

7. General Motors (Section 28): •

Supplier must carry insurance with insurance carriers acceptable to GM and in the amounts set forth in the contract.

•

Each insurance company must agree to notify GM at least 30 days before modifying or canceling any insurance policy.

•

Upon request, Supplier must furnish certificates of insurance to GM.

8. Honda (Section 7): •

Supplier must carry insurance in amounts and with carriers acceptable to Honda all insurance required by law, including: o Workers’ Comp;

Page 365

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

o Accident by bodily injury by disease ($1 million limit) o Bodily injury by disease ($1 million each employee) 

(ii) CGL, including personal injury, property damage, and products and complete operations covering all employees, contractors, or sub-contractors, involved in providing the goods ($1 million per occurrence and $2 million aggregate minimum).



(iii) Business Automobile ($1 million minimum per accident in a combined single limit of liability for bodily injury and property damage); Excess/Umbrella Liability ($4 million per occurrence and $4 million aggregate) but for goods consisting of airbags, seats and seatbelts ($24 million per occurrence and $24 million aggregate).

•

Supplier agrees that the insurance requirements of the agreement shall cover all of the supplier’s operations and obligations of the agreement. The limit of liability may also be updated from time to time upon notice from Honda. Insurance may be carried in single policy or a combination of primary and excess liability policies.

•

Insurance must be in place before commencement of providing parts and maintain insurance throughout the term of the agreement. The insurance must be insurance that is required by applicable laws at a minimum and include coverage of the types, in the amounts, and provide for contractual liability assumed under the indemnification and/ or special provisions of the agreement as provided for within the agreement. CGL, Auto Liability, and Excess/Umbrella insurance shall name Honda, its parent, and all other subsidiaries, affiliates, members, partners, shareholders, officers, directors, managers, agents and employees as additional insureds. Such policies are primary and noncontributory insurance for claims, losses, or liability arising directly or indirectly from the Supplier’s operations, to the extent due to Supplier’s negligence.

•

All supplier insurance is primary.

•

Honda must be named additional insured, except for workers’ compensation. Honda’s parents, subsidiaries and affiliates, and their respective officers, agents, representatives and employees must be named as additional insured.

•

The limits of insurance or applicable deductibles do not limit the Supplier’s liability.

•

Honda may change insurance requirements at any time with 90 days advance written notice.

•

Unless prohibited by applicable law, Supplier agrees to a waiver of subrogation in favor of Honda, its parent, and all of their subsidiaries, affiliates, members, partners, shareholders, officers, directors, managers, agents and employees for the commercial general liability, automotive liability, worker’s compensation and employer’s liability insurance policies.

•

Supplier, at its sole expense and before providing goods, will procure and maintain property insurance sufficient to cover tooling or other physical assets that may be lost, damaged, or brought onto Honda’s premises. Any insurance maintained by Honda will not extend to such loss or damage.

Page 366

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

All insurance must be purchased from and maintained with insurers with an A.M. Best rating of A-VIII or better or a Standard & Poor rating of A- or better.

•

If Supplier is operating in California, all insurance must be provided by an insurer licensed and authorized to do business in California. The same is the case for Supplier’s operating in Canada, they must maintain insurance written by insurers licensed to do business in Canada.

•

Supplier must maintain coverages as long as Supplier is providing goods and for 24 months following the completion and acceptance by Honda for each existing, new, and/or future orders.

•

Supplier must provide certificates of insurance to Honda. Supplier must also provide Honda written notice before the effective date of any cancellation, non-payment of premium, non-renewal, or change in terms, or if any limits are reduced of required insurance.

•

Supplier must notify Honda as soon as they become aware of any occurrences, claims, or suits arising from their agreement with Honda.

9. Hyundai (Section 17): •

Supplier must carry worker’s compensation, employer’s liability, commercial general liability, automobile, product liability/completed operations, and property damage insurance with financially secure insurers licensed in Alabama in the minimum amounts specified in this section.

•

Each policy must name Hyundai as an additional insured and must contain endorsements that the insurance is primary and not excess over any other insurance that Hyundai might carry.

•

Supplier must waive subrogation under all applicable insurance policies.

•

Upon request, Supplier must furnish certificates of insurance that require the insurer to provide Hyundai with 30 days’ notice of any cancellation or other adverse action.

10. Kia (Sections 17 and 41): •

Same as Hyundai, except insurer must be licensed in Georgia.

•

Additionally, with respect to the Amortized Supplier Property, Supplier must maintain full fire and extended coverage insurance at Supplier’s expense at full replacement value with loss payable to Supplier and Kia unless otherwise agreed.

11. Lucid (Section 16): •

Supplier must carry insurance coverage for all activities under the Agreement, including commercial general liability insurance ($5,000,000 each occurrence), automobile liability insurance, workers’ compensation insurance ($5,000,000 each occurrence), employer’s liability insurance ($1,000,000 each accident and same for bodily injury by disease) and umbrella/excess insurance ($5,000,000 each occurrence and annual aggregate); electronics errors and omissions coverage; and property perils insurance.

Page 367

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Supplier shall furnish to Lucid either a certificate showing compliance with these insurance requirements or certified copies of all insurance policies within ten (10) days of Lucid’s written request.

•

The policies must waive all rights of recovery, under subrogation or otherwise, against Lucid. Supplier must have its sub-suppliers provide similar waivers.

12. Mazda (Section 40): •

During the term and for 2 years after, Seller shall, and shall require its subcontractors to, maintain comprehensive CGL coverage, including death, bodily injury, property damage, contractual liability, products liability and completed operations.

•

Minimum coverage is $2 million/occurrence, $4 million aggregate, which may be satisfied from umbrella/excess coverage.

•

Insurer must waive subrogation.

•

Mazda shall be an additional insured.

13. Mercedes-Benz US International, Inc. (“MBUSI”) (Section 23.4): •

Supplier shall provide worker’s compensation, comprehensive general liability, automobile, public liability, and property damage insurance in amounts and coverage sufficient to cover all claims under the contract with insurers acceptable to MBUSI.

•

Such policies shall name MBUSI as an additional injured party and contain endorsements that the insurance is primary and not excess over any other insurance that MBUSI may carry.

•

MBUSI may require the Supplier to provide evidence of insurance.

14. Nissan (Section 18A): •

Supplier must carry full insurance coverage for all activities under the contract, including commercial general liability insurance, automobile liability insurance, workers’ compensation insurance, employer’s liability insurance, and property perils insurance, each in the minimum amounts listed.

•

Each policy (other than workers’ compensation) must name Nissan as an additional insured or loss payee. The property policy must name Nissan as a loss payee as applicable.

•

The Commercial General Liability Policy shall have a commercially reasonable deductible, with no deductible for any excess.

•

Nissan shall not be liable for any premium associated with any such policy.

•

Each insurance company must agree to notify Nissan at least 30 days before modifying or canceling any insurance policy.

•

Supplier must furnish certificates of insurance to Nissan.

•

Each policy must waive subrogation.

15. Rivian (Section 17): •

Supplier must carry insurance in an amount that will be specified by Rivian.

Page 368

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Rivian is to be named as an additional insured.

•

Policy must include: general liability, public liability, product liability, product recall, completed operations, contractor’s liability, automobile liability insurance, Worker’s Compensation, and employer’s liability insurance as will adequately protect Rivian.

•

Supplier must also insure for replacement value of all machinery, equipment, tools and other property or things necessary to perform under the contract.

16. Scout Motors (Section 18): •

Supplier must maintain in force and cause its subcontractors to do the same, at their own expense, insurance of the type and the amounts as set forth below: o Property All Risk insurance with a minimum limit of $5 million. Scout to be added as loss payee and additional insured with respect to its interest in the goods. o Statutory workers’ compensation insurance in accordance with the legal requirements of the relevant jurisdiction(s). o Employer’s liability insurance with a minimum limit of $500,000 per accident and $500,000 per policy covering bodily injury be disease, including death. o Comprehensive commercial general liability insurance in an amount not less than $5 million per occurrent, general aggregate, products and completed operations aggregate. o Comprehensive automobile liability single limit in an amount not less than $5 million per accident. o Professional Liability or Errors and Omissions liability insurance with a per claim limit in an amount not less than the greater of $2 million and the value of the applicable Order and the greater of $2 million or the value of the applicable Order in the annual aggregate. o Insurance coverage with respect of information and data protection security, cyber liability and similar matters not less than $5 million. o Business Interruption insurance in an amount not less than $2,5 million with Scout and its personnel shall be named as additional insured.

17. Toyota (2009) (Section 5.3): •

Supplier must carry general liability, general automobile liability, workers’ compensation, and property damage insurance in amounts commonly maintained by prudent business persons.

•

Upon request, Supplier must furnish certificates of insurance to Toyota.

•

See also Part Five, § I regarding Toyota tooling.

18. Toyota (2021) (Section 6.3 and Schedule B): •

The following supersedes the 2009 summary.

•

Supplier must carry general liability, general automobile liability, workers’ compensation, employer’s liability, commercial crime, “all risk” commercial property, and product liability.

Page 369

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

•

Upon request, Supplier must furnish certificates of insurance to Toyota.

•

All insurance must be occurrence based. It must be continuously maintained for the longer of (a) at least six years after the termination of the Agreement or (b) the period required by applicable local law.

•

Insurance must include a waiver of any and all rights of subrogation.

•

Supplier obligated to carry identified types of Insurance at minimum limits and at mandatory coverage and policy requirements, e.g., minimum Coverage Limits include 15 years $15 million Product Liability insurance, and Full (100%) replacement value of all Supplier Property, as well as more standard requirements, per Schedule B.

•

See also Part Five, § I regarding Toyota tooling.

19. Volkswagen (Section 18): •

Supplier must carry workers’ compensation (statutory limit), employer’s liability ($500,000 per accident, disease policy limit, disease each employee), comprehensive general liability insurance ($5 million per occurrence, general aggregate, products and completed operations aggregate), comprehensive automobile liability ($5 million per occurrence, combined single limit) and business interruption insurance ($2.5 million per occurrence).

•

VW may require all additional amounts and coverage.

•

Supplier must furnish certificates with thirty (30) days’ notice to VW of cancellation or reduction in coverage.

•

VW and applicable affiliates must be named as loss payees and additional insured on all policies.

20. Volvo: •

Does not address this topic.

21. MEMA OE Suppliers (Section 12): •

Prior to commencing work at Buyer’s premises or using Buyer’s property, Supplier must carry worker’s compensation, general liability, and all risk property perils insurance.

•

Upon request, Supplier must furnish certificates of insurance to Buyer.

Page 370

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Appendix A – Documents Referenced in OEM Terms and Conditions

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

BMW (2018) – Documents Referenced in Terms and Conditions

Document

Paragraph/ Section Number(s)

Page Number(s)

BMW Group Standards (GS)

Definitions, et. seq.

BMW Partner Portal: https://b2b.bmw.net

1.3, et seq.

Packaging Manual

4.1, et. seq.

VDA Standard 4933

4.3

VDA Standard 4945/IFTSTA

4.3

IATF 16949

6, et. seq.

Art. 210 of regulation (EC) No. 2913952/2013 (European Customs Code)

8.3

Art. 3 sec. 26 and sec. 27 Regulation (EC) No. 300/2008 Annex 6.1.1 and annex 6.3.2 of Regulation (EC) No. 185/2010

8.5

Annex 6.2 of regulation (EU) No. 185/2012

8.5

PPA-Procedure

9.2, et. seq.

Quality Management in the Automotive Industry, Vol. 2: Quality Assurance of Supplies

9.2

VDA process description Special Characteristics

9.5

Quotation Analysis Form (QAF)

13.8

Tooling Analysis Form (WAF)

13.8

EDI Guidelines

16, et. seq.

ISO/IEC 27001

17.3

VDA Model “TISAX”

17.3

ISO 14001

20.3

VDA Material Sheet 260

20.5

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

BMW Group Standard 91001

20.5

BMW Group Standard 91003

20.5

BMW Group Standard 93008 (1 to 4)

20.7

International Material Data System (IMDS)

20.7

UN Initiative Global Compact (Davos, 01/99)

21.1

Declaration on fundamental principles and rights at work (IAO, Geneva 06/98)

21.1

UN Convention for the International Sale of Goods (CISG)

23.1

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

BMW (2022) – Documents Referenced in Terms and Conditions

Document

Paragraph/ Section Number(s)

Page Number(s)

BMW Group Standards (GS)

Definitions, et. seq.

BMW Partner Portal: https://b2b.bmw.net

1.3, et seq.

Packaging Manual

4.1, et. seq.

VDA Standard 4933

4.3

VDA Standard 4945/IFTSTA

4.3

IATF 16949

6, et. seq.

Art. 210 of regulation (EC) No. 2913952/2013 (European Customs Code)

8.3

Art. 3 sec. 26 and sec. 27 Regulation (EC) No. 300/2008 Annex 6.1.1 and annex 6.3.2 of Regulation (EC) No. 185/2010

8.5

Annex 6.2 of regulation (EU) No. 185/2012

8.5

PPA-Procedure

9.2, et. seq.

Quality Management in the Automotive Industry, Vol. 2: Quality Assurance of Supplies

9.2

VDA process description Special Characteristics

9.5

EDI Guidelines

16, et. seq.

ISO/IEC 27001, ISO/IEC 62443, ISO/SAE 21434

17.2

VDA Model “TISAX”

17.3

“Declaration on Fundamental Principles and Rights at Work’’ (Genova, 06/98), e

20.1

UN Initiative Global Compact (Davos, 01/99)

20.1

UN Guiding Principles on Business and Human Rights (2011)

20.1

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Supplier Code of Conduct

20.2

VDA Material Sheet 260

20.2(d)

BMW Group Standard 91001

20.2(d)

BMW Group Standard 91003

20.2(f)

BMW Group Standard 93008 (1 to 4)

20.2(f)

International Material Data System (IMDS)

20.2(f)

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

FCA US (2021) – Documents Referenced in Terms and Conditions

Document

Paragraph/ Section Number(s)

Page Number(s)

Order

Introduction, et. seq.

FCA Supplier Portal

1, et. seq.

FCA US’s IT Specifications

FCA US Capacity Database

2-3

ISO/TS 16949

FCA Group LLC Customer Specification Requirements for use with ISO/TS 16949

Process Planning & Audit Manual

Quality Management System

Advanced Quality Planning system

Third-Party Containment and Problem Resolution (“3CPR”)

Supplier Associated Warranty Reduction Program Policies and Procedures

Tool Record Form

6-7

C-TPAT

US Export Laws

CS-9003

18-19

ISO 14001

US Foreign Corrupt Practices Act

UN Convention on Contracts for the International Sale of Goods (CISG)

Expedited Rules of Arbitration of the International Chamber of Commerce

26(c)

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

FCA US / Stellantis (2022) – Documents Referenced in Terms and Conditions NOTE: Beginning for awards after 1/1/22, the applicable terms are (1) the FCA US (2021) terms (immediately above) and (2) the 2022 Stellantis Global Terms. The documents listed below are referenced in the Global Terms. Document

Paragraph/ Section Number(s)

Page Number(s)

Order

Introduction, et. seq.

Exhibit A (2021 FCA Terms)

Section 1

Policies (catch all term)

Definitions

Supplier Portal

1, et. seq.

IT specifications

Shipping and Packaging requirements

Quality Management Policies

Legal Compliance Policies

Environmental Policies

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Ford (2004) – Documents Referenced in Terms and Conditions

Document

Paragraph/ Section Number(s)

Page Number(s)

Ford Supplier Portal (http://fsp.covisint.com)

1, et. seq.

Purchase Order

1, et. seq.

Sourcing Agreement

2.02, et. seq.

Target Agreement

2.03, et. seq.

Request for Quote

2.04, et. seq.

Statement of Work

2.05, et. seq.

Quality/Reliability Statement of Work

2.06, et. seq.

Warranty Program Agreement

2.07, et. seq.

Technology Agreement

2.08, et. seq.

Prototype Purchase Order

2.09, et. seq.

Production Purchase Order

2.10, et. seq.

Blanket Purchase Order

2.11, et. seq.

Lump Sum Purchase Order / Spot Buy Purchase Order

2.12, et. seq.

Prototype Tool Order

2.13, et. seq.

Production Tool Order

2.14, et. seq.

Supplemental Terms and Conditions

2.16, et. seq.

Release

2.17

Web-Guides (http://fsp.covisint.com)

3.01, et. seq.

OEM’s Q1 quality program, ISO/TS 16949 or QS9000, ISO 14001 and Supplier Delivery Rating

12.01

Vehicle Parts Branding Directive

15.02

Computer aided design and drafting standards

16.01

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Team Value Management

18.01

Warranty Reduction Program

18.01

Quality/Reliability Statement of Work

22.07

49 CFR Part 573 (Defect and Non-compliance Reporting)

24.01

49 CFR Part 579 (Reporting of Information and Communication About Potential Defects)

24.01

Restricted Substance Management Standard

24.04(b)

International Material Data System

24.04(b)

Title 48, Code of Federal Regulations

36.02(a)

Executive Order 13201, Notification of Employee Rights Concerning Payment of Union Dues or Fees

36.02(b)

Code of Basic Working Conditions

37.03

United Nations Convention on Contracts for the International Sale of Goods

39.07

•

Sections: o 52-219-8; Utilization of Small Business Concerns o 52.225-11; Restrictions on Certain Foreign Purchases o 52.222-21; Prohibition of Segregated Facilities o 52.222-26; Equal Opportunity o 52.222-35; Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era and Other Eligible Veterans o 52.222-36; Affirmative Action for Workers with Disabilities o 52.222-37; Employment Reports on Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans; o 52.222-41; Service Contract Act

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Ford (2021) – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Ford Supplier Portal (http://fsp.covisint.com)

1, et. seq.; 11.02; 20, et. seq.

1; 12; 20

Purchase Order

1, et. seq.

Sourcing Agreement

Definitions.

Target Agreement

Definitions; 3.02

VI; 8

Request for Quote

Definitions; 8.02

V; 11.

Statement of Work

Definitions; 3.02; 15 et. seq.

IV; 8; 15

Quality/Reliability Statement of Work

22.07

23.

Warranty Program Agreement

Definitions; 3.02; 22.08.

IV; 8; 23.

Technology Agreement

Definitions; 3.02; 16.04; 21, et. seq.

IV; VI; 8; 17; 21.

Prototype Purchase Order

Definitions;

Production Purchase Order

Definitions; 3.04, 5; 7 et. seq.; 8.02; 22, et. seq.; 23.07; 33, et seq.; 34, et. seq.; 37.01

V; 8; 9; 10; 11; 23; 24; 32; 34; 39.

Blanket Purchase Order

Definitions; 3.04; 4.02.

IV; 8; 9.

Lump Sum Purchase Order / Spot Buy Purchase Order

Definitions.

Prototype Tool Order

Definitions; 1.02.

V; 7.

Production Tool Order

Definitions; 1.02; 26.08; 27.03; 34 et. seq.

V; 7; 28; 29; 34.

Supplemental Terms and Conditions

Definitions; 2 et. seq.; 3 et. seq.

VI: 7.

Supplier Guides

2.01, et. seq.; 12.01.

7; 13

A10

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

OEM’s Q1 quality program, ISO/TS 16949 or QS-9000, ISO 14001 and Supplier Delivery Rating

11.01

Parts Branding Directive

14.02

Ford Engineering CAD & Drafting Standards (FECDS)

15.01

Team Value Management

Definitions; 30.02.

IV; 31

Efficiency Initiatives

17, et. seq.

Quality/Reliability Statement of Work

22.07

49 CFR Part 573 (Defect and Non-compliance Reporting)

24.01

49 CFR Part 579 (Reporting of Information and Communication About Potential Defects)

24.01

Restricted Substance Management Standard

24.04(b)

International Material Data System

24.04(b)

Supplier Requirements on US Government Contracts Supplier Guide

36.02

Social Responsibility Supplier Guide

36.02

United Nations Convention on Contracts for the International Sale of Goods

38.07

A11

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

General Motors – Documents Referenced in Terms and Conditions (Effective February 2014) Document

Paragraph/ Section Number(s)

Page Number(s)

Delivery and logistics requirements

Shipping and packaging requirements

Authorized Economic Operator

United States Bureau of Customers and Border Protection’s Customs-Trade Partnership Against Terrorism (C-TPAT)

Canada border Services Agency’s Partners in Protection initiative

Administración General de Aduanas de Mexico’s Neuvo Esquema Empressa Certificada (NEEC) program

Incoterms 2010

US Foreign Corrupt Practices Act

U.K. Bribery Act

United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980)

A12

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Honda – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

“Honda Engineering Standards”

1.2

Quality control regulations standards

1.2

Guidelines for electronic transactions

1.2

Packaging and transportation guidelines

1.2

A13

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Hyundai – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Automotive Industry Action Group Standards

Transportation Routing Instructions

Material Safety Data Sheet

5, 11

1, 3

Quality Standards

American Arbitration Associations’ Commercial Arbitration Rules

Emergency Interim Relief Procedures

A14

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Kia – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Automotive Industry Action Group Standards

Transportation Routing Instructions

Material Safety Data Sheet

5, 11

1, 3

Quality Standards

Acceptance/Burden Ratio Agreement

American Arbitration Associations’ Commercial Arbitration Rules

Emergency Interim Relief Procedures

A15

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Lucid – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Automotive Industry Action Group Standards

2.7, 5.1

3, 5

California Transparency in Supply Chains Act

5.1

California Commercial Code §§2615-2616

15.4

C-TPAT certification

22.1

Development Schedule

3.1

Dodd Frank Wall Street Reform Act and Consumer Protection Act, Section 1501

5.1, 22.2

5, 18

European Union Restriction on the use of Certain Hazardous Substances, Directive 002/95/EC

5.1

European Directive 2000/53/EC

6.2

Global Automotive Declarable Substance List (GADSL)

5.1

Incoterms 2010

2.6, 13.4

2, 12

International Material data System (IMDS)

5.1

Material Safety Data Sheet (MSDS)

2.8, 5, 11

1, 3

Minerals Audit

22.2

National Traffic and Motor Vehicle Safety Act

6.2

Order

1.1-1.7, 2.4-2.6, 6.6, 7.1,19.1-19.2, 23.10

1, 2, 7, 8, 17, 20

Production Order

1.7, 2.1-2.3

Supplier Code of Conduct

22.2

Supplier Quality Manual

2.9, 5.1, 5.5, 5.7

3, 5, 6

Release

2.3-2.6, 6.6, 7.1

2, 6, 8

A16

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Specifications

1.6, 3.1, 5.6, 6.2

1, 4, 5

Statement of Work

3.1, 23.10

4, 20

Supplier Scorecard

5.4, 5.6

5, 6

Transportation Routing Instructions

US Foreign Corrupt Practices Act

22.1

A17

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Mazda – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

“Mazda Engineering Standards”

“Packaging Guide”

5.2

“Seller Documents” re shipping and delivery

5.4

“Quality Requirements for Suppliers”

8.1

“Warranty Claim Handling Procedure”

9.1(b)

“Warranty Conditions at Market”

9.1(b)

Service Parts Policy

A18

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Mercedes-Benz US International, Inc. (“MBUSI”) – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Bailment Agreement

1.1(e), et seq.

Chain of Supply List

1.1(n), 4.9, 37.1

6, 14, 57

Development Agreement

1.1(r), et. seq.

Lower Tier Acknowledgement and Waiver

1.1(z), et. seq.

MBN 10435

3.5

Supplier Quality Assurance Manual – MBUSI (Attachment 1)

4.3, 12.2

13, 33

Supplier Quality Assurance System

4.3, et. seq.12.2

13, 32

Tooling Information Sheet (Attachment 3)

5.1, 5.2

15, 16

Title / Risk of Loss / Directive

7.2

Reimbursement Form for Payment of Obsolescence

8.9(e)

Logistics Directives

11.2

IT Requirements Directive

11.3

Data Protection and Information Security Requirements

11.4

eDocs eAccept Terms of Use

11.5

31, 32

Production Supplier Data Standards

11.6

Payment for Null Series Directive

11.7

Buyer Warranty Process

15.1

Buyer Warranty Process (Attachment 4)

15.1, 15.8

37 - 38

Global Service Parts Requirements

17.2

Safety One Manual

23.3

A19

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

ICMS Escalation Requirements

30.5

MBST 36

30.6

Responsible Sourcing Standards

30.6

Mexican Decree for Development and Modernization of the Automotive Industry of December 11, 1989

30.6

11 U.S.C. §365

33.1

ISO 140010

35.1

A20

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Nissan – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Purchase Order or PO

1.1, 2.1, 4.2, 4.2.1, 4.2.2, 5.1.1, 6.1, 6.1.1, 6.2, 7.3, 7.4, 7.5, 15.2, 15.3, 18.2.1, 18A.1, 18B, 19.2, 23A, 26, 27.1.1, 27.3, 27.4, 27.5, 27.5.1 27.6, 28.1, 28A, 29.2, 29.3, 31.2, 34, 35, 36.1, 37, 38.1, 40.8, 40.10, 41, 42

1, 4, 6, 7, 8, 9, 10, 13, 15, 16, 17, 19, 20, 21, 22, 23, 24, 25, 26, 28, 29, 30

Acceptance Drawings Nissan Drawings

1.1, 3.1, 9.1, 14.1, 14.2, 20, 27.3, 27.5.1, 27.5.2 1.1, 3.1, 3.2, 9.1, 17.1, 20, 27.3

Claim Compensation Procedure

1.1, 9.2

1, 6, 11, 13, 17, 21, 22 4, 6, 11, 14, 17, 21 2, 11

Customs-Trade Partnership Against Terrorism (C-TPAT) Security Criteria

6.5

Evaluated Receipt System (ERS)

6.1.2, 7.3

8, 10

Ancillary Documents

1.1, 29.3

1, 25

Generic Documents

1.1, 29.3

3, 25

Legacy Documents

1.1, 29.3

4, 25

Specific Documents

1.1, 29.3

5, 25

INCOTERMS® 2020

1.1, 2.1

2, 6

Export Administration Regulations (EAR, 15 C.F.R. §§ 730 et seq.)

1.1, 40.11

2, 30

Release

1.1, 4.1, 4.2, 4.2.2, 27.6

4, 6, 7, 23

RAN

1.1, 2.1, 4.1, 4.1.1, 6.2, 27.1.1, 27.6

Specifications

1.1, 3.1, 3.2, 5.2, 8.1, 10, 19.1

4, 6, 7, 9, 21, 23 5, 6, 8, 10, 11, 17

Technical Information

1.1, 14.2, 22.4, 27.5.2, 40.11

Vendor Tooling Guidelines (Guidelines)

1.1, 18.1.2

5, 13, 18, 22, 30 3, 14

A21

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Nissan’s Quality Procedures for Suppliers

Occupational Safety and Health Administration’s Hazard Communication Standard, Title 29,

38.1

Toxic Substances Control Act (TSCA, Title 40, C.F.R. Subchapter R)

38.2

United Nations Global Compact

40.2

Magnuson-Moss Consumer Warranty Act

40.10

The Occupational Safety and Health Act of 1970

40.10

The Fair Labor Standards Act of 1938

40.10

Armed Services Procurement Regulations

40.10

The Federal Procurement Regulations

40.10

Executive Order 11246 of September, 1965

40.10

United States-Mexico-Canada Agreement

4.5, 40.10

Corporate Average Fuel Economy

40.10

American Automotive Labeling Act

40.10

Conflict Minerals Disclosure

40.10

Uyghur Forced Labor Prevention Act (UFLPA)

40.10

C.F.R. Part 1910, 1200

A22

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Export Administrations Regulations (EAR)

40.11

Foreign Asset Control Regulations administered by the Department of Treasury, Office of Foreign Assets Control (OFAC, 31 C.F.R. Part 500 et. seq.)

4, 40.11

Wassenaar Munitions List

40.11

American Arbitration Association (AAA) Commercial Arbitration Rules and Mediation Procedures (AAA Rules)

43.2

Nissan Records Management Policies and Procedures and Nissan Records Retention Schedules (Policy)

1.1, 45

4, 33

A23

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Rivian – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Purchase Orders

1, 2, 4.2, 5.3, 6.2- 6.3, 7.1, 8.1-8.4, 9, 10, 11.2, 12.1-12.2, 13.1-13.2, 15.1- 15.3, 16.1, 17, 19.1- 19.3, 21.2, 21.5- 21.7, 23, 27 and 19

1, 2

Release

1.3

Incoterms 2010

6.1

Specifications

5.1

Supplier quality manual

5.1

A24

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Scout Motors – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Purchase Order (PO) or Order

1, et seq.

1-35

RFQ Documents

1, 2, 3, 4.b, 5.a, 7, 9

1, 2, 3, 4, 6, 7

Prior Agreement

1, 3, 4.b, 5.a, 7, 9

1, 2, 3, 4, 6, 7

Material Releases

1, 4

Nomination Letter or Electronic Nomination Agreement (eNA)

1, 2

Statement of Requirements

4.b

Statement of Work

4.b, 10.a, 14

3, 8, 12, 13

Document for Logistics Processes (Documents on B2B Platform/LISON)

6.c

Supplier Standards (including Formula Q Concrete, Formula Q Capability, Formula Q New Parts Integral, Quality Documentation for the Pre-Series Phase, Quality Master Agreement for Commissioning Suppliers for Module and Systems Assembly, Agreement on Objectives Regarding Quality Capability, and VDA 6.1)

12.a, 14

11, 12, 13

Formel-Q

12.a

Qualifications for New Parts

12.a

Development Conditions VW 99000

12.a.i

Supplier Claims Manual

12a.ii, 15.e, 29, 38

11, 13, 28, 30

Advanced Quality Planning (QPN)

12a.iii

Supplier Packaging Regulations

12.a.v

Standardized Expendable Packaging document (found on LISON)

12.a.vi

Code of Conduct for Business Partners

12.a.vii

A25

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Appendix G - Supplier Diversity Program

12.a.viii

Service Parts Requirement’s Manual

12.a.viii.1

Service Parts Supplier Claims Manual

12.a.viii.2

Code of Conduct for Business Partners

A26

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota (2009) – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Contract Documents and Supplemental Documents Further Defining the Purchasing Relationship, including, without limitation, supplier quality assurance manual

1.4

Guiding Principles

1.9

Payment Procedures, including ePayment and Electronic Invoice Presentment and Payment system (“EIPP System”)

2.3(a) and (b)

Tooling Purchase Order

3.1(c), 3.5(a)

9, 10

Joint Defense Agreement

5.5

TEMA World Wide Automotive Real Time Purchasing System (WARP)

6.1

Toyota Supplier Interface to WARP

6.1

Toyotasupplier.com

6.1

United Nations Convention on Contracts for the International Sale of Goods

7.2(a)

United Nations Convention on the Limitation Period in the International Sale of Goods

7.2(a)

UCC provisions as enacted by Commonwealth of Kentucky

7.2(a)

25-26

§ 2-207 of the Uniform Commercial Code

7.5

CPR Rules for Non-Administered Arbitration

7.8

United States Arbitration Act, 9 U.S.C. §§ 1, et seq.

7.8

A27

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Toyota (2021) – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Contract Documents and Supplemental Documents Further Defining the Purchasing Relationship, including, without limitation, the Generic Contract Documents such as the Supplier Quality Assurance Manual

2.3

3, Appx p 3

Guiding Principles

1.1

Payment Procedures, including electronic invoice and payment system

3.3.1 and 3.3.2

Tooling Purchase Order

3.2.2, 3.3.4, 4.1.3, 4.1.4, 4.3 8.5

4, 5, 10, 11

United Nations Convention on Contracts for the International Sale of Goods

8.3

UCC provisions as enacted by the State of Michigan

8.3, 8.6

§ 2-207 of the Uniform Commercial Code

8.6

Rules of ADR Services, JAMS, or the International Institute for Conflict Prevention and Resolution

8.12.2

Federal Arbitration Act, 9 U.S.C. Section 1 et seq

8.12.6

Toyotasupplier.com and Toyota Networks

A28

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Volkswagen – Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Incoterms 2000

Disposal and Recycling Instructions

Material Safety Data Sheet

US Toxic Substances Control Act

European Union Directive 2000/53/EC

6, 11

4, 6

USCMA Certificates of Origin

Bureau of Customs and Border Protection’s CustomsTrade Partnership Against Terrorism (C-TPAT)

4-5

Multilateral Netting System (MNS2)

National Traffic and Motor Vehicle Act

VW’s Supplier Standards

12, 14

6-7

Development Conditions VW 99000

Advanced Quality Planning

Quality Evidence – Guidelines for the Documentation and Archiving of Quality Requirements, Frankfurt am Main, 1998

Supplier Claims Manual

12, 15

7-8

Supplier Packaging Regulations

Standardized Expendable Packaging document (found on LISON)

Code of Conduct for Business Partners

12, 13

Appendix G – Supplier Diversity Program

11 U.S.C. § 365(n)

24, 27

13, 15

A29

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

UN Convention for the International Sale of Goods (CISG)

United States Federal Arbitration Act

38.1

VW’s Internet Website: www.vwgroupsupply.com

Uniform Commercial Code § 2-207

UN Convention for the International Sale of Goods (CISG)

United States Federal Arbitration Act

38.1

VW’s Internet Website: www.vwgroupsupply.com

Uniform Commercial Code § 2-207

A30

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Volvo (May 2018) Documents Referenced in Terms and Conditions Document

Paragraph/ Section Number(s)

Page Number(s)

Blanket Purchase Order

1.1, 3.1, 3.2, 4.2, 5.1, 6.2, 15.1.5, 18.1.1, 25.3.1, 25.3.3 and 25.5.1

1, 6, 7, 8, 19, 22, 31, 32, 33

Call Off

1.1, 2.2, 3.1

1, 5, 6

Framework Purchase Agreement

1.1, 3.3, 5.2, 7.2.2 7.3.1, 18.2.15, 25.3.4 and 29.3.2

1, 6, 8, 9, 10, 24, 32, 37

General Purchase Agreement

1.1, 7.1.1, 7.1.2, 7.1.3, 28.1 and 29.9.7

1, 9, 34, 38

IncoTerms

1.1, 8.3

1, 11

Lump-Sum Purchase Order

1.1, 3.1, 4.3, 5.2, 15.1.5 and 25.3.2

1, 6, 7, 8, 9, 19, 32

Purchase Agreement

1.1, 2.2, 2.3, 3.2, 3.3, 3.5, 4.1, 4.2, 4.3, 5.1, 5.2, 6.1, 7.1, 7.2, 7.3, 10.1, 10.4, 10.5, 11.1, 11.4, 13.1, 13.7, 14.2, 15.1, 15.2, 15.3, 16.1, 16.3, 18.2, 18.3, 20.1, 22.1, 22.3, 22.4, 22.5, 23.1, 23.3, 25.1, 25.2, 25.3, 25.4, 26.1, 26.3, 27, 28.1, 29.2 and 29.4

1, 5, 6, 7, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 25, 27, 28, 29, 30, 31, 33, 34, 37

Purchase Order

1.1, 2.2, 3.3

1, 5, 6

Quality Reject document

1.1, 15.1.2, 15.2.2

1, 19, 2

Supplemental Terms and Conditions

1.1, 3.3

1, 6

A31

OEM Light Vehicle North American Production Purchase Order Contract Terms and Conditions Comparative Analysis

Document

Paragraph/ Section Number(s)

Page Number(s)

Technical Specification

1.1, 3.3, 6.1, 6.2, 6.3, 7.2.1, 7.2.2, 10.2.2, 14.1, 14.2, 22.2

1, 6, 8, 9, 12, 17, 18, 27

Volvo Car Instruction

1.1, 3.3, 8.1, 8.3, 10.2.1, 10.3.3, 13.1, 13.2, 13.3, 14.1, 15.1.2, 15.1.5, 15.2.2, 15.3.3, 18.2.8, 18.2.11, 21.2.1, 21.3.2, 24.1, 24.2, 25.3.5, 26.2 and 29.1.1

1, 6, 11, 12, 13, 16, 17, 18, 19, 20, 21, 23, 26, 27, 29, 32, 33, 37

A32

MEMA Original Equipment Suppliers Updated Model General Terms and Conditions for Light Vehicles With Comments

Content Updated in September 2022 Rebranded to MEMA OE Suppliers in June 2023

MEMA Original Equipment Suppliers www.mema.org 248.952.6401

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

SEPTEMBER 2022

Table of Contents 1. Scope..........................................................1

11.5 Seller’s Intellectual Property...........9

2. The Contract...............................................1

11.7 Infringement.....................................9

2.1 Contract............................................1 2.2 Offer and Acceptance........................1 2.3 Entire Agreement...............................2 2.4 Changes to the Supplies....................2 2.5 Other Changes Prohibited................2 3. Supplies......................................................3 3.1 Quantities..........................................3 3.2 Releases.............................................3 3.3 Inputs................................................3 3.4 Forecasts...........................................4 3.5 Service Parts.....................................4 4. Packing and Shipping................................4 4.1 Packing.............................................4 4.2 Shipping............................................5 5. Inspection...................................................5 6. Price...........................................................5 6.1 Contract Price...................................5 6.2 Equitable Adjustment........................5 7. Payment......................................................6 8. Warranties..................................................6

11.6 Buyer’s License Rights.....................9 11.8 Copyright.......................................10 12. Buyer’s Property.....................................10 12.1 Definition........................................10 12.2 Maintenance...................................10 12.3 Payment..........................................11 12.4 Possession......................................11 12.5 Failure to Release Buyer’s Property..11 13. Seller’s Property....................................... 11 14. Default......................................................12 14.1 Events of Default............................12 14.2 Remedies........................................12 14.3 Damages........................................12 14.4 Limitation of Damages...................12 15. Duration and Termination........................12 15.1 Duration.........................................12 15.2 Termination for Convenience.........13 15.3 Termination for Default.................13 15.4 Seller’s Obligations on Termination.....13 15.5 Buyer’s Obligations on Termination

or Expiration...................................13

8.1 Seller’s Warranties............................6

16. Information and Data................................ 14

8.2 Non-Conforming Supplies.................6

16.1 Confidential Information................14

8.3 Recalls...............................................7

16.2 Rights in Data................................14

9. Indemnification..........................................7

17. Cybersecurity...........................................15

9.1 Indemnification.................................7

17.1 Enterprise Cybersecurity...............15

9.2 Procedure..........................................8

17.2 Product Cybersecurity...................15

10. Compliance with Laws.............................8

17.3 Supply Chain Cybersecurity..........15

11. Intellectual Property Rights......................8

17.4 No Personal Data..........................15

11.1 Definitions........................................8

18. Assignment and Subcontracting..............15

11.2 Background Intellectual Property....8

19. Excusable Non-Performance...................16

11.3 Foreground Intellectual Property....8

20. Labor Contracts........................................16

11.4 Seller’s License Rights.....................9

21. Customs....................................................17

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

SEPTEMBER 2022

22. Insurance..................................................17

23.5 Waiver............................................18

23. Miscellaneous..........................................17

23.6 Severability....................................18

23.1 Advertising.....................................17

23.7 Interpretation.................................18

23.2 Audit Rights....................................17

23.8 Notices............................................18

23.3 Electronic Communication............17

23.9 Governing Law and Forum............18

23.4 Relationship of the Parties.............17

USE AND PURPOSE OF MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS

These Model General Terms and Conditions for Light Vehicles (“Model Terms” or “GTC”) were designed for use in connection with the purchase and sale of automotive original equipment parts. MEMA OE Suppliers developed the Model Terms to promote a more collaborative approach to seller-customer relationships. The goal is to increase cooperation, communication, and trust between buyers and sellers, eliminate ambiguities in responsibilities, reduce transaction costs, increase certainty, and ultimately increase the industry’s competitiveness. The Model Terms should serve as a reference guide and educational tool for buyers and sellers, and are intended to help form the basis for fair and balanced contracts. USE OF THE MODEL TERMS IS ENTIRELY VOLUNTARY. Price and other terms of sale are determined by the buyer and seller in every transaction, and the Model Terms are not intended to affect that negotiating process. Buyers and sellers are always free to negotiate whatever terms or conditions they believe appropriate in the specific situation. Each buyer and seller should independently decide whether the Model Terms are appropriate for the company or transaction. Under no circumstances should buyers or sellers discuss with their competitors the specific terms and conditions they should adopt in particular negotiations, or agree collectively not to deal with a company refusing to adhere to the recommendations in this document or any other particular terms and conditions. These terms are not intended to provide legal advice. These Model Terms attempt to follow a more balanced approach to buyer-seller relations than many of the forms currently in use in the automotive industry, both at the OEM and tiered buyer levels. The drafters considered the interests and needs of both buyers and sellers and attempted to apply basic concepts of fairness and good faith dealing to navigate a course between the two. Where both parties had competing legitimate interests or needs, the drafters selected the approach that appeared to represent the greater interest or need. There is, of course, no one “correct” approach that fits all situations and individuals may disagree about what constitutes “fairness” and “good faith.” However, most would agree that the forms currently in use in the automotive industry are neither fair nor balanced. Rather they reflect the ability of the party with superior bargaining power, typically the buyer, to impose terms and conditions that provide maximum protection for that party and little or no protection for the other party. MEMA OE Suppliers believes that a more collaborative approach between buyers and sellers will pay long-term dividends to all parties in a global economy, and that a more balanced approach to contract terms and conditions is an important step in that direction.

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

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SEPTEMBER 2022

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

SEPTEMBER 2022

GENERAL TERMS AND CONDITIONS 1

Scope.

the parties. It is incumbent on both parties to consider carefully the documents that comprise the Contract and the language contained in those documents (not just price and payment terms), to be sure that they accurately reflect the agreement between the parties. Most contract disputes arise because the parties skip this critical step.

These General Terms and Conditions (“GTC”) will apply to all goods and services (collectively “Supplies”) that Buyer purchases from Seller. The Supplies, the Buyer and the Seller are identified on the face of the Purchase Order into which these GTC are incorporated. “Purchase Order” includes documents titled “Purchase Order,” “Scheduling Agreement” or any other document, however titled, that performs the same function. The Buyer and Seller are sometimes identified separately as a “Party” and collectively as the “Parties.”

2.2 Offer and Acceptance. Each Purchase Order is Buyer’s offer to purchase the Supplies on the terms of the Contract. The Contract is formed upon acceptance of the offer by Seller, which occurs if: (1) Seller accepts the Contract in writing; or (2) Seller fails to object or to propose alternate or additional terms in writing within 10 business days after receipt. If Seller timely objects to a Purchase Order or proposes alternate or additional terms, a Contract is formed only if and when Buyer and Seller mutually agree in writing as to the Contract terms, except that if Seller has commenced delivery of the Supplies, a contract will be formed in accordance with the provisions of Section 2-207 of the Uniform Commercial Code.

Comment: Section 1 merely provides context and certain key definitions 2

The Contract.

2.1 Contract. The “Contract” is exclusively comprised of the Purchase Order, together with any associated Releases, these GTC, the applicable specifications, and any other documents specifically incorporated into any of them or separately agreed to in writing by the Parties, such as policies. Buyer’s request for quotation and Seller’s quotation are not included in the Contract unless specifically incorporated in the Contract and then only to the extent specified.

Comment: 1. Any contract requires an offer and acceptance. Whether the offer is Seller’s quotation or Buyer’s purchase order is of legal significance and a common subject of conflict. The GTCs attempt to avoid those disputes by identifying the purchase order as the offer, which is consistent with common industry practice.

Comment: 1. Section 2.1 establishes the terms and documents that comprise the Contract between Buyer and Seller. Buyer’s Purchase Order is the offer of a Contract. Included in that offer are any documents referenced in the offer as being part of the Contract, including these General Terms and Conditions. All documents and agreements not specifically incorporated in the offer are excluded (see Section 2.3). It is typical for the Contract to include documents, such as guidelines or policies, that are not fully contained within the GTC. In order to avoid disputes, users of this document should identify those incorporated documents by either modifying the GTCs to identify them or by identifying them on the face of the Purchase Order.

2. Buyer’s offer (Purchase Order) may be accepted in one of two ways. First, the offer may be accepted by a written acceptance from Seller. Second, if there is no written acceptance, the offer will be deemed accepted if Seller begins performance or fails to object or propose different or alternate terms writing within 10 days or receipt. This means that it is essential Seller review, identify and communicate its objections or alternative terms promptly. Once the contract is accepted, it is frequently too late for Seller to protect itself contractually. 3. The two modes of acceptance are different and narrower than the typical industry terms, which usually say (with differences in wording) that a seller accepts by doing any work in preparation to perform or by performing (i.e., delivering goods). From a legal

2. Section 2.1 is intended to promote early identification and resolution of differences between

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

perspective, this means that Seller cannot begin preparation while continuing to negotiate, since preparation means acceptance. Section 2.1 instead says that, subject to the next bullet point, if Seller makes a timely objection, there is no contract until the areas in dispute are resolved.

SEPTEMBER 2022

adjusted (up or down) to reflect the impact of the Buyer Change. The Parties will engage in good-faith negotiations to agree on an equitable adjustment, but failure to agree will not defeat the right to an equitable adjustment, nor will it prevent prompt implementation of the Buyer Change. Seller may not make a change to the Supplies without Buyer’s written consent, but Buyer will not unreasonably withhold or delay consent to changes proposed by Seller. If a Buyer Change or approved change proposed by Seller makes any Supplies, work in progress or components or materials obsolete, then Buyer will compensate Seller (i) for the Supplies at the Contract Price, as defined in Section 6; (ii) for the components or materials at their acquisition cost; and (iii) for work in progress at an equitable price, provided that the quantities of Supplies, work in progress and/or components or materials are reasonable in amount under the circumstances.

4. If the parties begin buying and selling before resolving the areas of dispute, it is not feasible to say that there is no contract – by the very act of buying and selling, Seller is bound to deliver, Buyer is obligated to pay, there are quality standards that must be met, etc. Uniform Commercial Code (UCC) §2-207 (often labelled the “Battle of the Forms”) is addressed to that problem. Grossly oversimplified, it provides rules for a court to decide what the business deal will be when Buyer and Seller can’t agree. But there is no good way for a court to create an “agreement” that neither party has agreed to, and each party is likely to be unhappy with the agreement that the UCC creates for them.

Comment: 1. Under Section 2.4, Buyer may unilaterally impose changes to drawings, specifications, and other Contract requirements listed, but Seller is entitled to an equitable adjustment of price or schedule, if requested by Seller and appropriately documented. Although agreement on an equitable adjustment is encouraged, there can be no assurance that agreement will be reached. In that case, the parties must rely on contractual or noncontractual dispute resolution mechanisms to determine the equitable adjustment.

5. These, or any other contract provision or legal rules, cannot eliminate uncertainty and risk when the parties have not actually agreed on the terms. A Buyer and Seller that do business without actual agreement on the contract terms do so at their own risk. 2.3 Entire Agreement. The Contract constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all prior oral or written representations or agreements by the Parties with respect to the subject matter of the Contract.

2. Seller must implement the changes on the (reasonable) timetable directed by Buyer, regardless of whether the parties have agreed on an equitable adjustment.

Comment: Also known as an “integration clause,” Section 2.3 clarifies that the Contract consists of the documents referenced in Section 2.1 and excludes all other prior written and oral agreements and understandings. If an important concept is not already addressed in the Contract, the parties should make sure that it is put in writing and made part of the Contract. Special consideration should be given to the various types of agreements which often precede the first production purchase order and which may contain terms that were intended to carry over to the parties’ production relationship. If so, they should be identified in the purchase order.

3. Seller may also request changes to the Contract, but they require Buyer’s approval. All changes must be documented in writing. The differing treatment between the parties recognizes that Buyer must have the ability to make changes that are necessary to improve its products or meet its customer’s requirements during the course of the Contract, while there is not generally a corresponding need by Seller to impose changes. 4. Section 2.4 also expressly addresses Seller’s entitlement to compensation for obsolete materials, which is a topic not expressly addressed in the typical industry contract

2.4 Changes to the Supplies. Buyer may from time to time by notice to Seller make reasonable changes to the drawings, specifications, materials, manufacturing processes or location, packaging or testing of the Supplies (collectively “Buyer Change”). At Seller’s request and with reasonable supporting documentation, the Contract Price, as defined in Section 6, and times for performance will be equitably

2.5 Other Changes Prohibited. Except for the changes described in Section 2.4, neither Party may make any changes to the Supplies, the manufacturing processes or location, or the Contract (including to the 2

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

GTC) without the signed written agreement of each Party.

customary lead time requirements or any lead time requirements specified in the Contract or otherwise agreed to by Buyer and Seller in writing. However, in all events, Seller will use best efforts to meet Buyer’s Releases, provided that Buyer will equitably compensate Seller for expenses arising out of an unreasonable Release, such as overtime or expedited shipping. For clarity, (i) once the Contract is formed in accordance with Section 2.2, a Release may not be rejected, and (ii) if Seller is unable to fully satisfy a Release that is not reasonably determined despite best efforts, it shall nevertheless deliver the portion of the released quantity that is reasonably achievable.

Comment: The typical industry terms say, in substance, that the Contract is subject to Buyer’s then current standard terms and conditions. If a new or revised purchase order is issued and the standard terms and conditions have been modified since the original purchase order, those modified terms may significantly change the deal that had been agreed to. The drafters believe that it is unfair to change an existing contract merely by posting different terms to a website, without any affirmative manifestation of acceptance. Section 2.5 reflects that belief. 3

SEPTEMBER 2022

Comment:

Supplies.

1. The industry typically uses blanket purchase orders which allow Buyer to specify quantities and delivery dates through releases, which typically include both brief “firm release” information and longer “forecast” information beyond the firm release period. However, the optimal firm release period is likely to vary from purchase order to purchase order depending on a variety of factors. The parties should consider modifying the four-week period as appropriate in the purchase order.

3.1 Quantities. Unless a fixed quantity is specified in the Purchase Order or elsewhere in the Contract, the Contract is a requirements contract, and Buyer will purchase and Seller will sell 100% of Buyer’s requirements for the Supplies (or a specific percentage of requirements specified in the Contract.). Comment: Under Section 3.1, Contracts are presumptively requirements contracts. This is an increasingly common provision in the industry and, in most cases, reflects the actual expectations of the parties. In addition, it prevents potential legal risks relating to the applicable statute of frauds. A contract that lacks a written quantity term is not enforceable under the statute of frauds, (with exceptions that do not change the basic point). Under the UCC, an obligation to purchase “requirements” is considered a quantity, so the typical industry contract that specifies “requirements” or the equivalent is enforceable. Before contracting for something other than requirements or a fixed quantity, consider consulting with counsel to avoid non-compliance with the statute of frauds.

2. Seller is obligated to satisfy a release so long as it is “reasonable.” Section 3.2 recognizes that releases may be unreasonable if they are inconsistent with capacity limitations, lead time requirements or unusual volume fluctuations. However, even if a release is unreasonable, Seller must use its best efforts to satisfy Buyer’s releases, or as much of the requirements as feasible. If Seller is required to incur costs incurred in satisfying an unreasonable release, it is entitled to compensation. 3. The provisions regarding unreasonable releases are a response, in part, to recent industry experience in which releases have become increasingly erratic and unreliable, causing Seller’s to incur significant expenses. Anecdotally, the increase in unreasonable releases is driven by supply chain shortages and similar factors which are not within the control of Buyer. The purpose of the unreasonable release provisions is not to punish Buyer for “bad” behavior, but rather to offer some protection to Sellers from the consequences of erratic and unreliable releases.

3.2 Releases. Unless otherwise stated in the Contract, Buyer will communicate its delivery date and quantity requirements to Seller through periodic written “Releases.” Releases specify the firm quantities and delivery dates for the first four weeks of the Release schedule. Seller will deliver the Supplies in accordance with the Releases, of which the delivery dates and quantities therein will be reasonably determined by Buyer. Whether Releases are “reasonably determined” will take into account, without limitation: (i) any capacity limitations specified in the Contract or otherwise agreed to by Buyer and Seller in writing; and (ii) unusual volume or timing fluctuations that are inconsistent with

3.3 Inputs. Seller is responsible for obtaining and maintaining at its expense all materials, components, inventories, and other resources

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(“Inputs”) reasonably necessary to meet Buyer’s Releases.

produce small quantities at irregular intervals, often long after regular production has ended.

Comment: Section 3.3 is consistent with typical industry contract terms, except, perhaps, for the inclusion of the “reasonable” limitation.

2. Industry contract terms regarding past- model service parts vary widely, both as to the duration of the obligation and pricing and incremental cost recovery. However, the model of a base price equal to the last production price adjusted for incremental service part costs is common, although which incremental costs are compensable vary widely.

3.4 Forecasts. Buyer or its Customer may provide Seller with forecasts or estimates of delivery times and quantities, estimated program length or similar information for periods beyond the firm Release period, whether in Releases or other documents. All such information constitutes estimates provided for planning purposes only, is subject to change from time to time, and will not be binding upon Buyer or Seller. 3.5

3. Section 3.5.2 varies from industry norms by providing for annual cost-based price adjustments. The premise of the provision is that it is unreasonable to hold Seller to firm-fixed pricing not only for the production period, but also for the lengthy servicepart period.

Service Parts

3.5.1 Current-Model Service Requirements. During the vehicle production period (i.e., the period in which the vehicle in which the Supplies are used is in serial production), Seller will make Supplies available to Buyer for Buyer’s current-model service requirements at the then-current production prices under the Contract, plus any additional costs for special packaging, shipping, handling, and other expenses specific to service parts. If only components of the Supplies are ordered for service purposes, the price shall be equitably determined by the Parties.

3.5.3 Effect of Termination. Seller’s obligations under Section 3.5 will survive termination, except that the obligations will terminate if the Contract is terminated by Buyer pursuant to Section 15.2 or Seller pursuant to Section 15.3. Comment: Under the typical industry terms, Seller must provide service parts even if the supplies have been re-sourced. This will typically be infeasible, as the replaced Seller will not remain in possession of tooling, and is not necessary, as the replacement Seller will be able and bound to supply those parts. Section 3.5.3 conforms the Contract to that reality.

Comment: Section 3.5.1 is consistent with typical industry contract terms, although many of those terms do not allow for recovery of service part-specific expenses during the current-model period.

Packing and Shipping.

4.1 Packing. Seller will comply with Buyer’s reasonable instructions regarding the method of packing, transporting, storing and labelling, as well as associated documentation requirements. If Buyer has not provided such instructions, Seller will pack and ship Supplies in accordance with sound commercial practices. If Seller is required to use Buyer’s returnable packaging, Seller will be responsible for cleaning and returning the returnable packaging. Buyer will be responsible for replacement of returnable packaging, unless due to Seller’s neglect. If returnable packaging is not available, Seller may use expendable packaging, and Buyer will reimburse Seller for the reasonable costs of expendable packaging, unless Seller is responsible for the unavailability of returnable packaging.

3.5.2 Past-Model Service Requirements. After the vehicle production period, Seller will make Supplies available to Buyer for Buyer’s past-model service requirements for a period of 10 years. The price will be the production price at the end of the vehicle production period plus any additional costs for special packaging, shipping, handling, and other expenses specific to service parts, which price will further be equitably adjusted annually based on the cost of materials and labor. If only components of the Supplies are ordered for service purposes, the price shall be equitably determined by the Parties. Comment:

Comment: Because packing and shipping requirements vary substantially among Buyers, Section 4.1 leaves to each Buyer the right to specify its own particular requirements. From Seller’s standpoint, it is important to understand Buyer’s

1. Section 3.5.2 balances Buyer’s legitimate interest in securing a continuing source of service parts after regular production has ended with Seller’s legitimate interest in recovering any added costs to

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packing and shipping requirements so that the costs can be reflected in Product pricing. 2. Following industry practice, Section 4.1 assumes that Buyer will provide returnable packaging for the Products. If returnable packaging is not available, Buyer will be responsible for either providing or paying for expendable packaging. Seller must reflect in its pricing the cost of cleaning and returning returnable packaging.

consistent with Section Error! Reference source not found.; (iii) Sections 2.4 or 15; or (iv) Section 6.2. Unless otherwise stated in the Contract, the Contract Price includes all applicable federal, state, provincial, and local taxes and duties other than sales, value added, or similar turnover taxes or charges. Seller will separately invoice Buyer for any sales, value added, or similar turnover taxes or charges that Seller is required by law to pay or collect from Buyer.

4.2 Shipping. Unless otherwise stated in the Contract, Supplies will be delivered FCA (Incoterms 2020), and title will transfer upon receipt of the Supplies by the freight carrier. If Supplies are not ready for delivery in time to meet Buyer’s Releases, the Party causing the delay will be responsible for additional costs of any resulting expedited or other special transportation.

Comment: Consistent with industry standards, the Contract Price is a firm-fixed price for the Term (see Section 15.1). It is adjustable only in the limited circumstances covered by the provisions identified in Section 6.1, or under Section 6.2, discussed below. 6.2 Equitable Adjustment. Notwithstanding Section 6.1, upon Seller’s showing of severe and sustained increased production costs caused by reasons outside of Seller’s control, the Parties shall engage in good-faith negotiations regarding an equitable pricing adjustment. Good-faith negotiations shall consider, without limitation, the extent by which the amount of the increase exceeds historical fluctuations, the expected duration of the increase in production costs, and the commercial likelihood that Buyer will be able to pass on any increase in the Contract Price.

Comment: If desired, the FCA default standard can be modified either in the GTCs or the Purchase Order. Further information about FCA and other Incoterms is available from the International Chamber of Commerce at http://www.iccwbo.org/incoterms. Section 4.2 establishes a fault-based standard for additional transportation costs. 5

Inspection.

Comment:

Buyer may, upon reasonable advance notice to Seller and in compliance with Seller’s reasonable restrictions or conditions regarding safety and confidentiality, inspect production processes and Property (as defined in Section 12) and, subject to Seller’s prior written approval, conduct testing at Seller’s premises for the sole purpose of verifying Seller’s performance under the Contract. Buyer is not required to inspect Supplies, and no inspection or failure to inspect will reduce or alter Seller’s obligations under the Contract.

1. Section 6.2 is a significant, although anticipated to be rare, departure from industry norms, because it provides Sellers with the possibility of costbased price increases based on “severe and sustained increased production costs” The drafters recognize that it is likely to be very controversial and concerning to Buyer’s, but believe that it protects the interest of both Sellers and Buyers by minimizing the frequency of supply chain disruptions. Under the current industry model, if a Seller is faced with severe cost increases that make supply at the usual Contract Price commercially untenable, Seller may resort to extracontractual remedies, such as supply cutoff threats. In response, Buyer’s will frequently turn to courts for relief, asking the court to force the Seller to continue supply. The outcome of that litigation is very uncertain and creates significant continuity risks. Section 6.2 is intended to serve as a “pressure relief valve” to reduce that risk

Comment: Section 5 balances the need for Buyer to inspect production processes and its property with Seller’s need to maintain the confidentiality of its and its other customers’ proprietary information. Section 5 also clarifies that Buyer is not required to inspect Supplies upon receipt, and that Seller’s obligations (such as warranty obligations) are not affected by Buyer’s inspection or failure to inspect. 6

Price.

2. The conditions for price relief in Section 6.2 are general and do not provide bright-line answers. This is necessary given the variety of circumstances that the GTCs are intended to cover. The parties

6.1 Contract Price. “Contract Price” means the unit price stated in the Purchase Order, as it may be adjusted only in accordance with: (i) any provision of the Purchase Order, such as agreed raw material or currency indexing; (ii) a Contract modification 5

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should consider negotiating more specific criteria for relief to further minimize continuity risk. 7

THE FOREGOING WARRANTIES ARE THE SOLE WARRANTIES, AND ALL OTHER WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, ARISING BY LAW OR CUSTOM, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY DISCLAIMED.

Payment.

Payment terms are as set forth in the Contract or, if not stated, 45 days net. Seller will promptly submit correct and complete invoices or other agreed billing communications with appropriate supporting documentation and other information reasonably required by Buyer after delivery of Supplies, and Buyer may withhold payment until a correct and complete invoice or other required information is received and verified. Buyer will pay Seller in the currency specified in the Contract or, if none is specified, in US Dollars. Buyer may set off or deduct from sums owed to Seller under the Contract those sums owed by Seller to Buyer and agreed to in writing between the Parties prior to setoff or upon final determination. Unless Seller consents in writing, Buyer may not set off or deduct amounts owed to Buyer by Seller’s affiliates or others who are not parties to the Contract.

Comment: Section 8.1 recognizes that an appropriate allocation of risk and responsibility for warranty claims often depends on the nature of the Supplies and Seller’s role in its design and manufacture. It sets forth Seller’s basic warranties including freedom from defect, conformity to specifications conformity to Law (see Section 10) and title. Fitness for purpose and design warranties are excluded, but may be appropriate if Seller is design-responsible, in which case this section should be modified or a separate warranty agreement should be used. Any product warranties apply for the same period as any corresponding consumer warranty, or, if not subject to a consumer warranty, 36 months.

Comment: Buyer may setoff or deduct only those amounts that are determined to be owed by Seller, either by agreement of the parties or through dispute resolution. This is contrary to standard industry practice, which typically allows Buyer to unilaterally setoff amounts that are disputed by Seller. The risk of unilateral setoff by Buyer can be very coercive and lead to unbalanced results. The right of setoff is also limited to amounts owed by Seller to Buyer, and does not extend to amounts owed by Seller’s affiliates, or to Buyer’s affiliates, or others who are not parties to the Contract. 8

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8.2 Non-Conforming Supplies. Subject to Sections 8.3 and 9 and the following sentence of this Section 8.2, Buyer’s sole remedy for Supplies that do not conform to the warranties in Section 8.1 will be to (i) reject the non-conforming Supplies; (ii) require Seller, at Seller’s option and expense (including applicable shipping costs necessary to meet delivery schedules and avoid interruption), to either repair or replace the non-conforming Supplies; and (iii) if repair or replacement is infeasible, require Seller to refund or credit the purchase price. In addition, Buyer may: (i) require Seller to implement at Seller’s expense containment, inspection, sorting, and other quality assurance procedures if Buyer reasonably determines (through statistical sampling or other quality assessments) that a substantial quantity of incoming Supplies do not conform to the warranties in Section 8.1; and (ii) require Seller to reimburse Buyer for any reasonable, direct costs incurred in the repair or replacement of defective Supplies that had been installed during production of a new vehicle or other product. To the full extent possible, Buyer will provide Seller with access to any available warranty data and other information related to the non- conforming Supplies and any available fieldreturned Supplies. Buyer will also provide Seller with an opportunity to participate in any root-cause analysis performed by Buyer concerning the Supplies. Each Party will provide prompt notice to the other as soon as possible after it determines that a material non-conformity exists.

Warranties.

8.1 Seller’s Warranties. During the warranty period, Seller warrants to Buyer that, on delivery, the Supplies will: (i) be free from defects in workmanship and materials; (ii) conform to the specifications, drawings, samples, and performance requirements specifically incorporated in the Contract; and (iii) conform to applicable Laws, as defined in Section 10. Unless otherwise specified in the Contract, the warranty period is the period for which the automobile manufacturer warrants the Supplies to end users or, if the Supplies are not warranted to end-users, thirtysix months from delivery of the Supplies. Seller also warrants to Buyer that it will transfer to Buyer ownership and good title to the delivered Supplies. Unless otherwise specifically stated in the Contract, Seller does not warrant the design of the Supplies.

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Comment: Section 8.2 generally limits remedies for warranty claims to rejection or repair or replacement of the non-conforming Supplies. However, Seller may also: (i) be responsible for costs of repair or replacement of Supplies that have already been installed in vehicles; (ii) be responsible for certain recall expenses under Section 8.3; (iii) be required to indemnify Buyer for claims of third parties arising from the nonconforming Supplies under Section 9; and (iv) be subject to termination for material breaches under Section 15.3. In addition, Buyer may require quality assurance procedures if a substantial quantity of non-conforming Products are delivered. This is a departure from current industry terms and conditions, which typically impose no limit on remedies.

on these factors. Fault is an important consideration in these situations, as often the Recall results not solely from a defective part but also from a defective or inadequate design or specifications, or from integration issues, that may not be the responsibility of Seller. Seller’s responsibility for a Recall is limited to situations in which Products fail to conform to the warranties in Section 8.1 during the applicable warranty period. This is a departure from ordinary practice. Finally, Section 8.3 requires that Seller be reasonably informed and reasonably involved in the Recall process as a condition of continuing liability for Recall costs.

8.3 Recalls. This Section 8.3 applies to any voluntary or government-mandated offer by Buyer (or the vehicle manufacturer) to vehicle purchasers to remedy a defect (a “Recall”). Seller will be liable for costs and damages resulting from a Recall only if the Recall results in whole or in part from a failure of the Supplies to conform to the warranties in Section 8.1 during the warranty period specified in the Contract. If Seller is liable for a Recall, the extent of Seller’s liability will be negotiated on a case-by-case basis based on: (i) a good-faith allocation of responsibility for the defect or non-compliance that resulted in the Recall; (ii) the reasonableness of the costs and damages incurred; (ii) the quantity purchased and Contract Price of the affected Supplies; and (iv) other relevant factors. As a condition precedent to Seller’s liability under this Section 8.3, Buyer must (i) notify Seller as soon as practicable after Buyer learns that a Recall being considered implicates the Supplies; (ii) provide Seller with available warranty data, customer complaints, performance evaluations, accident reports, engineering investigations, communications with governmental agencies, including NHTSA, and other data relating to the potential Recall; (iii) provide Seller a reasonable opportunity to participate in inquiries and discussions among Buyer, its customer, and governmental agencies regarding the need for and scope of the Recall; and (iv) consult with Seller about the most cost-effective method of remedying the alleged defect or non-compliance.

9.1 Indemnification. Seller will indemnify and defend Buyer against third-party claims or demands (“Claims”) for injury or death to persons, property damage, economic loss, and any resulting damages, losses, costs, and expenses (including reasonable legal fees) (collectively, “Loss”), regardless of whether the claim or demand arises under tort, contract, strict liability, or other legal theories, if caused by (i) Seller’s delivery of non-conforming Supplies and (ii) with respect to Claims unrelated to the performance of the Supplies, Seller’s negligent acts or omissions in its performance under the Contract. However, if Buyer or other parties materially contributed to the Loss, responsibility for the Loss will be equitably allocated based on relative fault. This Section 9.1 will not apply to the extent that the injury, loss, or damage results from: (i) Buyer’s design of the Supplies; (ii) any alteration or improper repair, storage, maintenance, handling, or installation of the Supplies; or (iii) the integration or interaction of the Supplies with systems or components not supplied by Seller. Indemnification under this Section 9.1, Section 11.7 and Section 12.1 are the sole indemnity rights, express or implied, under or arising out of the Contract.

Indemnification.

Comment: 1. Section 9.1 provides for what is sometimes called “third party indemnity,” meaning that it applies only if Buyer is subject to a third party claim as a result of either non-conforming Supplies or negligent performance (other than the delivery of nonconforming Supplies). The provision is narrower than the typical industry provision, which often allow for both first-party and third-party indemnity.

Comment: Recalls are a sub-set of warranty claims, usually but not always safety-related, that involve notification to the ultimate vehicle purchasers of the availability of a remedy. Section 8.3 provides a general framework for dealing with Recalls that assigns responsibility for Recall costs based on the relative fault of the parties and other factors listed, and contemplates that the actual liability will be negotiated between the parties in good faith based

2. Similar to the approach to Recalls in Section 8.3, Section 9.1 allocates responsibility based on fault.

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3. Section 9.1 requires both indemnification (i.e., paying to Buyer the amount of the liability and certain expenses incurred to the third party) and defense (i.e., defending Buyer in the underlying thirdparty claim).

Intellectual Property Rights.

11.1

Definitions.

11.1.1 “Intellectual Property Right” means any patent, trade secret, trademark, service mark, copyright, mask work, or other intellectual property right.

4. The GTCs also provide for indemnity of certain intellectual property claims (see Section 11.7).

11.1.2 “Background Intellectual Property Rights” means any Intellectual Property Rights of either Buyer or Seller relating to the Supplies (i) existing prior to the effective date of this Contract or prior to the date Buyer and Seller began any technical cooperation relating to the goods or services contracted, whichever is earlier; or (ii) that each Party acquires or develops after these dates but in a strictly independent manner and entirely outside of any work conducted under the Contract.

9.2 Procedure. Buyer will notify Seller promptly after Buyer becomes aware of the basis for a Claim under this Section 9 or under Section 11.7. The Parties will cooperate with each other to determine the root cause of a defect in or failure of the Supplies (and related systems and components) and an equitable allocation of responsibility among all responsible parties. Seller may examine and test all available Supplies and related systems and components that are subject to a third-party Claim. Buyer will endeavor to include Seller in settlement discussions where indemnity has been or will be sought from Seller, and Buyer may not settle or compromise any thirdparty Claim that gives rise to an indemnification claim without Seller’s prior written consent, which will not be unreasonably withheld or delayed.

11.1.3 “Foreground Intellectual Property Rights” means any Intellectual Property Rights, except Background Intellectual Property Rights that are developed in connection with this Contract. Comment:

Comment: Section 9.2 provides procedures to allow Seller to effectively protect itself and Buyer when defending and indemnifying under Section 9.1, including the right to approve any settlement, where Buyer seeks indemnification 10

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1. There is no industry standard intellectual property provision – they vary more widely in both nomenclature and substance than any other industry contract provision. Section 11.1 uses the increasingly common approach of distinguishing between “background” and “foreground” intellectual property, to differentiate the parties’ rights and responsibilities.

Compliance with Laws.

Seller will comply with applicable laws, ordinances, rules and regulations (“Laws”) of the United States, Canada, Mexico and any other country in which the Supplies are manufactured or delivered (as well any of their respective states, provinces or other political subdivisions). Each of the Parties will supply the other Party with all certifications and information reasonably requested by the other to assist the requesting Party in complying with its obligations under any Laws.

2. Intellectual Property Rights are sometimes the most important and contentious issue in a Contract and sometimes of little or no importance. When those rights are important, it may be appropriate to enter into a separate, more specific licensing agreement to avoid conflict down the road. 11.2 Background Intellectual Property. Buyer and Seller will each retain ownership of their respective Background Intellectual Property Rights.

Comment: Section 10 is a typical provision that requires Seller to comply with applicable laws, but is limited to laws of the US, Canada, Mexico and any other country where the Supplies are manufactured or delivered. Section 10 also requires both Buyer and Seller to provide information needed to comply with applicable Laws.

Comment: Under Section 11.2, each party retains sole ownership of its Background IP. 11.3 Foreground Intellectual Property. Buyer and Seller will each retain ownership of any Foreground Intellectual Property Rights that are solely created or made by their respective employees, agents or subcontractors (“Personnel”) without material

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assistance of the other Party. Foreground Intellectual Property Rights that are created with material assistance of both Parties will be jointly owned, and Buyer and Seller will each have the ability to grant licenses without consultation and without any duty of accounting to each other for any use or purpose. For clarity, unless an express written period of exclusivity has been promised to Buyer, Foreground Intellectual Property Rights owned or controlled by Seller may be immediately exploited by Seller in connection with Seller’s business with Seller’s other customers and will not be exclusive to Seller’s performance of the Contract.

to Section 15.2 or 15.3, Seller grants to Buyer a nonexclusive right and license to use Seller’s Intellectual Property Rights during the Contract term that would have applied had the Contract not been earlier terminated and, to obtain from alternate sources products and services similar to the Supplies for use only in vehicles or component parts covered by the terminated Contract. There will be no fee for this license if (i) Buyer terminates the Contract for Seller’s Default; or (ii) Seller terminates the Contract for convenience pursuant to Section 15.2.1. Otherwise, the Parties will negotiate a reasonable fee for use of Seller’s Intellectual Property Rights.

Comment:

Comment: Of necessity, Buyer must have the right to incorporate the Supplies containing Seller’s IP into vehicles or components. Section 11.5 grants that right. In addition, if the Contract is terminated, Buyer may have a need to use Seller’s IP to continue production of the vehicle into which the Supplies are incorporated. Section 11.5 grants that right, but a reasonable royalty must be paid if Buyer terminates for convenience.

1. Under Section 11.3, ownership of Foreground IP depends on whether it was developed collaboratively or by only one of the parties without material assistance of the other. If developed by only one party, it is owned by that party. If developed collaboratively, it is jointly owned, with each party having the right to economically exploit the IP.

11.6 Buyer’s License Rights. Seller grants to Buyer the right to use Seller’s Background Intellectual Property and Seller’s Foreground Intellectual Property (except for jointly owned Foreground Intellectual Property) to make, have made, use, reproduce, modify, improve, prepare derivative works of, distribute, display, perform, offer to sell, sell and import the goods or services that are the subject of this Contract (the “Limited License”), provided that Buyer or its affiliates will only use this Limited License in the event that (i) Seller breaches or repudiates its obligations by being unable or unwilling to deliver goods or services under this Contract; or (ii) in the event Seller is unable to supply goods or services under this Contract as a result of an Excusable Event as described in Section 19, but in such event only for the duration of Seller’s inability to supply. In no event will the term of the Limited License extend beyond the expiration date of this Contract.

2. Depending on the facts, disputes are possible as to whether particular Foreground IP is jointly or solely owned. Especially if valuable IP is expected to be created under the Contract, it may be prudent to specifically assign ownership (sole or joint) in a Contract-specific agreement. 11.4 Seller’s License Rights. Buyer grants to Seller a license to use Buyer’s Background Intellectual Property and Buyer’s Foreground Intellectual Property (except for jointly owned Foreground Intellectual Property) solely in connection with the performance of Seller’s obligations under the Contract. For clarity, Supplies manufactured based on Buyer’s drawings, designs, and/or specifications as well as any software code or models provided by Buyer may not be used for Seller’s own use or sold to third parties without Buyer’s express written authorization. Comment: Of necessity, Seller must have the right to use Buyer’s IP to make the Supplies. Section 11.4 grants that right. That is Seller’s only right with respect to Buyer’s IP.

Comment: In addition to Buyer’s rights under Section 11.5, Section 11.6 grants Buyer license rights to Seller’s IP if Seller refuses or is unable to deliver Supplies, including as a result of an Excusable Event (force majeure event).

11.5 Seller’s Intellectual Property. Except as stated in this Section 11, Seller does not transfer to Buyer any Intellectual Property Right of Seller related to the Supplies or incorporated in Buyer’s Property, other than the right to incorporate Supplies purchased from Seller in vehicles and component parts and to sell those vehicles and component parts to the public. If the Contract is terminated by Seller or Buyer pursuant

11.7 Infringement. Subject to the following paragraph, Seller will indemnify and defend Buyer and its customers against third-party claims, liabilities, losses, damages, costs, and expenses, including reasonable legal fees, arising out of the actual or alleged infringement by the Supplies of a third-party 9

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Intellectual Property Right (i) in the United States, the United Kingdom, the European Union, or Japan; and (ii) in another jurisdiction if Seller is aware of the actual or alleged infringement in that other jurisdiction at the time the Purchase Order is issued and fails to disclose it to Buyer within 10 days after accepting the Purchase Order. If a claim under this Section 11.7 results, or is likely to result, in an injunction or other order that would prevent Seller from supplying or Buyer from using Supplies for their intended purpose, Seller will, at its option and expense, either (i) secure a license of the Intellectual Property Right that permits Seller to continue supplying the Supplies to Buyer; or (ii) modify the Supplies so that they become non- infringing, so long as the modification does not materially alter the operation or performance of the Supplies, or (iii) replace the Supplies with a non- infringing but practically equivalent alternative. However, Seller will have no liability under this Section 11.7 if (i) Buyer fails to provide Seller with reasonable information, cooperation, and assistance regarding, and authority to defend, a claim, or (ii) a claim of infringement is based on (A) a modification to the Supplies made by Buyer or a third party or at Buyer’s request, (B) use or interconnection by Buyer of the Supplies in combination with other products not made or sourced by Seller, or (C) Supplies made to designs or specifications not provided by Seller.

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qualify as “works made for hire” for Buyer, in which case Seller hereby assigns to Buyer all right, title and interest in all copyrights and, if lawfully permitted, waives all moral rights therein. Comment: Section 11.8 is generally consistent with customary industry terms. 12

Buyer’s Property.

12.1 Definition. Buyer will own the tooling, jigs, dies, gauges, fixtures, molds, patterns, supplies, materials, and other equipment and property used by Seller to manufacture, store, and transport Supplies (“Property”) if (i) Buyer or its customer has provided the Property; or (ii) Buyer or its customer has fully paid for the Property (in either case, “Buyer’s Property”). Seller will not purchase any Property for the account of Buyer or charge Buyer for any Property except as authorized in writing by Buyer. Seller will assign to Buyer contract rights or claims in which Seller has an interest with respect to Buyer’s Property and execute bills of sale, financing statements, or other documents reasonably requested by Buyer to evidence its or its customer’s ownership of Buyer’s Property. Seller will indemnify and defend Buyer against claims or liens adverse to Buyer’s or its customer’s ownership of Buyer’s Property except those that result from the acts or omissions of Buyer or its customer. Seller will hold Buyer’s Property on a bailment basis and will be responsible for loss or damage to Buyer’s Property while in its possession or control. To the extent permitted by law, Seller waives any lien or similar right it may have with respect to Buyer’s Property. Buyer will be responsible for personal property taxes assessed against Buyer’s Property.

Comment: Section 11.7 requires Seller to indemnify Buyer for infringement if the Supplies infringe thirdparty Intellectual Property Rights in the major automotive markets (the United States, the United Kingdom, the European Union, and Japan), as well as any other jurisdiction where Seller knows of alleged infringement, recognizing that many Sellers lack the resources to search for third-party Intellectual Property Rights worldwide. Section 11.7(A) also requires Seller to take appropriate action to enable Buyer to use the Products for their intended purpose, once a claim covered by Section 11.7 appears likely to limit Buyer’s ability to use the Supplies as intended. Section 11.7 also imposes two conditions to Seller’s liability. First, it requires that Seller be afforded the opportunity to control defense of the third-party claim. Second, it excludes liability in the circumstances listed, of which the most significant is to exclude Supplies made to Buyer’s specifications.. These conditions are not typical of most industry terms, but the drafter’s believe that they better align liability with fault.

Comment: Section 12.1 covers tooling and other property of Buyer that is placed in Seller’s custody in order to perform the Contract. It clarifies that Buyer’s Property includes only Property that Buyer has provided or paid for. It does not include Property ordered from or through Seller unless and until it has been paid for. It requires Seller to keep the property free of liens and to indemnify Buyer if it fails to do so. Section 12.1 is generally consistent with typical industry terms, although there is significant variation among industry terms with respect to this topic. 12.2 Maintenance. Seller will (i) at its expense, maintain Buyer’s Property in good condition and repair, normal wear and tear excepted, throughout the useful life of Buyer’s Property; (ii) use Buyer’s Property only in connection with its performance under the Contract, unless Buyer otherwise approves in writing; (iii) at Buyer’s request and expense, mark

11.8 Copyright. To the extent that this Contract is issued for the creation of copyrightable works, the works will be considered “works made for hire” for Buyer except to the extent that the works do not 10

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

Buyer’s Property as belonging to Buyer or its customer; and (iv) not remove Buyer’s Property (other than shipping containers and the like) from Seller’s premises without Buyer’s written approval. All replacement parts, additions, improvements, and accessories to Buyer’s Property will become part of Buyer’s Property unless they can be removed without damaging Buyer’s Property. If Buyer’s Property exceeds its useful life, as determined based on Buyer’s volume estimates provided at the time the Property was quoted or requires replacement or refurbishment due to normal wear and tear, Buyer will be responsible for the cost of refurbishing or replacing Buyer’s Property.

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and marked in accordance with the requirements of Buyer’s carrier. If the release or recovery of Buyer’s Property or other property renders Seller unable to produce Supplies, the release or recovery will be deemed a termination of the Contract by Buyer for convenience with respect to those Supplies. If Buyer and Seller dispute in good faith whether Buyer’s Property has been paid in full, Seller will release and allow Buyer possession upon payment by Buyer of the undisputed portion of the amount claimed by Seller to be owed. Seller’s relinquishment of possession will not prejudice any claim or right to payment of Seller for the disputed amounts. Comment: Section 12.4 allows Buyer to obtain possession of its property once it has paid for it, except that if there is a dispute about what is owed, Buyer can obtain possession by paying the undisputed amount, with the dispute to be resolved later.

Comment: Section 12.2 requires that Seller properly maintain Buyer’s Property, but requires Buyer to bear the costs of repair, refurbishment or replacement for properly that exceeds its useful life. Section 12.2 also contains requirements designed to assure that Seller is able to return Buyer’s Property if required to do so under Section 12.4. Section 12.2 is generally consistent with typical industry terms.

12.5 Failure to Release Buyer’s Property. If Seller does not release Buyer’s Property in accordance with Section 12.4, Buyer may, at Seller’s cost, (i) obtain an immediate court order for possession, and (ii) enter Seller’s premises, with or without legal process, and take immediate possession of Buyer’s Property. To the extent permitted by law, Seller waives any right to object to Buyer’s repossession of Buyer’s Property in a bankruptcy or other proceeding.

12.3 Payment. Buyer will pay for Buyer’s Property that Buyer is required to purchase at the amount specified in the Contract or, if no amount is specified in the Contract, at (i) if manufactured by a third party, Seller’s actual cost, including a reasonable markup; or (ii) if manufactured by Seller, Seller’s actual cost of purchased materials, components, and services, plus Seller’s actual cost of labor and overhead allocable to the Buyer’s Property. Unless otherwise stated in the Contract, final payment for Buyer’s Property is due (i) on the PPAP (Production Part Approval Process) approval date; or (ii) within 60 days after the Property is tendered for PPAP approval if no action has then been taken on the request for PPAP approval.

Comment: Section 12.5, together with Section 12.4, recognizes that the prompt return of Buyer’s Property is of fundamental importance to Buyer in order to maintain continuity of supply if Buyer chooses to resource or otherwise requires its Property. The provision is consistent with typical industry terms. 13

Comment: Section 12.3 sets the price established in the Contract as the purchase price for Property that has been purchased by Seller for resale to Buyer. Only if the Contract does not establish a fixed price will Seller’s acquisition or production costs become relevant. Section 12.3 also sets forth the default payment provisions, which may be modified in the Purchase Order.

Seller’s Property.

Seller will own all Property that is not Buyer’s Property (“Seller’s Property”). Seller will, at its expense, furnish, maintain in good condition, and replace when necessary Seller’s Property needed to perform the Contract. While a Contract for Supplies remains in effect, Buyer may purchase Seller’s Property used exclusively to produce those Supplies and not needed by Seller to produce Supplies or products for other customers, for a purchase price equal to the greater of fair market value or Seller’s unamortized acquisition cost.

12.4 Possession. Subject to Section 12.3, Seller will immediately release to Buyer upon request, and Buyer may retake immediate possession of, Buyer’s Property at any time, with or without cause and without payment of any kind unless otherwise provided in the Contract. Seller will release the requested Buyer’s Property FCA (Incoterms 2020), properly packed

Comment: Section 13 affords Buyer the opportunity to purchase Property (as defined) owned by Seller, so long as Seller no longer needs that Property. It is consistent with typical industry terms. 11

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Default.

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14.3 Damages. Subject to Section 14.2, either Party may recover from the other Party direct damages caused by the other Party’s breach of the Contract. In all cases, damages under this Section 14.3 will be reasonably determined based on the nature, type, price, and profitability of the Supplies, industry practices, and the overall volume, scope, and profitability of other business relationships between Seller and Buyer. For clarity, if Buyer terminates the Contract pursuant to Section 15.3, Buyer’s direct damages include its reasonable costs actually incurred to relocate the work to an alternate source.

14.1 Events of Default. Either Party will be in “Default” under the Contract if it (i) fails to perform any obligation under the Contract and fails to cure the non-performance within 15 business days after written notice from the other party specifying the nonperformance, provided that the cure period can be shortened if necessary to prevent irreparable harm; (ii) admits in writing its inability to pay its debts as they become due, commences a bankruptcy, insolvency, receivership, or similar proceeding, or makes a general assignment for the benefit of creditors; (iii) becomes a debtor in a bankruptcy, insolvency, receivership, or similar proceeding commenced by a third party that is not dismissed within 30 days after commencement; or (iv) fails to provide adequate assurance of performance under the Contract within 5 business days after written demand by the Party having reasonable grounds for insecurity.

Comment: In every case, damages are limited to “direct damages,” including, for Buyer, the costs of re-sourcing. Section 14.3 also requires that the overall nature and extent of the commercial relationship be considered when awarding damages under Section 14.3. “Direct damages” is a term of art, the meaning of which depends on the context. This provision is more protective of Seller than typical industry provisions, but, the drafters believe it provides reasonable recovery to Buyer.

Comment: Section 14.1 should be read in conjunction with Section 15.2, which permits either party to terminate without cause, and Section 19, which excuses nonperformance caused by an event beyond the control of the affected party. Section 14.1 attempts to strike a balance between giving the non-performing party a reasonable opportunity to cure a nonperformance that is capable of cure and giving the performing party the opportunity to begin exercising its remedies. The provisions regarding Seller Default are generally consistent with typical industry terms, although many are less generous to Seller with respect to cure rights. The provisions regarding Buyer default are not typical.

14.4 Limitation of Damages. Except as otherwise expressly authorized in the contract, all indirect, special, consequential (including lost profits or market share or damage to brand value), incidental, punitive, and exemplary damages, whether or not foreseeable, are excluded to the extent permitted by applicable law. Comment: Section 14.4 is, to some extent, a “belt and suspenders” provision that makes clear that Sections 14.2 and 14.3 mean what they say. These limits on damages attempt to balance the goal of making the performing party “whole,” with the recognition that a significant imbalance in financial resources and rewards often exists between the parties.

14.2 Remedies. Except for termination for default pursuant to Section 15.3, Sections 8.2, 8.3 and 9 provide Buyer’s exclusive remedies for claims arising out of non-conforming Supplies, and Section 11.7 provides the exclusive remedies for infringement, regardless of the legal theory under which those claims are asserted. Otherwise, either Party may assert and exercise any right and obtain any remedy available at law or equity.

Duration and Termination.

15.1 Duration. The Contract will remain in effect for the Term, unless earlier terminated in accordance with Sections 15.2 or 15.3 “Term” means the time period specified in the Contract or, if the Contract does not specify a term, the period in which the original vehicle program into which the Supplies are incorporated is in production, including any extensions or renewals, provided that at the time of extension or renewal the Contract Price will be adjusted to reflect changes in Seller’s costs.

Comment: Section 14.2 clarifies that unless Buyer terminates Seller for Default, Buyer’s remedies for non-conforming supplies or IP infringement are limited to those in Sections 8.2 (warranty), 8.3 (recall), 9 (indemnity) and 11.7 (IP infringement). These provisions are more protective of Seller than typical industry provisions, but, the drafters believe they provide reasonable recovery to Buyer.

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

Comment: Under Section 15.1, the Term is either specified on the Purchase Order or, if not, the life of the program. If the like of the program is extended, the price will be adjusted to reflect changes in Seller’s costs. This price adjustment is not typical of industry terms, but the drafters consider it reasonable since program life is often extended significantly beyond the initial expected duration on which pricing was based.

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termination notice; (ii) otherwise, the period reasonably needed by Buyer to complete an orderly transition to the alternate Seller, but not to exceed 360 days from the termination notice. Unless terminated by Buyer for breach, during the Transition Support Period, the Contract Price will be adjusted to reflect changes in Seller’s costs, subject to reasonable documentation. All amounts due to Seller for Supplies provided during the Transition Support Period shall be invoiced and paid for in accordance with Section 7 during the Transition Support Period. “Transition Support” means that Seller will at no cost to Buyer, promptly provide reasonable information and documentation, excluding trade secrets and Seller’s Intellectual Property (unless licensed pursuant to Section 11.6) continue to fill Buyer’s reasonable requirements; and use best efforts to provide special overtime production, storage and/or management of extra inventory of Supplies, extraordinary packaging and transportation and other special services as expressly requested by Buyer in writing. Buyer will pay the reasonable, actual cost of the assistance under this Section 15.4, subject to reasonable documentation, and (B) if the Parties disagree on the cost of Transition Support, Buyer will pay the agreed portion to Seller without prejudice to Seller’s right to seek to recover any disputed amounts.

15.2 Termination for Convenience. Buyer may terminate the Contract for convenience on at least 60 days written notice. Seller may terminate the Contract for convenience on reasonable written notice based on the time required for a Buyer to diligently transition supply to a successor Seller, but not less than 60 days or more than 360 days. In all cases, Buyer will use its best efforts to promptly transition supply. Comment: Section 15.2 allow both Buyer and Seller to terminate for convenience, although the terminating Seller must give significantly longer notice, in order to allow Buyer a reasonable opportunity to re-source. Section 15.2 is not consistent with typical industry provisions, which usually allow Buyer to terminate with little or no notice and do not allow Seller to terminate for convenience. The drafters consider Seller’s limited right to terminate reasonable because Sellers are likely to exercise the right only if remaining in the contract is financially ruinous for Seller, and the lengthy notice period protects Buyer’s continuity of supply. Similarly to Section 6.2, it serves as a “pressure relief valve,” providing Seller with an alternative to brinksmanship and the resultant supply chain uncertainty.

Comment: Section 15.4 defines Seller’s obligations to provide “Transition Support” as needed to allow for an orderly transition to a replacement supplier. It is generally consistent with typical industry terms. 15.5 Buyer’s Obligations on Termination or Expiration. Following termination or expiration for any reason, Buyer will: (i) purchase from Seller completed Supplies at the Contract Price and merchantable work-in-process, components and materials at Seller’s actual cost, each of which will be owned by Buyer upon payment in full, provided that the quantities of Supplies, work in progress or components or materials are reasonable in amount under the circumstances; (ii) reimburse Seller for the amounts, if any, reasonably paid to third parties by Seller on account of commitments made by Seller; and (iii) pay any amounts owed for Transition Support pursuant to Section 15.4. In addition, if the Contract is terminated by Buyer for convenience or Seller for Default, Buyer will pay to Seller the reasonable cost of unreimbursed and unamortized research and development, capital equipment purchased specifically to perform the terminated Contract, and Property. In all cases, Buyer’s obligations will be subject to documentation of costs reasonably requested by Buyer.

15.3 Termination for Default. Upon the occurrence of a material uncured Default by a Party, the other Party may terminate the Contract by notice, effective upon the date specified by the terminating Party in writing. Comment: Section 15.3 should be read together with Section 14.1, regarding Default and cure. It is consistent with typical industry terms with respect to termination by Buyer, but is not typical with respect to termination by Seller. 15.4 Seller’s Obligations on Termination. Following notice of termination, Seller will comply with Buyer’s reasonable instructions to provide Transition Support during the Transition Support Period. “Transition Support Period” means: (i) if termination is by Seller for Default, the date specified by Seller, but not less than thirty days from the 13

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Comment: Section 15.5 defines Buyer’s obligation to take and pay for Supplies, work in progress and materials upon termination, as well as amounts paid by Seller to cancel commitments made to third parties prior to termination. It differs from typical industry terms in that typical terms limit the buyback to firm releases, while Section 15.5 limit it to “reasonable” amounts. The drafters believe that the proposed approach is preferable because lead times and other factors often require Seller to hold inputs in amounts greater than those needed for the firm release period in order to protect Buyer. The drafters believe that placing Seller at risk for prudent purchases misaligns incentives and leads to greater supply chain uncertainty. 16

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through routine backup or archival processes and not accessible in the ordinary course. Comment: Section 16.1 protects Confidential Information disclosed by either party. To provide a measure of certainty and recognize the responsibility of the disclosing party to take reasonable steps to protect it, “Confidential Information” is limited to information that is marked as such, except if the confidential nature of the information is apparent at the time of disclosure. Prudent practice would dictate that the best way to assure confidential treatment is to always identify the information as confidential, thus removing all doubt. The standard of care specified is the same degree of care as the recipient uses to safeguard its own Confidential Information, but not less than a reasonable degree of care. Section 16.1 requires the return or destruction of Confidential Information on request, except that the recipient may keep one copy to protect its legal interests and need not destroy computer archival copies.

Information and Data.

16.1 Confidential Information. “Confidential Information” means trade secrets, specifications, drawings, notes, instructions, engineering data and analyses, compositions of matter, financial data, and other technical and business data which are supplied or disclosed by Buyer or Seller in connection with the Contract, in each case that are marked or otherwise identified as confidential or where their confidential nature is apparent at the time of disclosure. The Party disclosing Confidential Information is referred to herein as the “Disclosing Party,” and the Party receiving Confidential Information is referred to herein as the “Receiving Party.” Confidential Information will be deemed confidential and proprietary to, and remain the sole property of, the Disclosing Party. The Receiving Party may not disclose Confidential Information or use Confidential Information for any purpose other than as contemplated under the Contract without in each case the written consent of the Disclosing Party. Confidential Information will not include information that (i) is or becomes generally available to the public other than as a result of a violation of this Section 16 by the Receiving Party, (ii) was obtained by the Receiving Party on a non-confidential basis from a third party who had the apparent right to disclose it, or (iii) is legally required to be disclosed. Buyer and Seller will each use the same degree of care to safeguard Confidential Information that it uses to protect its own confidential information from unauthorized access or disclosure (but not less than a reasonable degree of care). Upon request by the Disclosing Party, the Receiving Party will promptly return or destroy the original and all copies of Confidential Information received, except that each party may maintain one copy for legal purposes and need not delete or return copies stored

16.2 Rights in Data. “Buyer Data” means all data and information: (i) provided to Seller by or on behalf of the Buyer or its Affiliates; (ii) obtained, developed or produced by Seller in connection with the Contract; or (iii) to which Seller has access in connection with the provision of the Supplies. “Affiliates” means an entity that controls, is controlled by or is under common control with Buyer. As between Buyer and Seller, all Buyer Data created, collected, generated, stored, transmitted, or otherwise processed is and will remain the property of Buyer. Seller will have no rights in or to such Buyer Data except as expressly set forth in the Contract. Further, Seller agrees that Buyer will own all derivative works of Buyer Data created by Seller but not containing the Seller’s Confidential Information, including, but not limited to reports and analysis tools. Seller has a limited, non-exclusive, non-transferable, and revocable license to access, copy, and use the Buyer Data solely for the performance of the Contract. Comment: Section 16.2 was added because of the increased importance of data and data rights in the industry. The provision gives Buyer ownership of all Buyer Data, which is broadly defined. Similar to the intellectual property provisions of Section 11, data rights are sometimes the most important and contentious issue in a Contract and sometime of little or no importance. When those rights are important, it may be appropriate to enter into a separate, more specific data rights agreement to avoid conflict down the road.

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

Cybersecurity.

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practices”) is somewhat higher than for enterprise cybersecurity because of the magnitude of the unique business and safety threats posed if the security of the product itself is compromised.

17.1 Enterprise Cybersecurity. Seller must: (i) maintain reasonable, risk-based cybersecurity programs, supported by appropriate technical and operational measures including policies and procedures, to protect the confidentiality, integrity, and availability of Confidential Information and Buyer Data, prevent disruption of the production or delivery of Supplies, and respond in a timely and effective manner to any cybersecurity incident that may compromise any Confidential Information and Buyer Data or disrupt production or delivery of Supplies; (ii) promptly, but no less than 48 hours subsequent to Seller’s first knowledge of the incident, notify Buyer of any attempted or actual unauthorized possession, access, use, or knowledge of Buyer’s Confidential Information and Buyer Data by any person or entity that may become known or suspected by Seller; (iii) promptly furnish all known details of the attempted or actual unauthorized possession, access, use, or knowledge; (iv) take commercially reasonable measures to investigate, remediate or prevent the recurrence of any incursion or attempted or actual unauthorized possession, access, use, or knowledge of Confidential Information and Buyer Data; and (v) upon request, at Seller’s expense, demonstrate compliance through a third-party audit or other reasonable measure agreed upon by Buyer.

17.3 Supply Chain Cybersecurity. Seller will ensure its subcontractors are contractually bound to comply with the provisions of this Section 17 or its equivalent. Comment: Section 17.3 requires Seller to flow down the obligations of Sections 17.1 and 17.2 to its suppliers. This will likely require revisions to Seller’s own purchasing terms. 17.4 No Personal Data. No Personal Data protected under applicable Law is or will be disclosed or processed by either Party. Comment: A host of laws restrict the use, disclosure or processing of personal data, often with significant liability for violations. Personal data is usually not necessary for the transactions covered by the GTCs, so Section 17.4 assumes and requires that there will be none. If personal data will be involved, a separate compliance agreement will be needed. Note that “personal data” or similar terms used in applicable laws are often broadly defined, so it may be prudent to involve counsel or other subject matter experts in assessing the need for and content of such an agreement.

Comment: Section 17.1 was added because of the increased importance of enterprise cybersecurity in the industry. Because of the intended broad use of the GTCs and the vast difference in the vulnerability and the sophistication of different Sellers, the provision is general in nature, requiring “reasonable, riskbased” protective measures. Program design and implementation are largely left to Seller, although Buyer does have the right to require a third party audit.. Seller must promptly inform Buyer if there are specified cybersecurity incidents.

Assignment and Subcontracting.

Neither Party may assign or subcontract its duties or responsibilities under the Contract without the prior written consent of the other Party, which will not be unreasonably withheld or delayed. Unless otherwise stated in the consent, any assignment or subcontracting by either Party, with or without the required consent, will not relieve that Party of its duties or obligations under the Contract or its responsibility for non-performance or Default by its assignee or subcontractor. If Buyer requires Seller to subcontract all or a portion of its duties or obligations under the Contract to a designated subcontractor, Seller will not be responsible for a breach of the Contract caused by that subcontractor’s failure to meet its warranty, delivery, or other contractual obligations.

17.2 Product Cybersecurity. Seller must maintain a reasonable, risk-based program, supported by appropriate technical and operational measures including policies and procedures, to ensure the cybersecurity of any Supplies that include software, hardware, or other electrical components. Seller’s product cybersecurity program must provide for security by design, vulnerability management, governance, and any other elements identified by Buyer in a manner consistent with industry best practices, including but not limited to ISO/SAE 21434.

Comment: Section 18 requires approval for any assignment or subcontracting, which makes it incumbent on Seller to seek specific approval from Buyer for all subcontractors. Generally, the party making the assignment or subcontract remains responsible for the actions of its assignee or

Comment: Section 17.2 was added for the same reasons as 17.1. The standard (“industry best 15

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

subcontractor unless the consent provides otherwise. Where the subcontractor is a directed source by Buyer, however, Seller is not liable for a breach caused by that directed source. 19

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consistent with industry standards, except for the final two sentences 2. The penultimate sentence requires Buyer and Seller to share increased costs if “extraordinary costs” are incurred in order to maintain supply. “Extraordinary” is an inherently imprecise standard and may lead to disputes, but the drafters believe that it is preferable to the current typical provision, under which Seller is faced with the choice of either incurring 100% of conceptually unlimited costs to maintain supply or claiming “force majeure” and cutting off supply, leaving it to either the courts or commercial brinkmanship to sort out whether Seller is in breach.

Excusable Non-Performance.

A delay or failure by either Party to perform its obligations under the Contract (except Buyer’s payment obligations) will be excused, and will not constitute a Default, only if caused by an event or occurrence beyond the reasonable control of that party and without its fault or negligence (an “Excusable Event”). The Party unable to perform will give notice of the non-performance (including its anticipated duration) to the other Party promptly after becoming aware that it has occurred or is reasonably likely to occur, followed by prompt notices of any material changes in the facts relative to its ability to perform and/ or the anticipated duration of the non- performance. Seller and Buyer will share information, confer, seek agreement and otherwise act cooperatively to avoid or mitigate the effects of the potential or actual excused non-performance. If Seller is unable to perform for any reason, Buyer may purchase Supplies from other sources and reduce its purchases from Seller accordingly without liability to Seller. Within three business days after written request by the other Party, the non-performing Party will provide adequate assurances that the non- performance will not exceed 30 days. If the nonperforming Party does not provide those assurances, or if the non-performance exceeds 30 days, the other Party may terminate the Contract pursuant to Section 15.2 by notice given to the nonperforming Party before performance resumes. If Seller reasonably incurs extraordinary costs in order to maintain or restore supply in response to an inability to perform (or what would be an inability to perform except for those extraordinary costs), including expedited shipping and/or increased costs to obtain substitute materials or components, the costs will be equitably shared between the Parties. Buyer may not require Seller to use substitute materials or components for the Supplies that are not fully validated or tested unless and until the Parties first reach written agreement to reasonably share the risk.

3. The final sentence makes clear that Seller is not required to maintain production using unvalidated inputs absent an agreement on how to allocate the resultant risks. This is an enhancement to customary terms, in response to increasingly frequent Buyer demands that Sellers maintain supply by substituting components or materials without complying with standard testing and validation requirements. 20

Labor Contracts.

Seller will notify Buyer of a labor contract expiration date at least six months (6) before the expiration of a current labor contract that has not yet been extended or replaced. Buyer may thereafter direct Seller in writing to manufacture up to 30 days of additional inventory of Supplies, specifying the quantities of Supplies required and any packaging and storage requirements. Seller will use commercially reasonable efforts to comply with Buyer’s written directions prior to expiration of the current labor contract and until the current labor contract has been extended or a new contract completed. By authorizing the additional inventory, Buyer commits to buy the entire quantity of conforming Supplies requested and produced. Seller is responsible for carrying costs and any additional costs of manufacture. Comment: Section 20 recognizes that a labor dispute involving Seller’s employees may significantly impact Buyer’s ability to continue to operate. Accordingly, Section 20 allows Buyer to require that Seller build a bank of up to 30 days additional inventory to help insulate Buyer from the effects of a potential labor stoppage by Seller’s employees. However, by requiring the additional inventory, Buyer commits to purchase that inventory.

Comment: 1. Section 19 references “excusable nonperformance” rather than the more limiting “force majeure.” It specifically includes labor disputes. Prompt notice of the inability to perform is a pre- condition to coverage. Section 19 is broadly

MEMA OE SUPPLIERS MODEL GENERAL TERMS AND CONDITIONS FOR LIGHT VEHICLES

Customs.

Transferable credits or benefits associated with Supplies purchased, including trade credits, export credits, or rights to the refund of duties, taxes, or fees, belong to Buyer unless otherwise prohibited by applicable law. Seller will provide Buyer with all information and records relating to the Supplies necessary for Buyer to (i) receive these benefits, credits, and rights; (ii) fulfill any customs obligations, origin marking, labeling, or disclosure requirements, and certification or local content reporting requirements; (iii) claim preferential duty treatment under applicable trade preference agreements or regimes; and (iv) participate in any duty deferral or free trade zone programs of the country of import. Seller will obtain all export licenses and authorizations and pay all export taxes, duties, and fees unless otherwise stated in the Contract, in which case Seller will provide all information and records necessary to enable Buyer to obtain those export licenses or authorizations.

Miscellaneous.

23.1 Advertising. During and after the term of the Contract, Seller will not advertise or otherwise disclose its relationship with Buyer or Buyer’s customers without Buyer’s prior written consent, except as may be required to perform the Contract or as required by law. Comment: Section 23.1 adopts the current industry practice of prohibiting Seller from advertising its relationship with Buyer. 23.2 Audit Rights. Seller will maintain records as necessary to support amounts charged to Buyer under the Contract in accordance with Seller’s document retention policies. Buyer and its representatives may audit Seller’s records of transactions directly related to the Supplies and completed within one year prior to the audit date, to the extent needed to verify the quantities shipped and that the prices charged match the Contract Prices, and subject to Seller’s reasonable restrictions or conditions regarding confidentiality. Any audit will be conducted at Buyer’s expense (but will be reimbursed by Seller if the audit uncovers material errors in the amounts charged), at reasonable times, and at Seller’s usual place of business.

Comment: Section 21 adopts the current industry practice that transfers to Buyer credits or benefits associated with Products purchased, to the extent that they are transferable. There are many other legal obligations that may be incident to the import and export of goods, Complaince with those other obligations are required under Section 10. 22

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Comment: Section 23.2 adopts the current industry practice of allowing Buyer to audit Seller’s records for a one year period, but limits the audit scope to those records needed to those directly related to the Supplies. It does not generally permit a wide-ranging review of Seller’s costs or operations, financing, business plans, and the like. Seller should protect any Confidential Information disclosed in an audit by marking that information accordingly (see Section 16.1).

Insurance.

Prior to commencing work on Buyer’s premises or utilizing Buyer’s Property, Seller will maintain and upon request furnish to Buyer a certificate evidencing (i) general liability insurance with coverage limits reasonably acceptable to Buyer; (ii) all risk property perils insurance covering the full replacement value of Buyer’s Property while in Seller’s care, custody, or control and naming Buyer as loss payee; (iii) worker’s compensation insurance as required by applicable law; and (iv) other insurance required by applicable law. Insurance coverage required under this section will be subject to commercially reasonable self-insured retentions.

23.3 Electronic Communication. Seller will comply with the method of electronic communication specified by Buyer in Buyer’s request for quotation and confirmed in the Contract, including requirements for electronic funds transfer, Purchase Order transmission, electronic signature, and communication. Seller will also make commercially reasonable efforts to comply with any modification to Buyer’s specified method of electronic communication after the date of the Contract.

Comment: Section 22 requires Seller to provide general liability insurance coverage when performing work at Buyer’s premises or using its property, and to provide property perils coverage protecting Buyer’s investment in Buyer’s property that is utilized by Seller. The requirements of Section 22 are limited and additional obligations may be appropriate for particular Supplies.

Comment: Section 23.3 is a standard industry provision, but it places a reasonableness limits on Buyer directed process changes. 23.4 Relationship of the Parties. Buyer and Seller are independent contractors, and nothing in 17

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the Contract makes either Party the agent or legal representative of the other Party for any purpose. Neither Party has authority to assume or to create any obligation on behalf of the other Party.

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receipt if the date of actual receipt is a business day or on the next business day if the date of actual receipt is not a business day. Comment: This is a standard commercial contract provision.

Comment: This is a standard commercial contract provision.

23.9 Governing Law and Forum. Unless otherwise agreed in writing, the Contract will be governed by and interpreted according to the internal laws of Michigan, excluding its choice of law principles. The United Nations Convention on Contracts for the International Sale of Goods will not apply to the Contract. Any litigation arising out of or related to the Contract will be commenced in the State or Federal courts of the State of Michigan.

23.5 Waiver. The failure of either Party to enforce any right or remedy provided in the Contract or by law on a particular occasion will not be deemed a waiver of that right or remedy on a subsequent occasion or a waiver of any other right or remedy. Comment: This is a standard commercial contract provision. 23.6 Severability. A finding that any provision of the Contract is invalid or unenforceable in any jurisdiction will not affect the validity or enforceability of any other provision of the Contract or the validity or enforceability of that provision in any other jurisdiction.

Comment: 1. Section 23.9 requires that litigation will be in Michigan courts under Michigan law. This is consistent with most industry terms, although that is changing as the industry changes. It may be appropriate for the parties to choose a different state and there is no inherent advantages to Buyer or Seller tied to the state chosen, except that it is likely that a Michigan court will have greater experience with automotive supply chain disputes than courts elsewhere and, likewise, there is considerably more legal precedents on automotive supply chain issues in Michigan than elsewhere. 1. The GTCs do not provide for arbitration or other formal or informal dispute resolution mechanisms. In the drafters’ experience, there are both advantages and disadvantages to litigation vs. alternative mechanisms, which can be explored with counsel. If alternative mechanisms are desired, appropriate provisions should be added.

Comment: This is a standard commercial contract provision. 23.7 Interpretation. When used in these GTC, “including” means “including without limitation,” and terms defined in the singular include the plural and vice versa. Comment: This is a standard commercial contract provision. 23.8 Notices. Any notice or other communication required or permitted in the Contract must be in writing and delivered by means and to the person(s) commercially reasonable under the circumstances. Notice will become effective on the date of actual