Quality Control Tests. Until the parties execute the Quality Agreement, this Section 7.1 shall govern quality control; once the Quality Agreement is executed, it shall supplant this Section 7.1 in its entirety. (a) Every Batch of Product supplied by Supplier shall be delivered in accordance with ARTICLE V, subject to Purchaser’s inspection, and may be rejected if any such Product fails to conform with any warranty of Supplier, the Specifications, or the other requirements set forth herein; provided, however, that Purchaser shall bear the cost of loss if the Product met all Specifications but was determined not to comply with Applicable Law. Such a rejection shall be communicated to Supplier within [***], from the later of (i) the date of packaging of such Product, or (ii) [***] from delivery of such Product, and will provide sufficient detail for the reasons for such rejection to permit Supplier to investigate the alleged non-conformity. Supplier shall not be deemed to be at fault if the Product met the applicable Specifications or if Raw Materials provided by Purchaser or a supplier mandated by Purchaser (as provided for in Section 3.4, provided that Supplier is compliant with its obligations under Section 3.4) were the reason for the non-conformity. Purchaser shall be deemed to have accepted each Batch in a shipment of Product if Supplier does not receive notice to the contrary within such [***] as set forth in this Section 7.1(a). In addition, and notwithstanding the foregoing, Purchaser will have the right to reject a Batch or part thereof, upon notice to Supplier, if Purchaser discovers any latent defects in a Batch or part thereof. If Purchaser rejects any Batch or part of a Batch, the Parties shall review the samples, Batch records and other information, as appropriate, to determine whether Supplier is at fault for any such non-conformity. If Supplier is deemed to be at fault, it shall replace the non-conforming Product at no further cost to Purchaser, and it shall reimburse Purchaser for all costs associated with the return and replacement of the non-conforming Product. If there is a disagreement between the Parties as to whether any Product conforms to the requirements of this Agreement, then samples, Batch records and other information, as appropriate and available, from the Batch in dispute will be submitted for testing and evaluation to an independent qualified testing laboratory agreed to by both Parties. The Parties agree that any testing method used by an independent qualified testing laboratory shall be reviewed to determine if it is fit for purpose and compliant with Good Manufacturing Practice Regulations. The Parties also agree that specification limits may from time to time be modified to reflect true process capabilities. Both Parties must agree to a Specification change. The determination of such laboratory as to conformance will be binding upon the Parties. If it is determined by such laboratory that the Product conformed to the requirements herein, the cost of any testing, evaluation by the testing laboratory and the total invoice value of the Product in question will be borne by Purchaser. If the Product is determined to have been non-conforming due to a failure of an obligation imposed by this Agreement on Supplier, the cost of any testing and evaluation by the testing laboratory will be borne by Supplier, Supplier shall replace the non-conforming Product at no further cost to Purchaser, and Supplier shall reimburse Purchaser for all costs with the return and replacement of the non-conforming Product. Notwithstanding anything to the contrary herein, no inspection or acceptance by Purchaser or its agents of the Products shall operate as a waiver of or limitation on Purchaser’s right to later reject Product under the terms hereof. (b) Subject to Purchaser’s reasonable written request and at Purchaser’s sole cost and expense, and pursuant to Purchaser’s quality specifications, which are codified in the Supplier’s quality management system, prior to releasing Products satisfying Purchase Orders hereunder, Supplier shall deliver to Purchaser a representative sample of Products from each production lot (“Pre-Delivery Samples”) for inspection by Purchaser, and copies of the corresponding Batch Records and quality assurance testing records. Upon receiving such a request for Pre-Delivery Samples, Supplier shall not release any Products satisfying Purchase Orders until Purchaser has accepted the Pre-Delivery Samples; provided, however, that Purchaser shall be deemed to have *** Certain information on this page has been omitted and filed separately with the SEC. Confidential treatment has been requested with respect to the omitted portions. accepted the Pre-Delivery Samples if Supplier does not receive written notice to the contrary within [***] of Purchaser’s receipt of the Pre-Delivery Samples. In the event that Purchaser requests Supplier to deliver Pre-Delivery Samples on a pending Purchase Order, Purchaser will adjust the agreed upon delivery date for the Products under such Purchase Order; however, unless the Parties otherwise agree in writing, Supplier shall deliver the Products to Purchaser as specified in each Purchase Order within the earlier of (i) [***] after Supplier receives written notice of Purchaser’s acceptance of the Pre-Delivery Samples or (ii) within [***] of Purchaser’s receipt of the Pre-Delivery Samples, if Purchaser does not provide written notice of acceptance of such Pre-Delivery Samples within the period set forth in this Section 7.1(b).
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Sources: Supply Agreement
Quality Control Tests. Until the parties execute the Quality Agreement, this Section 7.1 shall govern quality control; once the Quality Agreement is executed, it shall supplant this Section 7.1 in its entirety.
(a) Every Batch of Product supplied by Supplier shall be delivered in accordance with ARTICLE V, subject to Purchaser’s inspection, and may be rejected if any such Product fails to conform with any warranty of Supplier, the Specifications, or the other requirements set forth herein; provided, however, that Purchaser shall bear the cost of loss if the Product met all Specifications but was determined not to comply with Applicable Law. Such a rejection shall be communicated to Supplier within [***], from the later of (i) the date of packaging of such Product, or (ii) [***] from delivery of such Product, and will provide sufficient detail for the reasons for such rejection to permit Supplier to investigate the alleged non-conformity. Supplier shall not be deemed to be at fault if the Product met the applicable Specifications or if Raw Materials provided by Purchaser or a supplier mandated by Purchaser (as provided for in Section 3.4, provided that Supplier is compliant with its obligations under Section 3.4) were the reason for the non-conformity. Purchaser shall be deemed to have accepted each Batch in a shipment of Product if Supplier does not receive notice to the contrary within such [***] as set forth in this Section 7.1(a). In addition, and notwithstanding the foregoing, Purchaser will have the right to reject a Batch or part thereof, upon notice to Supplier, if Purchaser discovers any latent defects in a Batch or part thereof. If Purchaser rejects any Batch or part of a Batch, the Parties shall review the samples, Batch records and other information, as appropriate, to determine whether Supplier is at fault for any such non-conformity. If Supplier is deemed to be at fault, it shall replace the non-conforming Product at no further cost to Purchaser, and it shall reimburse Purchaser for all costs associated with the return and replacement of the non-conforming Product. If there is a disagreement between the Parties as to whether any Product conforms to the requirements of this Agreement, then samples, Batch records and other information, as appropriate and available, from the Batch in dispute will be submitted for testing and evaluation to an independent qualified testing laboratory agreed to by both Parties. The Parties agree that any testing method used by an independent qualified testing laboratory shall be reviewed to determine if it is fit for purpose and compliant with Good Manufacturing Practice Regulations. The Parties also agree that specification limits may from time to time be modified to reflect true process capabilities. Both Parties must agree to a Specification change. The determination of such laboratory as to conformance will be binding upon the Parties. If it is determined by such laboratory that the Product conformed to the requirements herein, the cost of any testing, evaluation by the testing laboratory and the total invoice value of the Product in question will be borne by Purchaser. If the Product is determined to have been non-conforming due to a failure of an obligation imposed by this Agreement on Supplier, the cost of any testing and evaluation by the testing laboratory will be borne by Supplier, Supplier shall replace the non-conforming Product at no further cost to Purchaser, and Supplier shall reimburse Purchaser for all costs with the return and replacement of the non-conforming Product. Notwithstanding anything to the contrary herein, no inspection or acceptance by Purchaser or its agents of the Products shall operate as a waiver of or limitation on Purchaser’s right to later reject Product under the terms hereof.
(b) Subject to Purchaser’s reasonable written request and at Purchaser’s sole cost and expense, and pursuant to Purchaser’s quality specifications, which are codified in the Supplier’s quality management system, prior to releasing Products satisfying Purchase Orders hereunder, Supplier shall deliver to Purchaser a representative sample of Products from each production lot (“Pre-Delivery Samples”) for inspection by Purchaser, and copies of the corresponding Batch Records and quality assurance testing records. Upon receiving such a request for Pre-Delivery Samples, Supplier shall not release any Products satisfying Purchase Orders until Purchaser has accepted the Pre-Delivery Samples; provided, however, that Purchaser shall be deemed to have *** Certain information on this page has been omitted and filed separately with the SEC. Confidential treatment has been requested with respect to the omitted portions. accepted the Pre-Delivery Samples if Supplier does not receive written notice to the contrary within [***] of Purchaser’s receipt of the Pre-Delivery Samples. In the event that Purchaser requests Supplier to deliver Pre-Delivery Samples on a pending Purchase Order, Purchaser will adjust the agreed upon delivery date for the Products under such Purchase Order; however, unless the Parties otherwise agree in writing, Supplier shall deliver the Products to Purchaser as specified in each Purchase Order within the earlier of (i) [***] after Supplier receives written notice of Purchaser’s acceptance of the Pre-Delivery Samples or (ii) within [***] of Purchaser’s receipt of the Pre-Delivery Samples, if Purchaser does not provide written notice of acceptance of such Pre-Delivery Samples within the period set forth in this Section 7.1(b).
(c) Purchaser shall supply the Specifications for each Product and Supplier must meet all applicable Specifications for the production and supply of the Product, subject to the terms of this Agreement, including Section 3.6. Supplier agrees to conduct, at its expense, all testing on the Products that is required for the manufacture of the Product by Applicable Law, including, but not limited to, stability testing. In addition, all Products are subject to Purchaser’s Product Specification verification which shall be conducted at an independent laboratory at Purchaser’s sole cost and expense, and shall be completed within ten (10) business days (which period may be extended upon mutual agreement of the Parties). The charges will vary depending on the type of ingredients and the number of ingredients being tested. If a Product fails testing, the Product will be rejected, in addition to any other remedies available to Purchaser under this Agreement.
(d) Supplier agrees to provide Purchaser a Supplier BOM at the time of new Product sampling and with every iteration thereafter until final formulation approval by Purchaser (new, reform, flavor extension). With regard to specifications, the Parties agree that all Raw Materials specifications will be supplied to Supplier by Purchaser for any ingredients, and that packaging specifications will be supplied by Purchaser for any packaging components including, without limitation, the labels.
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