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General Terms of Delivery and of Business

GENERAL TERMS OF DELIVERY AND OF BUSINESS OF DAUM ELECTRONIC GMBH

The present terms of business apply exclusively to our business transactions, and do not apply to our transactions with private consumers; the legal provisions in force apply to the later.

I. SCOPE OF THESE TERMS, LIMIT OF LIABILITY

1. The extend and details of our obligations are governed by the present terms of business. These terms of business apply also for all future business transactions, even if they are not expressly stated therein. These terms of business will be considered as approved at the latest at the moment of reception of our goods or services. Any modifications proposed by the customer referring to his own terms of business or terms of purchase are here expressly rejected, and will only apply if they were approved by us in writing. Any variations in the present delivery and warranty conditions will only be in effect if we approve them in writing.

2. Our offers are subject to change and are non-binding. The contract will be considered valid only after it is confirmed by us in writing or verbally by telephone. This applies also to extensions, modifications, and/or to additional agreements.

3. Bidding documents, e.g. drawings, figures, previous deliveries, weight, and other specifications, etc. are to be considered as approximate values, and will only become binding after they are expressly agreed upon in writing.

4.  The ownership and the copyright of all the documents included with the offer remain with us. These documents may not be divulged to a third party, and must be immediately returned to us upon request, particularly if the contract is not awarded to us.

5. Our sales employees and dealer representatives are not entitled to conclude verbally any additional agreement, or to verbally make any promise, that extend beyond the scope of the written contract or that contradict its terms. Such additional agreements and promises will only be effective after they are approved in writing by our management.

II. PRICE AND PAYMENT CONDITIONS

1. Unless expressly provided otherwise, we are bound by the prices specified in our offers for a period of 30 days starting at the date indicated on them. These prices are specified ex factory and do not include the applicable legal taxes.

2. The packaging and shipment costs are charged to the account of the customer. we will also be compensated for the packaging costs even when these packaging must be returned to us according to the applicable laws and regulations. We will have the freedom to choose the type of packaging and of shipment, unless otherwise agreed upon.

3.  The invoices must be paid without delay and without deductions upon delivery.

4.  When a customer is in arrears with a partial payment for a period exceeding two weeks, or if we have reasonable doubts in his creditworthiness or willingness to fulfil the payment, as a consequence to corresponding facts (e.g. the introduction of legal means of execution or the application for bankruptcy proceeding), the whole remaining amount due will be payable immediately. If the customer whose payment is due is in arrears, he will not be entitled to warranty claims, to the extend that the amount due is proportional to the cost of the removal of the defects.

5. When a payment deadline is exceeded, we will apply the usual interest and cost for money loans to an amount corresponding to that applied by private banking institutions, while preserving our claims, without that a formal summons be needed. A charge will be applied for every summons to the flat rate of € 3.50.

6. Payment retentions and / or set-off because of any counterclaims of the customer are excluded, to the extend that the counterclaims are not disputed or legally established.

III. TERMS OF DELIVERY

1. The agreed delivery deadlines will only be implemented after all the technical details will have been settled. We reserve the right to execute partial shipments.

2.  A timely shipment is the sufficient condition for the respect of a delivery deadline. When the customer is responsible of picking up the delivery object on our premises, a timely notification of the readiness for shipment is the sufficient criteria for the fulfilment of our obligations.

3.  The delivery period agreed upon will be extended should any unpredictable events occur, where the extension will be commensurate with the events, whether the events occur in our factories or at one of our subcontractors. The following events can particularly be considered possible delay causes: factory operating failures, strikes, rejected production batches, as well as delayed delivery of the required raw materials and/or components.

4.  If a delivery cannot be effected as planned for a reason that is the responsibility of the customer, we will be entitled to charge the customer for the storage costs, to an amount of at least 0.5% of the invoice value, for every month of storage. The customer will be entitled to prove that the actual cost were lower than charged. At the expiry of an appropriate extension period we will be entitled to withdraw from the contract and to demand the payment of a damage compensation. The damage compensation for non execution amounts to a blanket value of 15% of the net buying price agreed upon, as long as the customer does not provide the proof that the value of the damage is lower. We reserve the right to charge a value higher than the blanket value when justifiable by proof.

5.  If the delivery is delayed relative to the delivery period agreed upon due to a fault on our side, the customer is then entitled to withdraw from the contract at the expiry of an extension period to be defined in writing and amounting to at least 6 weeks. Claiming any damage compensation is excluded, unless the failure concerns essential contract duties (gross errors), or intentional personal injuries, or in the case of deliberate or grossly careless (negligent) behaviour. If the delivery were already partially effected, the customer will be entitled to demand a damage compensation instead of the whole service (delivery) only if this is required by his interest in the whole service. Withdrawing from the whole contract is in this case only possible when the customer can prove that he has no justifiable interest in a partial service.

6.  Our obligations void if the buyer is in arrear with a commitment towards us.

IV. TRANSFER OF RISK

1.  The risks are transferred to the buyer when the delivery item – and parts of this item – has already left our factories. This applies also for deliveries effected by our own vehicles or for deliveries effected free of freight and package costs, and also in the case that we are responsible of the assembling, installation or other performances (services).

2. If the expedition is delayed consequently to circumstances that are outside of our responsibilities, the risk will be transferred to the customer as soon as we informed him in writing of the readiness of the shipment.

3. Upon request of the customer the goods will be covered by an insurance against damages due to accidents, fire, water, and transport at the expenses of the customer. The insurance costs will be charged to the customer at their self price.

V. WARRANTY /   DAMAGE COMPENSATION

1. We guaranty that our products are free of defects, particularly manufacturing and/or material defects.

2. We will correct any problem pertaining to the above categories, while all customer’s claims not related to those categories are excluded from any repair services provided by us. We reserve the right, if the cost of the repair work is disproportional, to exchange the product with another product of the same type and value at our own discretion. Should the repair itself fail again after an adequate period of grace, the customer will be entitled to demand a decrease (reduction of the buying price) or, at his choice, to withdraw from the contract, as long as the customer would have notified us with a proper period of advance notice.

3. We provide a warranty on our product for a period of one (1) year starting at the transfer of perils. When warranty services are provided, the customer shall assume the transport and shipment costs. Any claim related to transport, shipment, labour, and material costs are excluded. This is particularly true when the expenses increase because the delivered product has been subsequently moved to another location than the place of fulfilment.

4. All other warranty claims, specially claims for the compensation of direct or indirect damages, or damage to a third party, and also claims for damages to third parties or to other objects, as well as of damages due to failure, and of labour costs, are expressly excluded to the extend authorised by law.

5. We decline any responsibility for any wear occurring through normal utilisation. The warranty will be considered null and void if our instructions for mounting and utilising the device are not respected, or if any modification was made to the device without our prior approval.

6. It is the customer's responsibility to check each one of our deliveries immediately upon reception. Any complaints about missing or defective parts must each be immediately submitted in writing. Hidden defects must be reported immediately at their detection.

7. We do not guarantee that the delivered product will be suitable for the usage intended by our customer. Divergent or extended agreements need to be expressly confirmed in writing.

8. Any technical advice provided by us is formulated according to the best of our knowledge and in good faith, based on our own experience and testing. We do not assume any responsibility for these services, unless essential contract obligations are not fulfilled (cardinal duties) or personnel injuries occur consequently to a negligence, or serious negligence can be proven on our part.

9. The legal rights of recovery of the customer against us are only valid to the extend that the customer and his end user did not conclude an agreement exceeding the legal claims for defects.

10. Any extended claims by the customer, particularly for damages compensation, are excluded, unless nothing else arises. We are also not liable for damages that happen to other objects than the delivered product, particularly, we are not liable for consequential damages caused by a defect, for lost income, and other financial losses of the customer, or for unpredictable untypical damages. These exclusions of liability do not apply when the damage is caused by premeditation or serious negligence, or in the case of physical or health injuries.

VI. RESERVATION OF PROPRIETARY RIGHTS / SECURITIES

1. Until all our obligations towards the customer are fulfilled, obligations that we are bound to fulfil for every actual legal ground or that can arise in the future, we are assured of the following securities, that can be released upon demand of the customer at his own choice, as long as their value exceed our obligations by more than 20%.

2. The goods remains our property. Manipulation or modification take always place for us as manufacturer, however without commitment on our part.

3. The customer is entitled to process and to dispose of the reserved goods into his business operations in the normal way, as long as he is not delayed in his payment to us. Hypothecation or alienation of securities are not authorised. The customer will hand over all obligations resulting from the reselling or another legal ground (insurance, illegal activities) related to the reserved goods (including the whole account balance from the current account) to us preventively in whole now. We empower the customer irrevocably to debit the obligations handed over to us on our invoice in his own name. We can revoke the debit authorisation if the customer does not meet his payment obligations.

4. if a third party would have access to the reserved goods the customer will have to point out our property and inform us immediately.

5. In the event that the customer would take action in breach of the contract – particularly delaying payment – we are entitled to take back the reserved goods or, where applicable, to demand the surrender of the delivery right of the customer towards a third party. Reclaiming or seizure of the reserved goods by us does not imply a retirement from the contract.

6. furthermore, the customer must provide a guaranty for our claims related to his particular business by means of a guaranty which is absolute, irrevocable, and unlimited in time from a bank or a savings bank, to the amount of gross contract value, if we consider this required based on the singularities of the particular case, where we will make the decision at our discretionary will (§ 315 of the German Civil Code). We are also entitles to demand such a security also after the conclusion of the contract until the complete payment of the corresponding invoice.

VII. CONSTRUCTION AND DESIGN MODIFICATIONS

We reserve the right to modify our products in construction and design anytime. We have no obligation to apply the same modifications to already delivered products.


VIII. LIMITATION OF LIABILITY

Claims for damage compensations, based on any legal ground, against us as well as against our fulfilment and execution partners are excluded, unless the situation involves the breach of essential contractual duties (cardinal duties) or intentional personal injuries or in the case of deliberate or grossly careless (negligent) behaviour. This does not apply to indebted pre-contractual breach of duty.

IX. APPLICABLE LAW, PLACE OF JURISDICTION, WRITTEN FORM

1.  For the present business conditions and for the global legal transactions between us and the customer the laws of the Federal Republic of Germany shall apply, with the exclusion of the UN Convention on Contracts for the International Sale of Goods (CISG) (of 11/04/1980 )

2. The requirement of the written form apply for the whole business relationship. Should a clause of these business conditions or a clause within other agreements become ineffective, the effectiveness of all other clauses or agreements shall remain unaffected. The ineffective clause shall be replaced by an effective clause that comes the closest to the intended arrangement.

3. Insofar as the customer is a dealer, contractor, legal person, or a fund assets governed by public law, Fürth is the exclusive place of jurisdiction for all disputes arising directly or indirectly from the contractual relationship. The place of execution is Fürth.

X. POSTAL ADDRESS

Daum Electronic GmbH, D – 90768 Fürth, Flugplatzstr. 100,

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