Elements of a Contract
for Precious Metal Refining
by John Bullock, Attorney
as presented at the International Precious
Metals Institute 25th Annual Conference,
11 June 2001, Tucson, Arizona, USA
ABSTRACT
A precious metal refining transaction involves material of great value, placed
by one party into the hands of another. The
rights of the parties, the ownership of the material as it is being processed,
and the competing interests of banks and other customers and creditors are
issues of both fact and law, but will often be determined by the terms of the
contract between refiner and customer. A
contract should identify the parties, the material, the services to be
provided, the ownership of the material, and the compensation to be paid. It
should be clear, be understood, and provide for efficient resolution of
disputes.
INTRODUCTION
There is no absolute need for a written contract between a generator of
precious metal-bearing material and the refiner or processor which will
extract the precious metals, or begin the process. The parties can go about
their business with a general understanding of what each will do, how they
will do it, when they will do it, and what the results will be.
They can hope for the best. In
fact, if a generator and refiner engage in business this way, they have a
contract. It is at least an oral
contract, limited in its terms, but nevertleless a contract – an exchange of
promises or obligations in which services are performed and goods exchanged
for valuable consideration.
A more likely scenario
may be that the parties have a written contract, but do not think of it as
such. They have exchanged
correspondence and other papers which contain statements of their expectations
and promises – such as descriptions of precious metal-bearing material to be
offered, services to be provided, a formula for compensation.
The statements may be somewhat vague, and may be contracdictory.
A term in, or on the back of, one paper may negate the term of another,
only to be contradicted and negated by a third.
Such a collection of papers, or some of them, may constitute a written
contract between the parties, specifying their rights and obligations in one
or more transactions.
The more rational
approach to a transaction involving a great deal of valuable material is for
the parties to understand from the outset what they are doing, who will do
what, when, where, with what results, for what compensation. That understanding should be in writing, both so that the
parties can be reasonably sure of what the understanding is on any particular
point, and so that they can refer back to any particular point if it should
become necessary. And,
importantly, so that a third party can refer to any particular point, and
understand it in the context of the entire undertaking.
Because if something should go arrwy in the course of the transaction,
a third party may become involved – a bank, another customer or trade
creditor, a court. It will then
be particularly important that the terms and conditions under which a
transaction has taken place be understood.
A thind party can, and will if necessary, find those terms and
conditions in an oral contract, supplemented by a course of dealing and
industry practices, or from a collection of papers.
But it will be much to the advantage of all of the parties if the
understanding can be derived from a single document which clearly expresses
the agreement between the parties to the transaction.
WHAT YOU CAN NOT DO WITH
A CONTRACT
It is important to know what can be done with a contract, but also important
to know what can not be done. First,
the parties can not change a law. They
may be able to create circumstances which conform to one law or to another,
but they can not re-write a law. Thus,
for example, the parties can not, by a contract, decree that the laws of
bankruptcy, or of secured property, will not be applicable.
The parties can define their relationship, and their rights as to one
another. But they can not deprive
another party of its rights. They
can limit the ability of another to obtain rights which would interfere with
their own rights and expectations, and they can clarify circumstances in which
the rights of another may apply or be affected, but they can not redefine,
between themselves, the existing rights of another person.
And, of course, the parties may not have the business freedom, even if
they have the legal right, to grant certain contractual rights. It may be perfectly legal to give a customer a priority above
a bank, but if the refiner needs the financial assistance of a bank more than
of that customer, the bank will be given priority in its contracts with the
refiner.
MODEL CONTRACT
This paper offers a model agreement, not for direct, fill-in-the-blanks use,
but to identify some of the parts of a transaction which require attention by
the parties. A model, by its
nature, is not perfect for every transaction. The model in this paper is
offered as the framework for discussion. If the model were to be used for an
actual transaction, without consideration, the parties to that transaction
would not have a sound understanding of what they had done, and the result
might be not much different than if they had an oral contract or collection of
disjointed papers. The
appropriate use of this agreement is to facilitate understanding, so that the
parties to a transaction can craft their own terms and conditions, so that the
transaction will meet their expectations.
1. PURPOSE AND NATURE OF THIS AGREEMENT
1A.
Relationship of Parties.
1B. Parties are Merchants.
1C. No Requirement of Dealing.
1D. Bailment and Toll Refining.
2. NATURE AND DESCRIPTION OF GENERATOR MATERIAL
2A.
Description of Precious and Base Metal Content.
2B. Hazardous Substances and
Other Content; Prohibited Materials.
2C. Hazardous Waste.
3. TENDER OF GENERATOR MATERIAL TO PROCESSOR
3A.
Generator Warranty of Good Title.
3B.
Packaging.
3C.
Documents Accompanying Shipment.
3D.
Transportation
4. RECEIPT OF GENERATOR MATERIAL BY PROCESSOR
4A.
Processor Procedure on Receipt.
4B.
Acceptance by Processor.
4C.
Rejection of Nonconforming Material.
4D.
Generator Representation.
5. PROCESSING OF GENERATOR MATERIAL BY PROCESSOR
5A.
Schedule of Processing.
5B.
Homogenizing of Generator Material; Post-Processing Weight.
5C.
Sampling.
5D.
Generator Representation.
6. SETTLEMENT
6A.
Assay; Determination of Quantity of Precious Metal.
6B.
Determination of Processor Charges and Deductions.
6C.
Notification to Generator; Exchange of Assays; Agreement or
Dispute.
6D.
Settlement; Change of Title.
(a) Physical
Delivery to Generator
(b) Credit
to Generator=s
Metal Account(s)
(c) Payment
in United States currency
6E.
Change of Title
6F.
Slag and Extraneous Material.
6G.
Settlement Statement
7. PROCEDURE FOR ADVANCE
COMPENSATION
8. DISPUTES AND REMEDIES
8A.
Disputes as to Amount of Generator Material Received by
Processor.
8B.
Disputes as to Settlement Assay.
8C.
Other Claims and Disputes - Arbitration.
8D.
Damages.
9. WARRANTIES AND EXCLUSIONS
9A.
Warranties Regarding Hazardous Substances.
9B. Other Warranties
10. MISCELLANEOUS PROVISIONS
10A.
Right of Set-off
10B.
Force Majeure.
10C.
Assignment.
10D.
Severability.
10E.
Interpretation and Applicable Law.
10E.
Exclusivity and Entirety of Agreement.
10F.
Notices and Communications; Telephone Recording
11. Authorized Signatures
APPENDIX B, PROCESSOR FACILITIES ACCEPTABLE
APPENDIX C, PROCESSING FEES AND CHARGES
APPENDIX D, RECEIVED WEIGHT DISPUTE LIMIT
APPENDIX E, ASSAY SPLITTING PROCEDURES AND LIMITS
APPENDIX F, APPROVED UMPIRES
APPENDIX G, APPROVED REPRESENTATIVES
APPENDIX H, METAL DELIVERY
MODEL AGREEMENT FOR PRECIOUS
METAL REFINING
This
Agreement between (“Processor”)
and (AGenerator@)
is effective from
to .
1. PURPOSE AND NATURE OF
THIS AGREEMENT
1A.
Relationship of Parties.
Generator owns certain material which contains, or is reasonably expected
to contain, specific precious metals, and is hereinafter referred to in this
Agreement as AGenerator
Material.” Processor treats,
samples, assays and refines precious metal-bearing material and precious
metals, and has the specific capability of processing Generator Material in
the manner described in this Agreement. The
parties intend, pursuant to this Agreement, that Processor will receive,
process, sample and assay Generator Material, that Generator will compensate
Processor for such services, and that Processor will return to Generator, or
purchase, precious metals contained in Generator Material.
1B.
Parties are Merchants.
Generator and Processor are merchants engaged in businesses involving
precious metals. Transactions
which are intended to be carried out pursuant to this Agreement are in the
ordinary course of business for each of the parties.
1C.
No Requirement of Dealing.
This Agreement describes the terms and conditions applicable to one or
more precious metal refining transactions between Generator and Processor
during its effective period. This
Agreement does not, however, create a requirement that Generator tender or
deliver any specific amount of Generator Material to Processor during the
effective term set forth above.
1D.
Bailment and Toll Refining.
Each transaction covered by this Agreement is a true bailment and toll
refining or processing operation, in which title to a specific, identified
batch of Generator Material, although placed into the possession of Processor,
will remain with Generator until such time as (1) the batch of Generator
Material has been sampled and assayed, (2) Processor and Generator have agreed
upon the quantity of precious metal contained in the batch, and (3) Processor
has fully compensated Generator for such metal according to the terms of this
Agreement. Processor will not
comingle or combine Generator Material with any other material belonging to
any other person, will not change the location of Generator Material (other
than movement within the same facility), and will not change its identity or
identification as Generator Material, until such time as Processor takes title
in accordance with this Agreement.
2A.
Description of Precious and Base Metal Content.
Generator will advise Processor of the nature of the Generator Material,
in Appendix A, including the specific precious metals and base metals which
Generator reasonably expects the Generator Material to contain and for which
an assay should be performed.
2B.
Hazardous Substances and Other Content; Prohibited Materials.
Because processing of Generator Material by Processor may create
conditions potentially hazardous to human health, Generator will provide to
Processor, in Appendix A or in any case before delivery of Generator Material
to Processor, a complete and accurate description of the nature and extent of
all substances in Generator Material that may be considered toxic or hazardous
to human health under the Occupational Safety and Health Act (OSHA). This obligation may be satisfied by provision to Processor of
a material safety data sheet for Generator Material which conforms to the
requirements of OSHA Hazard Communication (as set forth in the Code of Federal
Regulations, Title 29, Section 1910.1200).
PROCESSOR WILL NOT ACCEPT ANY MATERIALS CONTAINING THE PROHIBITED
SUBSTANCES LISTED IN APPENDIX A ABOVE THE LEVELS AND CONCENTRATIONS AS LISTED.
2C.
Hazardous Waste.
Generator Material may be classified by Generator, by Processor, or by
local, state, federal or international law, regulation or ordinance as
hazardous waste. Such Generator
Material will be appropriately managed in accordance with applicable law by
Generator and by Processor, and Processor warrants that it is legally entitled
to receive, accept and process Generator Material with such classification.
3. TENDER OF GENERATOR MATERIAL TO PROCESSOR
3A.
Generator Warranty of Good Title.
Generator
warrants that it is the owner of Generator Material, or is the
duly
authorized agent of the owner of Generator Material (which owner shall
be identified
in Appendix A), and has the right and capacity to deliver and
transfer
Generator Material to Processor free of all liens and encumbrances,
and will hold
Processor harmless against any claims by third parties
regarding
title to Generator Material.
3B.
Packaging.
Generator will tender each shipment of Generator Material to Processor
properly packaged and labeled in accordance with the Hazardous Materials
Transportation Act, and regulations of the United States Department of
Transportation set forth in the Code of Federal Regulations, Title 29. parts
171-179.
3C.
Documents Accompanying Shipment.
Generator will tender each shipment of Generator Material to Processor
together with such shipping papers or manifests as are appropriate and
required for lawful transfer of possession of Generator Material to Processor.
Shipping papers must include, at least, a general description, number
of containers and gross, tare and net weights of the shipment. If Generator
does not provide such information, information determined by Processor at the
time of receipt will prevail in all subsequent actions and purposes. (See Disputes as to Amount of Generator Material Received,
Paragraph 8A below.)
3D.
Transportation
Generator
will tender Generator Material to Processor at the facility or
facilities
of Processor shown on Appendix B. Generator
will bear the risk of
loss of
Generator Material during transit to such Processor facility, as well as
charges for
freight, insurance, taxes and fees of all kinds incurred in the
course of
transit.
4. RECEIPT OF GENERATOR
MATERIAL BY PROCESSOR
4A.
Processor Procedure on Receipt.
Upon
receipt of a batch of Generator Material by Processor at its facility,
Processor
will observe and identify Generator Material, count and weigh all
containers,
and notify Generator of the shipment=s
arrival, general
description, container count and gross, tare and net weights (the AProcessor
Acknowledgement@).
However, if Processor has been advised by
Generator,
in writing, in advance of receipt of Generator Material by
Processor,
of Generator=s
request to witness the opening, initial observation
and
weighing of Generator Material, the Processor Acknowledgment to
Generator
will not include general description and weights. (See Generator
Representation, Paragraph 4D below)
4B.
Acceptance by Processor.
Processor
will accept Generator Material which conforms to the descriptions
of
Generator Material set forth in Appendix A and provided to Processor
pursuant to
Paragraph 2B, and which conforms to the advice given to
Processor
in the documents and shipping papers accompanying the
shipment.
Processor reserves the right to revoke its acceptance if, at any
subsequent
time, it discovers that such Generator Material does not conform
to such
descriptions and advice.
4C.
Rejection of Nonconforming Material.
Processor
may reject all or part of a shipment of Generator Material which
does not
conform to the descriptions of Generator Material set forth in
Appendix A
and provided to Processor pursuant to Paragraph 2B, or to the
advice
given to Processor in the documents and shipping papers
accompanying the shipment. Processor,
at Generator=s
expense, shall
arrange for
return of such nonconforming Generator Material to Generator.
If
Processor rejects only part of a shipment of Generator Material as
nonconforming, Generator shall have the option to have the entire shipment
returned,
including any portion of such shipment which does conform.
4D.
Generator Representation.
If
Processor has been advised by Generator, in writing, in advance of receipt
of
Generator Material by Processor, of a request to witness such steps,
Processor
will permit Generator or its representative, at Generator's
expense, to
witness the opening, initial observation and weighing of all
Generator
Material. (See also Generator
Representation, Paragraph 5D
below.)
A Generator representative permitted under this paragraph may
only be a
person employed by one of the companies listed in Appendix F,
and must at
all times comply with Processor’s work rules and safety
procedures.
5. PROCESSING OF GENERATOR
MATERIAL BY PROCESSOR
5A.
Schedule of Processing.
Processor
will process Generator Material in an expeditious manner, as its
resources
and other business permit. Processor
will advise Generator of an
estimated
date by which processing will be accomplished, and by which
settlement
(as set forth in Section 6 below) may proceed.
Processor will not
be strictly
bound by such estimate, and will not be required to allocate any
specific
resources to meet that date. Any
estimated date for processing or
settlement
will be automatically postponed by delays caused by Generator’s
request for
or scheduling of representation.
Processor
will process Generator Material in a manner determined by
Processor
to be most efficient for and suitable to its homogenization,
sampling
and refining, based upon the amount, nature and characteristics of
Generator
Material. Following such
processing Processor will weigh all
homogenized
Generator Material (the APost-Processing
Weight@).
Slag
and
extraneous material contained in Generator Material and/or arising in the
course of
processing by Processor will not be included in the
Post-Processing Weight. (See Slag and Extraneous Material, Paragraph 6E
below.)
Processor will extract from homogenized Generator Material one or more samples
which are representative of the entire batch of Generator Material.
If Processor has been requested by Generator, in writing, in advance of
receipt of Generator Material by Processor, a portion of such sample(s) will
be provided by Processor to Generator (the AGenerator
Sample@)
and deducted from the Post-Processing Weight, and Processor will also reserve
an additional portion for subsequent use by an umpire.
If Generator does not request and obtain a Generator Sample, either
pursuant to this paragraph or pursuant to Generator Representation, Paragraph
5D below, Generator will have no claim or dispute regarding the Settlement
Assay. (See Disputes as to
Settlement Assay, Paragraph 8B below.)
If
Processor has been advised by Generator, in writing, in advance of receipt
of
Generator Material by Processor, of a request to witness such processing
steps,
Processor will permit Generator or its representative, at Generator's
expense, to
witness the homogenizing processes, post-processing weighing
and
sampling of Generator Material, and to receive a part of the sample from
Generator
Material (the A Representative
Sample@),
which sample will be
deducted
from the Post-Processing Weight, and Processor will also reserve
an
additional portion for subsequent use by an umpire.
(See also Generator
Representation, Paragraph 4D above.) A
Generator representative may
only be a
person employed by one of the companies listed in Appendix F,
and must at
all times comply with Processor’s work rules and safety
procedures.
6. SETTLEMENT
6A. Assay; Determination of Quantity of Precious Metal
Processor
will perform an assay or assays upon sample(s) extracted from
Generator
Material for such precious metals as are listed in Appendix A, in
accordance
with its customary assay practices, and will determine from such
assay(s)
the precious metal concentration(s) reasonably scientifically certain
to be
contained in Generator Material (the Settlement Assay).
Such
concentration(s), multiplied by the Post-Processing Weight of Generator=s
material
(reduced by any samples provided to Generator and/or its
representative(s)), will constitute the Generator Material Metal Content.
6B.
Determination of Processor Charges and Deductions
Processor
will charge such fees for all processing of Generator Material and related
services, including homogenization, sampling, assay, and advanced or
protracted credit or return of metal or payment, as are set forth in Appendix
C. When the Generator Material
Metal Content has been determined, Processor will determine such metal
deductions, processing fees and charges related to the specific batch of
Generator Material.
6C. Notification to Generator; Exchange of Assays; Agreement or Dispute.
As
soon as practicable, Processor will notify Generator that it has completed
processing, sampling and assay, and that it is prepared to exchange assay
information with Generator. The parties will exchange assay information by
simultaneous (same business day) deposit in the United States mail.
Processor’s notification will also advise Generator of Processor’s
determination of the Generator Material Metal Content and of metal deductions,
processing fees and charges. If Generator accepts the determinations made by Processor,
the parties will proceed with Settlement; Change of Title as set forth in
Paragraph 6D below. If Generator Assay and Settlement Assay are within the
Splitting Limits set forth in Appendix E, Processor and Generator will split
the difference between the two assays, applying the result as the Settlement
Assay, and will proceed with Settlement; Change of Title as set forth in
Paragraph 6D below. If Generator
Assay and Settlement Assay are not within the Splitting Limits set forth in
Appendix E, Processor and Generator will proceed with Disputes as to
Settlement Assay, Paragraph 8B below.
6D. Settlement; Compensation
After
the Generator and Processor have agreed upon the Generator Material Metal
Amount and upon metal deductions, processing fees and charges, Processor will
compensate Generator as follows (the Settlement):
(a) Physical Delivery to Generator
Processor will convert any processing fees and charges denominated as money to metal equivalent, as of market prices on the business date of settlement (or other date previously agreed upon by the parties), and will deliver the net balance of Generator Material Metal Content to the Generator, in form and at purity levels set forth in Appendix G, at the cost and risk of the Generator;
or
(b) Credit to Generator=s Metal Account(s)
Processor will convert any processing fees and charges denominated as money to metal equivalent as of market prices on the business date of settlement (or other date previously agreed upon by the parties), and will transfer the net balance of Generator Material Metal Content to a metal account of the Generator held by the Processor or by another institution. Any fees and/or charges required by another institution for such credit transfer will be deducted from settlement to the Generator’s account;
or
(c) Payment in United States currency
Processor
will convert the Generator Material Metal Content, less metal deductions, to
US dollars as of market prices on that business date (or other date previously
agreed upon by the parties), deduct processing fees and charges, and transfer
the net dollar balance to a bank account of the Generator. Any fees and/or
charges required for such transfer will be deducted from settlement to the
Generator’s account.
6E. Change of Title.
Upon such return of metal, or metal credit, or money
payment by Processor, title to the Generator Material will pass to Processor.
6F. Slag and Extraneous Material.
Slag
and other specifically identifiable extraneous material contained in Generator
Material and/or arising in the course of processing by Processor will become
the property of Processor, unless Processor has been advised by Generator, in
writing, in advance of receipt of Generator Material by Processor, of a
request to return such slag and extraneous material to Generator, at Generator=s
expense.
6G.
Settlement Statement.
Processor
will issue a statement to Generator setting forth the Settlement Amount, metal
deductions and charges, and return of metal, or metal credit, or money payment
to Generator (the ASettlement
Statement@).
7. PROCEDURE FOR ADVANCE
COMPENSATION
Notwithstanding
the procedures set forth above in Section 6 regarding Settlement, Generator
may request compensation for Generator Material before it has been processed,
sampled and/or assayed. Processor,
upon receipt of such a request, based upon such information as it considers
applicable, may offer advance compensation to the Generator, in the form of
metal or money, based upon market prices on that business date (or other date
previously agreed upon by the parties), with such fees and charges as
Processor deems appropriate, as partial compensation for Generator Material.
If Generator accepts such offer by Processor of advance compensation,
including fees and charges, then, notwithstanding Paragraph 1C above, title to
the entire batch of Generator Material upon which such advance compensation is
based shall pass to Processor upon its payment of such advance compensation to
Generator. Such advance
compensation, and any information or estimates made or used in its calculation
or negotiation, shall not bind either party as to the processing or final
settlement of the Generator Material as set forth in Paragraph 6D, other than
that such final settlement shall be adjusted for such advance compensation.
8. DISPUTES AND REMEDIES
8A. Disputes as to Amount of Generator Material Received by Processor.
Because the amount of Generator Material received by Processor can only be determined by weighing it in its condition as received, and the material will be processed by Processor in ways which will affect the weight of unprocessed Generator Material, any Generator claim or dispute regarding the amount of Generator Material shipped and received must be made and resolved before the Generator Material is processed.
If
Generator has not provided Processor with information, as required in
Documents Accompanying Shipment, Paragraph 3C above, regarding the basic
description, number of containers and gross, tare and net weight of the
Generator Material, Generator shall have no claim or dispute against the
determination of such information by Processor at the time of receipt, and
such information determined by Processor will prevail in all subsequent
actions and purposes.
If
Generator has provided Processor with information, as required in Documents
Accompanying Shipment, Paragraph 3C above, regarding the basic description,
number of containers and gross, tare and net weights of the Generator
Material, and such Generator information differs from information determined
by Processor pursuant to its Procedure on Receipt, Paragraph 4A above, in a
manner or by an amount exceeding the Received Weight Dispute Limit set forth
in Appendix D, Processor shall not process the Generator Material and
Generator and Processor shall attempt, for a period not to exceed thirty (30)
days following receipt by Processor of Generator Material, to resolve the
difference. If Generator and
Processor are unable to resolve such difference, Processor will, at the
expense of Generator, return Generator Material to Generator.
8B. Disputes as to Settlement Assay.
Because
the amount of any precious metal contained in Generator Material can only be
determined by assay of such material, any Generator claim or dispute must be
based upon an assay by or on behalf of Generator of the Representative Sample
or the Generator Sample (the AGenerator
Assay@).
Any Generator claim or dispute with respect to the Settlement Assay
reported by Processor to Generator must be made to Processor in writing not
later than thirty (30) days following the date of the Generator’s receipt of
Notification to Generator, Paragraph 6C.
Such written claim or dispute must advise Processor of the specific
nature of the claim or dispute and of the Generator Assay upon which it is
based. Such a timely filed and
properly based claim or dispute shall be resolved only by the following
procedure:
Processor
will send a portion of the sample taken by it from Generator Material (the AUmpire
Sample@) to
one of the umpires set forth in Appendix F for assay (the AUmpire
Assay@).
The middle of the three assays - Settlement Assay, Generator Assay and
Umpire Assay - will then become the Settlement Assay, and the parties will
proceed with Settlement; Change of Title as set forth in Paragraph 6D below.
Charges for the services of the umpire will be paid by the party whose
assay is farthest from the Umpire Assay.
If the Generator Assay is farther from the Umpire Assay than the
Processor Assay, the weight of the Umpire Sample will be deducted from the
Post Processing Weight.
8C. Other Claims and Disputes - Arbitration.
Except
for claims or disputes with respect to the amount of Generator Material
received, and the Settlement Assay, which can only be resolved pursuant to
Paragraphs 8A and 8B above, any other claim or dispute arising out of or
relating to this contract, or its breach, shall be resolved by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. Such arbitration will be conducted in the English language,
and the venue of such arbitration shall be New York, New York, USA.
No claim or dispute of any kind may be referred to arbitration under
this paragraph later than one year following the initial notification to
Generator of the determination by Processor of the Settlement Amount.
8D. Damages.
In
no event, whether or not a claim or dispute is resolved in accordance with
paragraphs 8A through 8C above, shall Processor be liable for any punitive
damages, incidental damages, special damages or consequential damages or
expenses incurred by reason of any negligence or any breach of warranty or
obligation arising out of or relating to the transaction governed by this
Agreement or any subsequent sale or use of any metal consigned or delivered to
Generator.
9. WARRANTIES AND
EXCLUSIONS
9A.
Warranties Regarding Hazardous Substances.
Processor
warrants that it has the capability to safely manage and process Generator
Material as described by Generator in Appendix A, including such hazardous
substances as are identified in compliance with Paragraph 2B above, and
Processor will protect and hold harmless Generator against any claims which
may arise against Generator because of and from the handling and processing of
Generator Material by Processor. Generator
warrants that it has properly described Generator Material, including
descripion of hazardous substances, and has delivered Generator Material to
Processor in proper packaging and with proper labeling, and Generator will
protect and hold harmless Processor against any claims which may arise against
Processor because of Generator’s failure to properly describe, package and
label Generator Material.
9B.
Other Warranties.
IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ALL
OTHER WARRANTIES, EXPRESSED OR IMPLIED, EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, ARE EXCLUDED FROM AND SHALL NOT APPLY TO THE SERVICES AND
TRANSACTIONS PERFORMED UNDER THIS AGREEMENT.
10. MISCELLANEOUS
PROVISIONS
10A. Right of Set-off
Processor
shall have the right, at any time, without notice, to set off any liability or
obligation of Generator to Processor against any liability or obligation of
Processor to Generator, and as a part of such set-off to convert metal to
money or money to metal at the existing market value on the date of set-off.
10B. Force Majeure.
If
performance of this Agreement by Processor is prevented, interrupted,
hindered, delayed or rendered unduly expensive because of a force majeure,
Processor shall have the right to defer its performance of this Agreement for
as long as such force majeure shall continue.
Events of force majeure shall include but not be limited to fire, war,
riot, acts of God, labor disputes, disruptions of transportation or plant
operations, government action, order or regulation, or lack of energy or raw
materials. If the duration of the
force majeure exceeds a period of thirty (30) days, and the parties cannot
agree upon a new performance schedule, then the performance of this Agreement
will become cancellable by either party upon notice to the other. Processor will return all Generator Material, in whatever
state of processing, to Generator, at the expense of Processor, and Generator
will have no liability for any processing charges incurred with regard to such
shipment of Generator Material.
10C. Assignment.
This
Agreement may not be assigned by either party.
10D. Severability.
Should
any part of this Agreement be found by a court of competent jurisdiction to be
wholly or partly invalid, the remaining paragraphs will nonetheless be valid.
10E. Interpretation and Applicable Law.
The rights and obligations of Processor and Generator hereunder shall be governed by the law of the State of New York, and the parties agree to venue in and jurisdiction of the courts of the State of New York.
10F. Exclusivity and Entirety of Agreement.
This Agreement is the complete and exclusive statement
of agreement between Processor
and Generator regarding all aspects of handling and processing Generator
Material, and regarding the return, compensation and other considerations
exchanged between the parties with regard to Generator Material and its
handling and processing. This
Agreement shall not be modified or amended in any way other than in a complete
new iteration of this Agreement, containing such modifications and amendments,
duly executed by Processor and Generator.
This Agreement supersedes all prior discussions, proposals, quotations,
predictions, estimates of metal content or value, negotiations,
representations and agreements between Processor and Generator or their agents
or representatives. No
purchase order, confirmation of receipt, or acceptance which purports to
change or add to the terms and conditions of this Agreement shall be deemed to
do so.
10G.
Notices and Communications; Telephone Recording
Notice regarding this Agreement must be in writing (including email text), or by telephone followed by writing which fairly summarizes the conversation, sent to one or more of the following persons and addresses:
For the Generator:
Name:
Title:
Mail Address:
Street Address (for delivery):
Tel:
Fax:
email:
For the Processor:
Name:
Title:
Mail Address:
Street Address (for delivery):
Tel:
Fax:
email:
Such
written notice may be sent by any means to an address indicated above.
If sent by fax or email, it will be deemed to have been received on the
day of transmission if sent during normal business hours of the recipient, or
on following business day, and must be followed by delivery by mail or other
delivery service. If sent by mail
or delivery service, it will be deemed to have been received on the date of a
signed receipt for delivery.
Both
parties consent to the recording by either party of telephone conversations
between them regarding the execution of this Agreement, without use of a tone
warning device.
11. Authorized Signatures
The
undersigned persons, warranting that they are authorized to do so, sign for
and commit their companies or business enterprises to the terms and conditions
set forth in this Agreement.
Generator
Name:
Title:
Date:
Name:
Title:
Date:
APPENDIX
A
DESCRIPTION OF GENERATOR MATERIAL
Owner:
General Description:
Precious Metals Expected (to be assayed):
Other Metals:
Substances of Concern:
PROHIBITED
SUBSTANCES:
SUBSTANCE
LEVEL
PROHIBITED
asbestos
beryllium
cadmium
mercury
radioactive material
APPENDIX B
PROCESSOR FACILITIES ACCEPTABLE
FOR TENDER OF GENERATOR MATERIAL
Facility 1
Address
Description of processes and materials processed
Facility 2
Address
Description
of processes and materials processed
APPENDIX C
PROCESSING FEES AND CHARGES
METAL ACCOUNTABILITY DEDUCTIONS
PRE-RECOVERY DISCOUNTS
NON-RETURNABLE METALS AND REDUCED METAL RETURN
1. FOR LOTS COMPOSED ONLY OF METAL CAPABLE OF BEING DIRECTLY MELTED, WITHOUT PRELIMINARY PROCESSING:
Silver:
Platinum:
Palladium:
Other Metals:
Silver:
Platinum:
Palladium:
Other Metals:
3. SPECIFIC PROCESS CHARGES
4.
DELETERIOUS SUBSTANCE CHARGES:
SUBSTANCE GREATER THAN CHARGE
Antimony
Arsenic
Bismuth
Cadmium
Lead
Nickel
Selenium
Telurium
APPENDIX D
RECEIVED
WEIGHT DISPUTE LIMIT
If the ratio of the
net weight of Generator Material as determined by Processor divided by the net
weight of Generator Material as advised by Generator is equal to or greater
than 0.99, the weight determined by Processor will prevail for all purposes.
If the ratio of the
net weight of Generator Material as determined by Processor divided by the net
weight of Generator Material as advised by Generator is less than 0.99, the
Generator Material will be held by Processor without processing until
Generator has been notified and Paragraph 8A has been followed.
APPENDIX
E
ASSAY SPLITTING PROCEDURES AND LIMITS
If the difference between the Generator Assay and the Settlement Assay is equal to or less than the amounts set forth below, the mean of the two assays will be applied to the Post-Processing Weight to determine the Settlement Amount:
APPENDIX F
APPENDIX H
METAL
DELIVERY
Metal
will be delivered at the following standard forms and levels of purity:
Metal
Type Assay
Level
Form
Gold:
Silver:
Platinum:
Palladium:
Other
Metals:
Charges for delivery in other forms or at other levels of purity will be set at the time of request.