No Substituted Merchandise Letter
As you know, Starboard’s policy is that it simply does not want substituted merchandise, that is, any merchandise shipped in response to our purchase order other than the exact merchandise specified on the face of the order. While we trust that the issue of substituted merchandise will never arise with you, this letter memorializes our agreement for substituted merchandise in the event that any is shipped to Starboard by your firm.
You and Starboard acknowledge that:
· U.S. Customs clearance will be difficult or impossible for substituted merchandise; that is, if the merchandise shipped does not exactly match the description of the merchandise ordered on Starboard’s purchase order issued to you. It is even possible that in some cases, substituted merchandise could result in imposition on Starboard of Customs penalties or seizure or arrest of the non-conforming shipment.
· Substituted merchandise causes delay in processing the conforming part of the shipment, resulting in lost sales and lost profits to Starboard, and means that we incur administrative costs and storage fees, as well as lose substantial opportunity costs, because our time and attention are diverted from other critical matters.
Therefore, you and Starboard agree:
1. Substituted merchandise is always automatically rejected by Starboard, without the need for notice from Starboard or any other action. Even if Starboard may be deemed, under applicable law, to have “accepted” substituted merchandise, Starboard may reject the substituted merchandise at any time after the deemed acceptance. Starboard shall have no obligation to notify the vendor of any rejection.
2. Starboard shall have no duty or obligation to take custody of or care for substituted merchandise, or return it to the vendor, and you waive any and all claims, and agree not to bring any lawsuit or other proceeding, against Starboard for loss, damage or destruction of any substituted merchandise even if Starboard has taken custody of it and even if Starboard may be deemed, under applicable law, to have accepted it.
3. Your firm agrees to defend, indemnity and hold harmless Starboard and its affiliates, as well as the officers, directors, shareholders, employees and agents of any of them, against any and all loss, damage, expense, U.S. Customs fines and penalties, and related attorneys’ fees, disbursements and court costs arising from or relating to substituted merchandise shipped to Starboard by you.
4. If Starboard does, in its sole discretion, incur any costs or expenses relating to the custody, care, handling or disposition of substituted merchandise or its return to you or your designee, you agree to reimburse Starboard promptly therefor on demand, plus an administrative fee of 25%. Starboard’s itemization of the costs and expenses shall be binding and conclusive on you.
5. Starboard may set off and deduct any and all amounts due from you under this letter or related to any purchase order from any amounts then owing or thereafter owed by Starboard to your firm or any of its affiliated persons or entities.
6. The remedies in favor of Starboard under this letter relating to substituted merchandise shall be cumulative, that is, shall be available to Starboard in addition to, and not in lieu of, those under the purchase order, any other documents applicable to you and Starboard, and under applicable law.
7. This letter shall be governed by, and construed in accordance with, the laws of the State of Florida, without reference to its conflict of laws rules or principles. You agree to submit to the non-exclusive jurisdiction of the federal and State courts of Florida. The terms and conditions of Starboard’s purchase order are incorporated by reference into this letter and made a part hereof, provided that in the event of a conflict between the terms and conditions of the purchase order and the terms of this letter, the latter shall prevail.
8. You hereby grant Starboard a security interest in any substituted merchandise to secure your full and prompt payment to Starboard of all sums due under this agreement. In the event of any nonpayment, Starboard shall have all rights and remedies with respect to the substituted merchandise of a secured creditor under “Default” chapter of the Secured Transactions Article of the Uniform Commercial Code, as enacted in Florida.
9. You agree that the terms of this letter relating to substituted merchandise are reasonable, and that your firm enters into this agreement freely and voluntarily; without duress or undue influence on the part of or on behalf of any party hereto.
10. This agreement has been entered into at arm’s length and between persons sophisticated and knowledgeable in business matters. Accordingly, any rule of law or legal decision that would require interpretation of this agreement against the party that has drafted it is not applicable and is irrevocably and unconditionally waived.
11. No supplementation, modification, amendment, waiver or termination of this agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this agreement shall be deemed or shall constitute a waiver of any of the other provisions hereof whether or not similar, nor shall such waiver constitute a continuing waiver.
12. The persons signing this letter represent and warrant that they have the full power and authority to do so on behalf of their respective firms.
If the above accurately sets forth our understanding, please sign the enclosed copy of this letter where indicated below to signify your agreement and return the copy to me.