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Original Equipment Suppliers AssociationNorth America OEM ProductionP.O. Terms and Conditions Comparative Analysis 11th Edition Join. Engage. Advance.

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

2016 Original Equipment Suppliers Association, All Rights Reserved Page 1

INTRODUCTION

Welcome to the OEM North American Production Purchase Order Contract Terms and Conditions Comparative Analysis published by the Original Equipment Suppliers Association (“OESA”) (revised October 2016). 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, OESA 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 BMW Group International Terms and Conditions for the Purchase of Production Materials and Automotive Components (Status 2/28/2014)

FCA US Production and Mopar Purchasing General Terms and Conditions (7/2015)

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

General Motors (2011)

General Terms and Conditions (Revised 03/2011)

General Motors (2014)

General Terms and Conditions for Direct Material, CCA and Tooling Purchases (Revised 2/2014)

Honda Terms and Conditions for Purchase and Sale of Goods (revised 5/16/2012)

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

Kia1 Kia Motors Manufacturing Georgia, Inc. — Parts Development Agreement Rev. 2/2010

Mercedes Mercedes-Benz U.S. International, Inc. — Master Terms Direct Purchasing (10/1/2010)

Nissan Nissan North America, Inc. — Master Purchase Agreement, dated 12/19/2003

Tesla Tesla Motors, Inc (USA) – General Terms and Conditions for Prototype or Production Parts or Service (Rev. 10/21/2012)

Toyota Toyota Motor Engineering & Manufacturing North America, Inc. — Terms and Conditions (4/1/2009)

Volkswagen Volkswagen Group of America, Inc. — Terms and Conditions of Purchase (Last revised 7/31/2008)

OESA OESA Draft Model General Terms and Conditions (10/2011)

1 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.



Note 1: The 2014 GM Terms are generally applicable only to RFPs issued after July 15, 2013, with the 2011 terms remaining applicable to POs under any earlier issued RFP. Accordingly, the Analysis includes both the 2011 and 2014 GM Terms.

Note 2: For purposes of the Comparative Analysis, the term “OEM” is used to indicate the “buyer” in the analysis as referenced in the OESA Draft Model General Terms and Conditions.

The purpose of this comparative analysis is to provide OESA 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. This is especially relevant as the pace of change – and the magnitude of challenges – continue to escalate. This comparative analysis 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 OESA’s hope that the analysis will provide a useful reference guide 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 OESA The Original Equipment Suppliers Association champions the business interests of more than 450 member organizations. Since 1998, the association is committed to addressing issues of common concern and advocating on behalf of the automotive supplier community. OESA strives to foster collaboration throughout the supply chain and help members make critical business decisions. Through timely events, active peer group councils and ongoing advocacy and thought leadership, OESA provides relevant industry information and resources to and for the automotive supplier industry. OESA is one of four Divisions of the Motor & Equipment Manufacturers Association (MEMA).

The Authors This updated comparative analysis was prepared by OESA in collaboration with Butzel Long, a Professional Corporation. Butzel Long is a leading legal advisor to automotive supplier companies worldwide. The Firm has broad experience pertinent to all aspects of the Supplier-to-OEM and Supplier-to-Supplier relationships. Butzel Long’s multi-disciplinary team of authors included Sheldon Klein, Cynthia Haffey, Dan Rustmann, James Bruno, Patrick Dreisig, Jennifer Dukarski, and David Devine.2 (OESA gratefully acknowledges the work of those who authored early versions of this analysis, from which this version has evolved.) Portions of the analysis were also reviewed by members of the OESA Legal Issues Council.

2 Additional information regarding the authors, and the Butzel Long firm, may be found at www.butzel.com. The

Firm maintains a section pertinent to Supplier issues at http://www.butzel.com/terms-and-conditions/. Butzel Long and its automotive team may also be contacted at 313.225.7000.

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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 () symbol, that identify distinctive or potentially problematic aspects of particular terms. Many sections include a “Dashboard.” The purpose of the Dashboard is to provide a simple, high-level comparison among the OEM and OESA 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 UCC or other applicable rules of law which addresses 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 is a summary of the documents described above and is necessarily limited solely to those documents. 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 with regard to 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. They have also increasingly relied on Suppliers to locate and review documents through online portals and may not communicate changes via traditional methods, such as hard copy or email.

OESA, 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 OESA at [email protected] or address them to OESA at 25925 Telegraph Road, Ste. 350, Southfield, MI 48023. Electronic copies are available to OESA members. Ordering information may be found under the Publications section at http://www.oesa.org This document may not be copied or reproduced in whole or in part without the prior written consent of OESA. As a matter of policy, OESA does not furnish copies of OEM Terms and Conditions or other contract documents.

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INTRODUCTION......................................................................................................................... 1

PART ONE …………………………………………………………………………………….19

I. Contract Formation – Context and Questions ....................................................................... 20

I. Contract Formation – OEM Comparative Analysis .............................................................. 23

1. BMW (Sections 1.1, 1.2, 2.1, and 2.2): .............................................................................. 23 2. FCA US (Sections 1 and 2): ............................................................................................... 23 3. Ford (Sections 3-5): ........................................................................................................... 24 4. General Motors (2011) (Sections 1 and 31): .................................................................... 24 5. General Motors (2014) (Sections 1 and 2): ...................................................................... 25 6. Honda (Sections 1, 2.1-2.3 and 14.13): ............................................................................. 25 7. Hyundai (Sections 1 and 2):............................................................................................... 26 8. Kia (Sections 1 and 2): ....................................................................................................... 26 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 1.1 (a), (f), (l), and (hh), 2.1, 2.3, 10.1, 10.2 and 38): .................................................................................................... 26 10. Nissan (Sections 1.1, 2.1 and 29): .................................................................................... 27 11. Tesla (Sections 1.1, 1.2, 1.3, 1.4, 1.5 and 2.1): ................................................................ 27 12. Toyota (Sections 1.1, 1.4, 7.1, 7.5 and 7.6 and final paragraph): .................................... 28 13. Volkswagen (Sections 1, 38 and 40): ............................................................................... 29 14. OESA (Sections 1 and 21.6): ........................................................................................... 29

I. Contract Formation – Dashboard .......................................................................................... 30

II. Contract Changes – Context and Questions ......................................................................... 31

II. Contract Changes – OEM Comparative Analysis ................................................................ 33

1. BMW (Sections 2.3 - 2.4, 3.2 and 21.1): ........................................................................... 33 2. FCA US (Section 12): ....................................................................................................... 33 3. Ford (Sections 4, 9 and 44): ............................................................................................... 34 4. General Motors 2011 (Sections 5, 6 and 31): ................................................................... 35 5. General Motors 2014 (Sections 2, 10 and 12,): ................................................................ 35 6. Honda (Sections 1.2, 2.4, 3.5 and 14.3): ........................................................................... 35 7. Hyundai (Sections 3, 11, 20): ............................................................................................ 36 8. Kia (Sections 3, 11, 20): ..................................................................................................... 36 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 9.3, 9.7, 10.1, 10.4, 12.2, 13.2, 38): ................................................................................................................................. 36 10. Nissan (Sections 8 and 29): …………………………………………………………… 37 11. Tesla (Section1.6) ............................................................................................................. 37 12. Toyota (Sections 1.4, 2.2(b), 3.5(b), 4.1): ........................................................................ 37 13. Volkswagen (Sections 9 and 38): ..................................................................................... 38 14. OESA (Sections 1.2, 1.3 and 21.6): ................................................................................. 38

II. Contract Changes – Dashboard ............................................................................................ 39

III. Assignment and Subcontracting – Context and Questions ................................................ 40

III. Assignment and Subcontracting – OEM Comparative Analysis ....................................... 42

1. BMW (Sections 7.9, 13.8, 14.1, 17.3, 20 and 21.6): .......................................................... 42 2. FCA US (Sections 11(b) and 19): ...................................................................................... 42



3. Ford (Sections 20.04, 32.02, 37.02, 42.01 and 42.04): ...................................................... 42 4. General Motors (2011) (Sections 14, 25 and 27): ............................................................ 43 5. General Motors (2014) (Sections 11, 12, 31 and 37): ...................................................... 43 6. Honda (Section 14.1): ........................................................................................................ 43 7. Hyundai (Section 26): ........................................................................................................ 44 8. Kia (Section 26): ................................................................................................................ 44 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 4.7, 6.3(f), 6.3(t), 20.1, 22.8, 33 and 37): ..................................................................................................................... 44 10. Nissan (Sections 21 and 30): ............................................................................................ 44 11. Tesla (Section 14): ........................................................................................................... 44 12. Toyota (Section 7.3): ....................................................................................................... 45 13. Volkswagen (Sections 14, 15 and 32): ............................................................................ 45 13. OESA (Section 15): ......................................................................................................... 45

III. Assignment and Subcontracting – Dashboard ................................................................... 46

IV. Expiration and Termination – Context and Questions ...................................................... 48

IV. Expiration and Termination – OEM Comparative Analysis ............................................. 51

1. BMW (Section 2.8): ........................................................................................................... 51 2. FCA US (Section 22, 31 and 38): ...................................................................................... 51 3. Ford (Sections 8 and 27-31): ............................................................................................. 51 4. General Motors (2011) (Section 13): ............................................................................... 52 5. General Motors (2014) (Section 34): ............................................................................... 52 6. Honda (Section 13.3): ........................................................................................................ 53 7. Hyundai (Section 29): ........................................................................................................ 53 8. Kia (Section 29):................................................................................................................. 53 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 21 and 22): .................. 53 10. Nissan (Sections 26 and 27.6): ......................................................................................... 54 11. Tesla (Section 1.5, 12): .................................................................................................... 54 12. Toyota (Section 5.8): ....................................................................................................... 54 13. Volkswagen (Sections 2 and 19): ..................................................................................... 55 14. OESA (Sections 12 and 21.2): ......................................................................................... 56

IV. Expiration and Termination – Dashboard ......................................................................... 57

PART TWO. ................................................................................................................................ 59

I. Releases and Delivery – Context and Questions .................................................................... 60

I. Releases and Delivery – OEM Comparative Analysis ........................................................... 62

1. BMW (Sections 2.4, 3.1-3.5, and 5): ................................................................................. 62 2. FCA US (Sections 3-5): ..................................................................................................... 62 3. Ford (Sections 6 and 13): ................................................................................................... 62 4. General Motors (2011) (Sections 3 and 4): ...................................................................... 63 5. General Motors (2014) (Sections 3, 7, 8 and 14): ............................................................ 63 6. Honda (Sections 3.2 and 4): ............................................................................................... 63 7. Hyundai (Sections 3-6): ..................................................................................................... 63 8. Kia (Sections 3-6): ............................................................................................................. 64 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 12): ............................... 64



10. Nissan (Sections 4 and 5): ................................................................................................ 64 11. Tesla (Sections 1.3, 1.5, 2.3 3.2 and 3.3): ........................................................................ 64 12. Toyota (Sections 2.1(a), 2.4, and 2.7): ............................................................................. 65 13. Volkswagen (Section 3): .................................................................................................. 66 14. OESA (Sections 2.1, 3.2, and 13.1): ................................................................................ 67

I. Releases and Delivery – Dashboard ....................................................................................... 68

II. Packing, Marking, and Shipping – Context and Questions ................................................ 70

II. Packing, Marking, and Shipping – OEM Comparative Analysis........................................ 71

1. BMW (Sections 4 and 9): ................................................................................................... 71 2. FCA US (Section 4): .......................................................................................................... 71 3. Ford (Sections 10.03 and 13): ............................................................................................ 71 4. General Motors (2011) (Sections 2, 4, and 10): ............................................................... 71 5. General Motors (2014) (Sections 4 and 14): .................................................................... 72 6. Honda (Section 4.3): .......................................................................................................... 72 7. Hyundai (Section 5): .......................................................................................................... 72 8. Kia (Section 5): .................................................................................................................. 72 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 12): .............................. 72 10. Nissan (Sections 4.1.1 and 6): .......................................................................................... 73 11. Tesla (Section 3.1): .......................................................................................................... 73 12. Toyota (Section 2.4): ........................................................................................................ 73 13. Volkswagen (Section 5): .................................................................................................. 74 14. OESA (Section 3.1): ......................................................................................................... 74

III. Inspections and Non-Conforming Parts – Context and Questions ................................... 75

III. Inspections and Non-Conforming Parts – OEM Comparative Analysis .......................... 76

1. BMW (Sections 6, 10.1, 10.3-10.5, and 21.5): .................................................................. 76 2. FCA US (Section 6): ......................................................................................................... 76 3. Ford (Section 14): ............................................................................................................. 77 4. General Motors (2011) (Sections 6 and 7): ...................................................................... 77 5. General Motors (2014) (Sections 6 and 15): .................................................................... 77 6. Honda (Sections 4.6, 4.7, 8.1, and 10.2): ........................................................................... 77 7. Hyundai (Sections 8 and 11): ............................................................................................ 78 8. Kia (Sections 8 and 11): ..................................................................................................... 78 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 13): ............................... 78 10. Nissan (Section 5): ........................................................................................................... 79 11. Tesla (Sections 3.3, 5.2, 6.2 and 6.3): .............................................................................. 79 12. Toyota (Sections 1.7(a) and (b), 2.5, 2.6, and 3.6): .......................................................... 80 13. Volkswagen (Section 7): .................................................................................................. 80 14. OESA (Sections 4 and 7.2): ............................................................................................. 81

IV. Supplier Quality – Context and Questions .......................................................................... 82

IV. Supplier Quality – OEM Comparative Analysis ................................................................. 83

1. BMW (Section 9): .............................................................................................................. 83 2. FCA US (Section 6): .......................................................................................................... 83 3. Ford (Section 12): .............................................................................................................. 83



4. General Motors 2011 (Section 6): .................................................................................... 83 5. General Motors 2014 (Sections 12 and 15): ..................................................................... 84 6. Honda (Sections 5.1 and 13.1): ......................................................................................... 84 7. Hyundai (Section 11): ....................................................................................................... 84 8. Kia (Section 11): ................................................................................................................ 84 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 13): ............................... 84 10. Nissan (Section 10): ......................................................................................................... 84 11. Tesla (Section 5): ............................................................................................................. 85 12. Toyota (Sections 1.6, 5.4(b), and 5.4(c)): ........................................................................ 85 13. Volkswagen (Section 11): ................................................................................................ 85 14. OESA (Sections 7.2 and 8.2): .......................................................................................... 86

IV. Supplier Quality -- Dashboard ............................................................................................. 87

V. Service Parts – Context and Questions.................................................................................. 88

V. Service Parts – OEM Comparative Analysis ......................................................................... 89

1. BMW (Sections 13.8, 13.9, and 14): .................................................................................. 89 2. FCA US (Section 13): ........................................................................................................ 89 3. Ford (Section 33): .............................................................................................................. 89 4. General Motors (2011) (Section 20): ................................................................................ 90 5. General Motors 2014 (Section 5): .................................................................................... 90 6. Honda (Section 9): ............................................................................................................. 90 7. Hyundai (Section 21): ........................................................................................................ 90 8. Kia (Section 21): ................................................................................................................ 91 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 9.5 and 18): ................. 91 10. Nissan (Section 19): ......................................................................................................... 91 11. Tesla (Section 2.2): .......................................................................................................... 91 12. Toyota (Sections 4.2 and 5.4(d)): ..................................................................................... 91 13. Volkswagen (Section 12): ................................................................................................ 92 14. OESA (Sections 2.2 and 2.3): .......................................................................................... 92

V. Service Parts – Dashboard ..................................................................................................... 93

VI. Invoices and Payment – Context and Questions ................................................................. 94

VI. Invoices and Payment – OEM Comparative Analysis ........................................................ 95

1. BMW (Section 7): .............................................................................................................. 95 2. FCA US (Section 14): ........................................................................................................ 95 3. Ford (Sections 10, 11, and 14.07): ..................................................................................... 95 4. General Motors (2011) (Sections 2 and 7): ...................................................................... 95 5. General Motors (2014) (Sections 6 and 17): .................................................................... 96 6. Honda (Sections 3.4 and 4.6): ............................................................................................ 96 7. Hyundai (Sections 7 and 8):............................................................................................... 96 8. Kia (Sections 7 and 8): ....................................................................................................... 96 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 9.6(a), 9.6(b) and 12.4(b)): .................................................................................................................................. 96 10. Nissan (Sections 5.1 and 7): ............................................................................................. 97 11. Tesla (Sections 4.1, 4.2, 4.3 and 4.6): .............................................................................. 97 12. Toyota (Sections 2.2, 2.3, and 3.5): ................................................................................. 97



13. Volkswagen (Sections 4 and 8): ....................................................................................... 98 14. OESA (Section 6): ........................................................................................................... 98

VII. Taxes – Context and Questions ........................................................................................... 99

VII. Taxes – OEM Comparative Analysis ................................................................................ 100

1. BMW (Section 7.2): ......................................................................................................... 100 2. FCA US (Section 40): ...................................................................................................... 100 3. Ford (Section 10.04): ...................................................................................................... 100 4. General Motors (2011): .................................................................................................. 100 5. General Motors (2014) (Section 19): .............................................................................. 100 6. Honda (Section 3.2): ........................................................................................................ 100 7. Hyundai (Sections 12, 16, 22 and 30): ............................................................................ 100 8. Kia (Sections 12, 16, 22, 30, and 41): .............................................................................. 100 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 6.1(b), 6.3(i), 9.6(c) and 26): ........................................................................................................................................ 101 10. Nissan (Section 39): ...................................................................................................... 101 11. Tesla (Section 4.7 and 4.8): ............................................................................................ 101 12. Toyota (Section 5, 7): ..................................................................................................... 101 13. Volkswagen (Sections 4 and 33): ................................................................................... 101 14. OESA (Section 5): .......................................................................................................... 102

VIII. Setoff – Context and Questions ....................................................................................... 103

VIII. Setoff – OEM Comparative Analysis ............................................................................... 105

1. BMW (Section 7.11): ...................................................................................................... 105 2. FCA US (Section 14): ..................................................................................................... 105 3. Ford (Section 11): ........................................................................................................... 105 4. General Motors (2011) (Section 23): .............................................................................. 105 5. General Motors (2014) (Section 17): .............................................................................. 105 6. Honda (Sections 3.4 and 3.6): .......................................................................................... 105 7. Hyundai (Section 7 and 28(e)): ........................................................................................ 105 8. Kia (Section 7 and 28(e)): ............................................................................................... 105 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 22.9): .......................... 106 10. Nissan (Section 7.5): ..................................................................................................... 106 11. Tesla (Section 4.5): ......................................................................................................... 106 12. Toyota (Sections 2.3(a), 2.6, 3.9, 3.12 and 5.9(b)(7)): ................................................... 106 13. Volkswagen (Sections 8 and 27): ................................................................................... 106 14. OESA (Section 6): .......................................................................................................... 106

VIII. Setoff – Dashboard ........................................................................................................... 108

PART THREE ........................................................................................................................... 109

I. Parts Warranty – Context and Questions ............................................................................ 110

I. Parts Warranty – OEM Comparative Analysis.................................................................... 113

1. BMW (Sections 10.1-10.5): ............................................................................................. 113 2. FCA US (Section 8): ........................................................................................................ 113 3. Ford (Section 22): ............................................................................................................ 113



4. General Motors (2011) (Section 9): ................................................................................ 113 5. General Motors (2014) (Section 13): .............................................................................. 114 6. Honda (Section 5): ........................................................................................................... 114 7. Hyundai (Section 12): ...................................................................................................... 115 8. Kia (Sections 12 and 31): ................................................................................................. 115 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 16): ............................. 115 10. Nissan (Sections 3, 9, and 13): ....................................................................................... 116 11. Tesla (Section 6.1 and 5.3): ............................................................................................ 117 12. Toyota (Section 5.4): ...................................................................................................... 118 13. Volkswagen (Section 10): .............................................................................................. 118 14. OESA (Section 7.1): ....................................................................................................... 119

I. Parts Warranty – Dashboard................................................................................................ 120

II. Recall – Context and Questions ........................................................................................... 121

II. Recall – OEM Comparative Analysis................................................................................... 123

1. BMW (Section 11.4): ....................................................................................................... 123 2. FCA US (Sections 11 and 26): ......................................................................................... 123 3. Ford (Section 23): ............................................................................................................ 123 4. General Motors (2011) (Section 21): .............................................................................. 124 5. General Motors (2014) (Section 25): .............................................................................. 124 6. Honda: ............................................................................................................................. 124 7. Hyundai (Section 13): ...................................................................................................... 124 8. Kia (Section 13): .............................................................................................................. 124 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 19): ............................. 124 10. Nissan (Section 11): ....................................................................................................... 124 11. Tesla (Sections 7 and 8.1) .............................................................................................. 125 12. Toyota (Sections 5.5(a) and 5.5(b)): .............................................................................. 125 13. Volkswagen (Sections 13 and 15): ................................................................................. 125 14. OESA (Section 7.3): ...................................................................................................... 125

II. Recall – Dashboard............................................................................................................... 126

III. Price Warranty – Context and Questions ......................................................................... 127

III. Price Warranty – OEM Comparative Analysis ................................................................. 128

1. BMW: ............................................................................................................................... 128 2. FCA US (Section 9): ........................................................................................................ 128 3. Ford: ................................................................................................................................. 128 4. General Motors (2011): .................................................................................................. 128 5. General Motors (2014): .................................................................................................. 128 6. Honda: .............................................................................................................................. 128 7. Hyundai (Section 14): ..................................................................................................... 128 8. Kia (Section 14): .............................................................................................................. 128 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 16.14): ........................ 129 10. Nissan: ............................................................................................................................ 129 11. Tesla (Section 4.4): ........................................................................................................ 129 12. Toyota (Section 2.2(a)): ................................................................................................. 129



13. Volkswagen (Section 10): .............................................................................................. 129 14. OESA: ............................................................................................................................ 129

IV. Indemnification and Product Liability – Context and Questions ................................... 130

IV. Indemnification and Product Liability – OEM Comparative Analysis ........................... 132

1. BMW (Section 10.3, 10.4, 11): ....................................................................................... 132 2. FCA US (Sections 11 and 24): ......................................................................................... 132 3. Ford (Section 25): ............................................................................................................ 132 4. General Motors 2011 (Sections16 and 25): .................................................................... 132 5. General Motors 2014 (Sections 16, 25, 31): ................................................................... 133 6. Honda (Section 6): ........................................................................................................... 133 7. Hyundai (Section 18): ...................................................................................................... 133 8. Kia (Sections 18 and 21): ................................................................................................. 133 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 17 and 24): ................ 134 10. Nissan (Sections 12 and 13): .......................................................................................... 134 11. Tesla (Sections 7, 8.1, 8.2 and 8.3): ............................................................................... 134 12. Toyota (Sections 4.3, 4.6, 5.5 and 6.16): ....................................................................... 135 13. Volkswagen (Section 15): .............................................................................................. 135 14. OESA (Section 8): .......................................................................................................... 135

IV. Indemnification and Product Liability – Dashboard ....................................................... 136

V. Default and Remedies – Context and Questions ................................................................ 137

V. Default and Remedies – OEM Comparative Analysis ........................................................ 140

1. BMW (Sections 2.6, 2.7, 2.8, 10.3 and 21.4): .................................................................. 140 2. FCA US (Sections 21 and 23): ......................................................................................... 140 3. Ford (Sections 26, 28 and 41): ......................................................................................... 141 4. General Motors 2011 (Sections 11, 12, 21, and 26): ...................................................... 141 5. General Motors 2014 (Sections 9, 15, 20, 25, 26, 33 and 36): ....................................... 142 6. Honda (Sections 4.7, 5.8 and 13): .................................................................................... 143 7. Hyundai (Sections 27, 28, 31, and 34): ........................................................................... 143 8. Kia (Sections 27, 28, 31, and 34): .................................................................................... 144 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 22): ............................. 144 10. Nissan (Sections 27.1-27.5 and 28): ............................................................................... 144 11. Tesla (Sections 12.2, 12.3, 20 and 21.1): ...................................................................... 145 12. Toyota (Sections 2.6, 3.7, 5.4 and 5.9): ........................................................................ 146 13. Volkswagen (Sections 13, 17 and 18): ........................................................................... 147 14. OESA (Sections 7.2, 13 and 21.5): ............................................................................... 147

V. Default and Remedies – Dashboard .................................................................................... 149

VI. Excusable Delays/Force Majeure – Context and Questions ............................................ 150

VI. Excusable Delays/Force Majeure – OEM Comparative Analysis .................................... 152

1. BMW (Sections 3.6-3.7): ................................................................................................. 152 2. FCA US (Section 7): ........................................................................................................ 152 3. Ford (Section 40): ............................................................................................................ 152 4. General Motors 2011 (Section 8): .................................................................................. 153



5. General Motors 2014 (Sections 8 and 27): ..................................................................... 153 6. Honda (Sections 4.8 and 4.9): .......................................................................................... 153 7. Hyundai (Section 10): ...................................................................................................... 154 8. Kia (Section 10): .............................................................................................................. 154 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 1.1(p) and 14): .......... 154 10. Nissan (Section 33): ....................................................................................................... 155 11. Tesla (Section 15): ......................................................................................................... 155 12. Toyota (Section 2.7): ..................................................................................................... 155 13. Volkswagen (Section 21): .............................................................................................. 156 14. OESA (Section 16): ........................................................................................................ 156

VI. Excusable Delays/Force Majeure – Dashboard ................................................................ 157

VII. Dispute Resolution – Context and Questions ................................................................... 159

VII. Dispute Resolution – OEM Comparative Analysis .......................................................... 160

1. BMW: ............................................................................................................................... 160 2. FCA US (Section 26 and Annex A): ................................................................................ 160 3. Ford (Section 39): ............................................................................................................ 160 4. General Motors 2011 (Section 29): ................................................................................ 161 5. General Motors 2014 (Section 35): ................................................................................ 161 6. Honda: .............................................................................................................................. 161 7. Hyundai (Section 36): ...................................................................................................... 161 8. Kia (Section 36): .............................................................................................................. 161 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 31): ............................. 161 10. Nissan: ............................................................................................................................ 162 11. Tesla (Sections 19 and 21.15): ....................................................................................... 162 12. Toyota (Sections 5.4 and 7.8): ....................................................................................... 162 13. Volkswagen (Sections 34 and 39): ................................................................................ 162 14. OESA (Section 20): ....................................................................................................... 163

PART FOUR ............................................................................................................................. 165

I. OEM’s Intellectual Property – Context and Questions ...................................................... 166

I. OEM’s Intellectual Property – OEM Comparative Analysis .............................................. 167

1. BMW (Sections 12.1 - 12.3, 13.1, 15 and 17): ................................................................ 167 2. FCA US (Sections 4, 10, 16, 17, and 18): ........................................................................ 167 3. Ford (Sections 15, 17, 35.03 and 46): .............................................................................. 167 4. General Motors 2011 (Sections 14 and 24): ................................................................... 168 5. General Motors 2014 (Sections 23 and 30): ................................................................... 168 6. Honda (Sections 8, 11.1 and 11.2): ................................................................................. 168 7. Hyundai (Sections 19, 24, and 25): ................................................................................. 169 8. Kia (Sections 19, 24 and 25): ........................................................................................... 169 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 6.3(e), 15.1, 25.1 and 32): …………………………………………………………………………………………..169 10. Nissan (Sections 15, 17, 22 and 23): .............................................................................. 169 11. Tesla (Section 10.1, 10.3, 13 and 21.8): ........................................................................ 170 12. Toyota (Sections 2.1(b), 4.5, 4.6 and 5.6): .................................................................... 170 13. Volkswagen (Sections 23, 24 and 29): .......................................................................... 171



14. OESA (Sections 10.1, 14 and 21.1): .............................................................................. 171

I. OEM’s Intellectual Property – Dashboard .......................................................................... 172

II. Supplier’s Intellectual Property – Context and Questions ................................................ 173

II. Supplier’s Intellectual Property – OEM Comparative Analysis ....................................... 175

1. BMW (Sections 12.2, 13.1, 15.3 and 17): ........................................................................ 175 2. FCA US (Sections 10, 16, 17 and 23): ............................................................................. 175 3. Ford (Sections 16, 17, 19, and 20): .................................................................................. 175 4. General Motors 2011 (Sections 14 and 15): ................................................................... 176 5. General Motors 2014 (Sections 22, 23 and 29): ............................................................. 176 6. Honda (Section 8): ........................................................................................................... 177 7. Hyundai (Section 19): ...................................................................................................... 177 8. Kia (Sections 19): ............................................................................................................. 177 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 15.1, 20.1 and 25.1): ... 177 10. Nissan (Sections 14, 15, and 22): ................................................................................... 178 11. Tesla (Section 10.2): ...................................................................................................... 178 12. Toyota (Sections 4.5, 4.6 and 4.7): ................................................................................ 179 13. Volkswagen (Sections 22 and 24): ................................................................................. 179 14. OESA (Sections 10.2 and 14): ....................................................................................... 179

II. Supplier’s Intellectual Property – Dashboard ................................................................... 181

III. Infringement – Context and Questions .............................................................................. 183

III. Infringement – OEM Comparative Analysis ..................................................................... 185

1. BMW (Section 15): .......................................................................................................... 185 2. FCA US (Sections 8 and 18): ........................................................................................... 185 3. Ford (Section 21): ............................................................................................................ 185 4. General Motors 2011 (Section 14): ................................................................................ 186 5. General Motors 2014 (Section 24): ................................................................................ 186 6. Honda (Section 6.1): ........................................................................................................ 186 7. Hyundai (Sections 12(c) and 19(a)): ................................................................................ 186 8. Kia (Sections 12(c) and 19(a)): ........................................................................................ 186 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 15.2 and 15.3): .......... 186 10. Nissan (Section 16): ....................................................................................................... 187 11. Tesla (Section 8.1): ........................................................................................................ 187 12. Toyota (Section 4.6(e)): ................................................................................................ 187 13. Volkswagen (Sections 22 (e) and (f)): .......................................................................... 187 14. OESA (Section 10.3): ..................................................................................................... 188

III. Infringement – Dashboard ................................................................................................. 189

PART FIVE.. ............................................................................................................................. 191

I. OEM-Owned Tooling and Other Property – Context and Questions ............................... 192

I. OEM-Owned Tooling and Other Property – OEM Comparative Analysis ...................... 194

1. BMW (Section 13): ........................................................................................................ 194 2. FCA US (Section 10): .................................................................................................... 194



3. Ford (Sections 15, 32.01, and 34): ................................................................................. 194 4. General Motors 2011 (Section 19): .............................................................................. 195 5. General Motors 2014 (Section 22): .............................................................................. 196 6. Honda (Sections 8.1 and 17): ......................................................................................... 196 7. Hyundai (Section 16): .................................................................................................... 197 8. Kia (Section 16 and 41): ................................................................................................ 197 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 1.1 (d), 1.1 (x)-(z), 6, 11, 23 and 26): ...................................................................................................................... 197 10. Nissan (Sections 17, 18 and 39): .................................................................................... 198 11. Tesla (Section 11.1): ...................................................................................................... 199 12. Toyota (Sections 3.1(f), 3.2(c), 3.6, 3.10-3.11, and 4.5): .............................................. 199 13. Volkswagen (Section 23): .............................................................................................. 200 14. OESA (Section 11.1): ..................................................................................................... 200

I. OEM-Owned Tooling and Other Property – Dashboard .................................................. 202

II. Payment for OEM-Owned Tooling – Context and Questions .......................................... 203

II. Payment for OEM-Owned Tooling – OEM Comparative Analysis .................................. 205

1. BMW: (Section 13.9): .................................................................................................... 205 2. FCA US (Section 10): .................................................................................................... 205 3. Ford (Sections 34.04, 34.15, and 34.16): ....................................................................... 205 4. General Motors 2011: ................................................................................................... 205 5. General Motors 2014: ................................................................................................... 205 6. Honda: ............................................................................................................................ 205 7. Hyundai:......................................................................................................................... 206 8. Kia (Section 41): ........................................................................................................... 206 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 6.1 and 6.2): ............ 206 10. Nissan (Section 18): ....................................................................................................... 206 11. Tesla (Section 11.1(c)): .................................................................................................. 207 12. Toyota (Sections 3.45 and 3.11): ................................................................................... 207 13. Volkswagen (Section 26): .............................................................................................. 207 14. OESA (Section 11.1): .................................................................................................... 208

II. Payment for OEM-Owned Tooling – Dashboard .............................................................. 209

III. Supplier-Owned Tooling – Context and Questions .......................................................... 210

III. Supplier-Owned Tooling – OEM Comparative Analysis ................................................. 211

1. BMW (Sections 13.4-13.6 and 13.8): ............................................................................ 211 2. FCA US: ......................................................................................................................... 211 3. Ford (Section 35): .......................................................................................................... 211 4. General Motors 2011 (Section 18): .............................................................................. 211 5. General Motors 2014 (Section 21): .............................................................................. 211 6. Honda: ............................................................................................................................ 212 7. Hyundai (Section 15): .................................................................................................... 212 8. Kia (Sections 15 and 41): ............................................................................................... 212 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 6.7 and 6.8): ............ 212 10. Nissan (Section 18.1): .................................................................................................... 212 11. Tesla (Sections 11.1 and11.2): ....................................................................................... 212



12. Toyota (Section 3.3): ...................................................................................................... 213 13. Volkswagen (Section 25): .............................................................................................. 213 14. OESA (Section 11.2): ..................................................................................................... 213

III. Supplier-Owned Tooling – Dashboard ............................................................................. 214

PART SIX… .............................................................................................................................. 215

I. Advertising – Context and Questions ................................................................................... 216

I. Advertising – OEM Comparative Analysis ........................................................................... 217

1. BMW (Section 12.3): ....................................................................................................... 217 2. FCA US (Section 16): ...................................................................................................... 217 3. Ford (Section 46): ............................................................................................................ 217 4. General Motors 2011 (Section 24): ................................................................................ 217 5. General Motors 2014 (Section 30): ................................................................................ 217 6. Honda (Section 11.2): ...................................................................................................... 217 7. Hyundai (Section 24): ...................................................................................................... 217 8. Kia (Section 24): .............................................................................................................. 217 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 32): ............................. 218 10. Nissan (Section 23): ...................................................................................................... 218 11. Tesla (Section 21.2): ...................................................................................................... 218 12. Toyota (Section 5.6): ...................................................................................................... 218 13. Volkswagen (Section 29): .............................................................................................. 218 14. OESA (Section 21.1): ..................................................................................................... 218

II. Audit and Inspection Rights – Context and Questions ...................................................... 219

II. Audit and Inspection Rights – OEM Comparative Analysis ............................................. 220

1. BMW (Sections 9.4, 21.5 and 21.8): ................................................................................ 220 2. FCA US (Sections 10, 12, and 21): .................................................................................. 220 3. Ford (Sections 17 and 32): ............................................................................................... 220 4. General Motors 2011 (Sections 2, 6 and 13): ................................................................. 220 5. General Motors 2014 (Sections 15 and 34): ................................................................... 221 6. Honda (Sections 8.1, 8.2 and 16): .................................................................................... 221 7. Hyundai (Sections 11, 23 and 29): .................................................................................. 221 8. Kia (Sections 11, 23 and 29): ........................................................................................... 221 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 20 and 25): ................ 221 10. Nissan (Sections 22, 23A, and 24): ................................................................................ 222 11. Tesla (Sections 13 and 21.5): ......................................................................................... 222 12. Toyota (Sections 3.6 and 4.6): ....................................................................................... 222 13. Volkswagen (Sections 7 and 17): .................................................................................. 222 14. OESA (Sections 4, 14, and 21.2): .................................................................................. 223

III. Labor Disputes – Context and Questions .......................................................................... 224

III. Labor Disputes – OEM Comparative Analysis ................................................................. 225

1. BMW (Sections 3.6-3.8): ................................................................................................. 225 2. FCA US (Section 7): ........................................................................................................ 225 3. Ford (Section 38): ............................................................................................................ 225



4. General Motors 2011 (Section 8): .................................................................................. 225 5. General Motors 2014 (Section 8): .................................................................................. 225 6. Honda (Section 4.8): ........................................................................................................ 225 7. Hyundai (Section 9): ........................................................................................................ 225 8. Kia (Section 9): ................................................................................................................ 226 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 14.3): .......................... 226 10. Nissan (Section 18B): .................................................................................................... 226 11. Tesla (Section 16): ......................................................................................................... 226 12. Toyota (Section 2.7(d)): ................................................................................................. 226 13. Volkswagen (Section 21): .............................................................................................. 226 14. OESA (Sections 16 and 17): .......................................................................................... 227

IV. Import and Export – Context and Questions .................................................................... 228

IV. Import and Export – OEM Comparative Analysis ........................................................... 230

1. BMW (Section 8): ............................................................................................................ 230 2. FCA US (Sections 15 (a) – (f)): ....................................................................................... 230 3. Ford (Section 10.04): ....................................................................................................... 231 4. General Motors 2011 (Section 22): ................................................................................ 231 5. General Motors 2014 (Sections 18 and 32): ................................................................... 231 6. Honda (Sections 3.2(b), 3.3, 12.1, 12.2, 12.3 and 12.4): ................................................. 231 7. Hyundai (Sections 22 (a) – (e)): ...................................................................................... 232 8. Kia (Sections 22 (a) – (e)): ............................................................................................... 233 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6 and 7.7): ................................................................................................................................ 233 10. Nissan (Section 40): ....................................................................................................... 233 11. Tesla (Sections 4.7 and 17): ........................................................................................... 233 12. Toyota (Sections 5.7 (a) and (b)): .................................................................................. 234 13. Volkswagen/Audi (Section 6):....................................................................................... 234 14. OESA (Section 18): ....................................................................................................... 234

IV. Import and Export – Dashboard ....................................................................................... 236

V. Suppliers with Special Needs – Context and Questions ..................................................... 238

V. Suppliers with Special Needs – OEM Comparative Analysis ............................................ 239

1. BMW (Section 20): .......................................................................................................... 239 2. FCA US (Section 25): ...................................................................................................... 239 3. Ford (Section 36.02): ....................................................................................................... 239 4. General Motors 2011: ..................................................................................................... 239 5. General Motors 2014: ..................................................................................................... 239 6. Honda: .............................................................................................................................. 239 7. Hyundai (Section 33): ..................................................................................................... 239 8. Kia (Section 33): .............................................................................................................. 239 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 34): ............................. 239 10. Nissan: ............................................................................................................................ 240 11. Tesla: .............................................................................................................................. 240 12. Toyota: ........................................................................................................................... 240 13. Volkswagen: .................................................................................................................. 240



14. OESA: ............................................................................................................................ 240

VI. Electronic Communication – Context and Questions ...................................................... 241

VI. Electronic Communication – OEM Comparative Analysis .............................................. 242

1. BMW (Sections 7.1 and 16): ............................................................................................ 242 2. FCA US (Section 27): ...................................................................................................... 242 3. Ford (Section 44): ............................................................................................................ 242 4. General Motors 2011 (Section 2): .................................................................................. 242 5. General Motors 2014 (Section 17): ................................................................................ 242 6. Honda (Sections 2.2 and 2.3): .......................................................................................... 242 7. Hyundai (Section 38): ...................................................................................................... 242 8. Kia (Section 38): .............................................................................................................. 242 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 12): ............................. 242 10. Nissan (Section 1): ......................................................................................................... 242 11. Tesla (Section 21.6): ...................................................................................................... 242 12. Toyota (Sections 1.4 and 6): ......................................................................................... 243 13. Volkswagen: ................................................................................................................... 243 14. OESA (Section 21.3): ..................................................................................................... 243

VII. Compliance with Laws and Applicable Law – Context and Questions ........................ 244

VII. Compliance with Laws and Applicable Law – OEM Comparative Analysis ................ 245

1. BMW (Sections 10.1, 20, and 22): ................................................................................... 245 2. FCA US (Sections 24 and 26): ......................................................................................... 245 3. Ford (Sections 36, 37, and 39.07): ................................................................................... 245 4. General Motors (2011) (Sections 25 and 29): ................................................................ 245 5. General Motors (2014) (Sections 14 and 31): ................................................................ 246 6. Honda (Sections 3.2, 5.2, 14.7, and 14.8): ....................................................................... 246 7. Hyundai (Sections 32 and 36): ........................................................................................ 247 8. Kia (Sections 32 and 36): ................................................................................................. 247 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 31): ............................. 247 10. Nissan (Sections 35, 36, and 40): ................................................................................... 247 11. Tesla (Sections 9, 21.3 and 21.15): ............................................................................... 247 12. Toyota (Sections 4.3 and 7.2): ...................................................................................... 248 13. Volkswagen (Sections14, 34 and 37): ............................................................................ 248 14. OESA (Sections 9 and 21.10): ....................................................................................... 249

VIII. Relationship of the Parties – Context and Questions .................................................... 250

VIII. Relationship of the Parties – OEM Comparative Analysis............................................ 251

1. BMW: ............................................................................................................................... 251 2. FCA US: ........................................................................................................................... 251 3. Ford: ................................................................................................................................. 251 4. General Motors 2011 (Section 28): ................................................................................ 251 5. General Motors 2014 (Section 38): ................................................................................ 251 6. Honda: .............................................................................................................................. 251 7. Hyundai (Section 35): ...................................................................................................... 251 8. Kia (Section 35): .............................................................................................................. 251



9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 28): ............................. 251 10. Nissan (Section 31): ....................................................................................................... 251 11. Tesla (Section 21.7): ...................................................................................................... 252 12. Toyota (Section 5.1): ...................................................................................................... 252 13. Volkswagen (Section 30): .............................................................................................. 252 14. OESA (Section 21.4): ..................................................................................................... 252

IX. Ingredients – Context and Questions ................................................................................. 253

IX. Ingredients – OEM Comparative Analysis ........................................................................ 254

1. BMW (Section 19): .......................................................................................................... 254 2. FCA US (Section 28): ...................................................................................................... 254 3. Ford (Sections 24.04 and 24.05): ..................................................................................... 254 4. General Motors 2011 (Section 10): ................................................................................ 254 5. General Motors 2014 (Section 14): ................................................................................ 254 6. Honda: .............................................................................................................................. 254 7. Hyundai (Sections 5 and 12(d)): ..................................................................................... 255 8. Kia (Sections 5 and 12(d)): .............................................................................................. 255 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 35.2): .......................... 255 10. Nissan (Section 38): ....................................................................................................... 255 11. Tesla (Sections 9 and 21.4): ........................................................................................... 255 12. Toyota (Section 4.4): ..................................................................................................... 255 13. Volkswagen (Section 5): ................................................................................................ 255 14. OESA (Section 9): ......................................................................................................... 256

X. Insurance – Context and Questions ..................................................................................... 257

X. Insurance – OEM Comparative Analysis ............................................................................ 258

1. BMW (Section 18): .......................................................................................................... 258 2. FCA US (Section 11(a)): .................................................................................................. 258 3. Ford (Section 34.18): ....................................................................................................... 258 4. General Motors 2011 (Section 17): ................................................................................ 258 5. General Motors 2014 (Section 28): ................................................................................ 258 6. Honda (Section 7): ........................................................................................................... 258 7. Hyundai (Section 17): ...................................................................................................... 259 8. Kia (Sections 17 and 41): ................................................................................................. 259 9. Mercedes-Benz U.S. International, Inc. (“MBUSI”) (Section 24.4): .......................... 259 10. Nissan (Section 18A): .................................................................................................... 259 11. Tesla (Section 18): ......................................................................................................... 260 12. Toyota (Section 5.3): ...................................................................................................... 260 13. Volkswagen (Section 16): .............................................................................................. 260 14. OESA (Section 19): ....................................................................................................... 261

Appendix A – Documents Referenced in OEM Terms and Conditions

Appendix B – 2011 Original Equipment Suppliers Draft Model General Terms and Conditions

Supplement – General Motors General Terms and Conditions for Collaborative Contract Management for Global Emerging Market (GEM) Programs


2016 Original Equipment Suppliers Association, All Rights Reserved

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. Lack of Actual Agreement = Uncertainty

All OEMs attempt to say, in varying ways, that the goods are sold on their terms, and only their terms, as stated in the OEM’s Purchase Order and standard Terms and Conditions, regardless of whether the Supplier expressly agreed to the terms, objected to the terms, or proposed different terms. Despite the OEM’s endeavor to have its terms control, 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:

[T]here 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.3

3. Battle of the Forms Does Not Eliminate Uncertainty

UCC 2-2074 provides rules for resolving these “battle of the forms” disputes.5 Although extensive consideration of the nuances of UCC 2-207 is beyond the scope of this Comparative Analysis, it is indisputable that the rules are complex and often provide unclear or unsatisfactory answers. UCC 2-207 often turns on elusive questions, such as whether a particular communication is an offer, whether a Supplier’s response to a RFQ

3 White and Summers, Uniform Commercial Code, Fourth Ed., §1-3, p. 31. 4 UCC 2-207 states in part: Between merchants [additional or different] terms become part of the contract unless:

(i) the offer expressly limits acceptance to the terms of the offer; (ii) they materially alter it; (iii) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

5 It is notable that Toyota and VW’s standard terms expressly provide that UCC 2-207 does not apply. (See the comments to the Toyota terms regarding the possible effect of the exclusion of 2-207.)



I. Contract Formation – Dashboard

Specific Provisions Provided in Terms and Conditions

BM

W

FCA

US

Ford

GM

201

1

GM

201

4

Hon

da

Hyu

ndai

Kia

MB

USI

Nis

san

Tes

la

Toy

ota

VW

OE

SA

UCC 2-207 (Battle of the Forms) expressly disclaimed N N N N N N N N N N

Y Y Y N

Performance = acceptance Y Y Y Y Y Y Y Y Y Y

Y Y Y Y(b)

Supplier failure to promptly object = acceptance N N N N N Y N N N N

Y N N Y(a)

Supplier signature expressly required for contract N N N N N N N N N N

N N Y Y

Supplier terms rejected/excluded Y Y Y N Y Y Y Y Y Y

Y Y N N

Particular signatures of OEM executives required for effective modification? N N Y N N N N N N N

N N N N

Agreement (as defined in terms) is the complete and exclusive agreement S Y Y Y Y Y Y Y Y Y

S Y Y Y

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

Y Y Y Y

General Notes

1. The Dashboard is intended to provide a simple, high-level comparison among the OEM and OESA 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.

2. 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.

3. 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.

Specific Notes

(a) If combined with commencement of performance.

(b) Unless objected to within 10 days.



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.12

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.

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 Toyota, provide that the Supplier is wholly responsible for the costs of handling, packaging, storage and transportation of parts which likely would be read by Toyota to include costs associated with changes. General Motors (2011) and Hyundai specifically reserve the right to change delivery schedules without cost to themselves. GM’s 2011 Terms go one step further in reserving to itself the right to change quantities to be shipped without cost. The GM (2014) terms eliminated this language.

5. Transfer of Title and Risk of Loss

BMW and the OESA model terms transfer title and risk of loss at the point of origin (Supplier’s shipping location), while FCA US, Ford, Honda, Hyundai, Mercedes Benz USA International, Inc., Nissan, and VW transfer title and risk of loss at the point of destination. It is important to note, however, that these boiler-plate rules are often

12 Coupled Products, LLC v. Modern Machine Tool Company, 2014 WL 293659 * 10-11 (N.D. Ohio Jan. 23, 2014) (the question of what is reasonable is often a question of fact)



I. OEM’s Intellectual Property – Dashboard

Specific Provisions Provided in Terms and Conditions

BM

W

FCA

US

Ford

GM

201

1

GM

201

4

Hon

da

Hyu

ndai

Kia

MB

USI

Nis

san

Tes

la

Toy

ota

VW

OE

SA

Confidentiality of OEM information required Y Y Y S Y Y Y Y Y Y Y Y Y Y

Supplier must obtain confidentiality from lower tier Suppliers Y S S S Y S S S S Y S S Y S

Marking of Parts with OEMs trademarks Y Y Y S S S S S S S Y S Y S

OEM expressly retains ownership of its Intellectual Property S S S S Y Y S S Y Y Y Y Y Y

Supplier licensed to use OEM’s Intellectual Property for Supply of Parts to OEM (Supply license)

S Y Y S S S Y Y Y Y Y Y Y Y

Supplier may not publicize its supply relationship with OEM without permission

Y Y Y Y Y Y Y Y Y Y Y Y Y Y

OEM may assign ownership of its intellectual property rights without notice to Supplier

S S S S S S S S Y S S S S S

Parts supplied to OEM may not be supplied to third parties S Y Y Y Y Y Y Y Y Y S Y Y S

General Notes

1. The Dashboard is intended to provide a simple, high-level comparison among the OEM and OESA 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

2. 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

3. 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.



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. Only two OEMs (Ford and Honda) specifically mention the possibility of such a separate intellectual property agreement. GM mentions a separate Confidentiality Agreement. While the OEMs may indicate a willingness to consider a separate intellectual property agreement, they will seek to avoid entering into separate intellectual property agreements since doing so may shift the Supplier’s risk, altering the OEM-favored Terms and Conditions obtained under the Purchase Orders. Notably, the standard Terms and Conditions of GM, Honda, Hyundai, MBUSI, Tesla, Toyota and VW are very aggressive in appropriating ownership and/or license rights of Supplier’s intellectual property. These terms have particular relevance 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. In at least one case (Honda) this requires a thirty (30) day advance notice from the Supplier that the Parts are covered by certain intellectual property rights or the Supplier loses the right to enforce the intellectual property right against the OEM.

4. Enforcing Patents and Copyrights

Many OEMs (FCA US, Honda, Toyota, and VW) now follow GM’s approach where the Supplier may only enforce the Supplier’s patents and copyrights against the OEM and not 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.


2016 Original Equipment Suppliers Association, All Rights Reserved A6

FCA – Documents Referenced in Terms and Conditions

Document Paragraph/ Section Number(s)

Page Number(s)

Order Introduction, et. seq.

1

FCA Supplier Portal 1, et. seq. 1

FCA’s IT specifications 3 2

FCA Capacity Database 5 2-3

ISO/TS 16949 6 3

FCA Group LLC Customer Specification Requirements for use with ISO/TS 16949

6 3

Process, Planning & Audit Manual 6 3

Quality Management System 6 3

Advanced Quality Planning system 6 3

Third-Party Containment and Problem Resolution (“3CPR”)

6 4

Supplier Associated Warranty Reduction Program Policies and Procedures

8 5

Tool Record Form 10 6

C-TPAT 15 11

U.S. Export Laws 15 11

CS-9003 24 17

ISO 14001 24 17

U.S. Foreign Corrupt Practices Act 24 17

UN Convention on Contracts for the International Sale of Goods (CISG)

26 18

Rules of Arbitration of the International Chamber of Commerce

26(c) 19

OESA DRAFT MODEL GENERAL TERMS AND CONDITIONS OCTOBER 2011

2016 Original Equipment Suppliers Association, All Rights Reserved B1

Appendix B - 2011 Original Equipment Suppliers Association

Draft Model General Terms and Conditions



Original Equipment Suppliers Association

Draft Model General Terms and Conditions

With Comments

The Original Equipment Suppliers Association www.oesa.org 248.952.6401

http://www.oesa.org/



TABLE OF CONTENTS

1. The Contract 1.1 Offer and Acceptance ......................... 1 1.2 Changes ............................................. 2

1.3 Other Changes .................................... 2

2. Products and Services 2.1 Quantity ............................................. 2 2.2 Current-Model Service

Requirements .................................. 3 2.3 Past-Model Service Requirements ...... 3

3. Delivery 3.1 Packing and Shipment ....................... 3 3.2 Delivery Schedules ............................. 4

4. Inspection ...................................................... 4

5. Taxes .............................................................. 4

6. Payment ......................................................... 4

7. Product Warranties 7.1 Seller’s Warranties ............................ 5 7.2 Non-Conforming Products ................. 5 7.3 Recalls ................................................ 5

8. Product Liability 8.1 Indemnification .................................. 6 8.2 Procedure .......................................... 6

9. Compliance with Laws ................................. 7

10. Intellectual Property Rights 10.1 Buyer’s Intellectual Property ............. 7 10.2 Seller’s Intellectual Property ............. 7 10.3 Infringement ....................................... 7

11. Property 11.1 Buyer’s Property ................................ 8 11.2 Seller’s Property ................................ 9

12. Term and Termination 12.1 Generally ........................................... 9 12.2 Long-Term Contracts ........................ 9 12.3 Short-Term Contracts ...................... 10 12.4 Property Orders .............................. 10

13. Default 13.1 Events of Default ............................. 10 13.2 Remedies .......................................... 11

14. Confidential Information .......................... 12

15. Assignment and Subcontracting ............... 12

16. Excusable Non-Performance .................... 13

17. Labor Contracts .......................................... 13

18. Customs ...................................................... 14

19. Insurance .................................................... 14

20. Dispute Resolution 20.1 Negotiation and Mediation .............. 14 20.2 Arbitration ....................................... 14 20.3 Litigation ......................................... 14

21. Miscellaneous 21.1 Advertising ...................................... 15 21.2 Audit Rights ..................................... 15 21.3 Electronic Communication .............. 15 21.4 Relationship of the Parties .............. 15 21.5 Waiver ............................................. 15 21.6 Entire Agreement ............................. 15 21.7 Severability ...................................... 15 21.8 Interpretation .................................. 16 21.9 Notices ............................................. 16 21.10 Governing Law ................................ 16

These Draft Model General Terms and Conditions were designed for use in connection with the purchase and sale of automotive original equipment parts. OESA developed the Model Terms to promote a more collaborative approach to supplier-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 may 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 and Conditions are not intended to affect that negotiating process. Buyers and sellers are always free to negotiate whatever terms or conditions they believe appropriate and are able to agree upon in the specific situation. Each buyer and seller should independently

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