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Editor's Note: This form may be modified for use by a party seeking a waiver of contractual performance or of a contractual provision from a counterparty to a supply agreement that contemplates regular adjustments in the quantity supplied on the basis of forecasts. This waiver contemplates that Party A is a manufacturer that purchases goods from the Counterparty. The specific reason for the waiver request needs to be tailored to the individual requester's situation.
Letterhead of Party A
Counterparty Contact Person
Re: Supply Agreement dated [Date]
Dear [Contact Person]:
We refer to the Supply Agreement dated [Date] by and between the undersigned (Party A) and [Counterparty Name] (Counterparty). Section [xx] of that Agreement requires Party A to provide a [Rolling Three-Month forecast to Counterparty of its projected product purchases from Counterparty for the forecasted time period. The forecast, if not objected to by Counterparty, becomes a firm order for not less than xx% of the forecasted monthly amount. The Agreement also contains a minimum annual volume of purchases.]
As we have discussed by telephone over the last [xx days/weeks], demand for our products has decreased significantly recently and work at our production facility continues to reduce in response to governmental recommendations due to Covid-19 and the novel coronavirus pandemic.. Forecasts previously supplied to you under the Agreement no longer reflect our needs or the current reality.
Comment: The parties are not invoking the provisions of a force majeure clause (assuming there is one in the parties’ agreement). This approach avoids the question of whether Party A's current performance dilemma is the result of a force majeure event. Prior to 2020, many commercial agreements did not list pandemics or widespread disease as a force majeure event. Also, Party A, as the buyer, cannot seek relief under the provisions of § 2-615 of the Uniform Commercial Code (Excuse by Failure of Presupposed Conditions) since that section is available only to a seller of goods.
A waiver in this instance permits the parties to reach a similar position as if a force majeure had been declared and accepted.
In light of the above, we hereby request that you waive the following:
1. The requirements of Section [xx] of the Agreement that we purchase at least [xx]% of the forecasted monthly amount.
2. The requirements contained in Section [xx] setting out a minimum annual purchase volume [for the current year].
3. The requirement contained in Section [xx] for a forecast. In lieu of a forecast, we propose to provide an estimate of our monthly needs, followed by a firm order not later than [xx] days prior to month end.
4. [Insert other waivers needed.]
Comment: The Supply Agreement may contain other provisions that need to be waived so that Party A does not inadvertently breach the contract or create an indemnification liability.
We request that these waivers remain in effect through at least [Date] or, if earlier, such time as we mutually agree that pandemic effects have abated.
These waivers will permit us needed flexibility to assess market demands and respond appropriately as conditions change.
Assuming this request is acceptable to you, we ask that you sign and return to us the enclosed copy of this letter, indicating your agreement to waive the provisions of the Agreement noted above for the referenced period.
Comment: The underlying agreement may set out requirements for waivers, such as that they must be in writing and agreed to by the parties. Such a clause may make it more difficult for Party A to include a provision in the waiver request stating that failure to respond by a certain date will be taken as agreement with the waiver.
[Name and Title]
Acknowledged and Agreed to:
[Name and Title]