Bailment Agreement
This agreement covers the situation where a company, having already agreed a manufacturing agreement with a contractor (see model: Manufacturing Agreement) further agrees to grant gratuitously to the contractor as bailee, the use of the machinery and equipment specifically needed for that assembly and manufacture.Under Belgian law this type of agreement (“bruikleen/prêt à usage”, also known as “commodatum”) is regulated by articles 1875 to 1891 of the Civil Code.
This unilateral contract is, in principle, gratuitous.
THIS AGREEMENT IS MADE AND ENTERED INTO
between
______, a company incorporated and existing under the laws of ______, with its registered office at ______[address] and registered with RPR/RPM in ______[judicial district] under number ______(hereinafter the “Bailor”)
and
______, a company incorporated and existing under the laws of Belgium, with its registered office at ______[address], Belgium and registered with RPR/RPM in ______[judicial district] under number ______(hereinafter the “Bailee”).
The Bailor and the Bailee are hereinafter collectively referred to as “the Parties”.
WHEREAS the Bailor is a corporation principally involved in the manufacture and assembly of ______[define the main products];
WHEREAS the Bailee is a company which will render certain assembly and manufacturing services to the Bailor;
WHEREAS the Bailor is willing and able to permit the Bailee to use the machinery and equipment, as specified in the list attached hereto and marked as Annex I, which, when signed by the Parties, is incorporated herein by reference, in order to enable the Bailee to provide the services which it has undertaken to render to the Bailor in accordance with the manufacturing agreement previously executed by the Parties;
NOW, THEREFORE, the Parties have agreed as follows:
Article 1 – Purpose
1.1.The Bailor hereby freely grants to the Bailee the use of the machinery and equipment, as specifically described in Annex I referred to above (hereinafter referred to as “the “Machinery”), for the exclusive purpose of providing assembly and manufacturing services to the Bailor.
1.2.Notwithstanding that an invoice or invoices may be required to be issued for certain customs purposes, it is agreed that the title and ownership of the Machinery shall, at all times, remain vested in the Bailor.
Article 2 – Delivery
2.1.The Bailor shall deliver the Machinery to the Bailee in commodatum, at the times as agreed by the Parties.
2.2.The Parties may, from time to time, amend the list attached as Annex I to this Agreement in order that it may include additional items which may be delivered to the Bailee on agreement of the Parties and also may exclude items returned by the Bailee to the Bailor on agreement of the Parties.
Article 3 – Maintenance
3.1.All necessary expenses for the use, maintenance, repair and preservation of the Machinery hereby given in commodatum shall be the exclusive responsibility of the Bailee, unless as otherwise agreed to by the Bailor.
3.2.The Bailee covenants and agrees to diligently preserve and maintain the Machinery in the condition in which it is received.
3.3.The Bailee shall maintain the Machinery at its current premises and may only remove it if agreed by the Parties, from time to time. The Bailee may not sell, assign its rights, place liens or encumber the Machinery in any manner whatsoever.
3.4.The Bailee undertakes to use the Machinery only and exclusively for the purposes for which it was built, and will adjust its operations to the capabilities thereof.
Article 4 – Risk of Loss
The Bailee shall be liable to the Bailor for the total or partial loss of the Machinery, as well as for any deterioration of the Machinery, except for deterioration resulting from normal usage, even when such deterioration is a result of fortuitous cause or force majeure, until such time as the Machinery is returned to the Bailor pursuant to article 6 of this Agreement.
Article 5 – Insurance
5.1.The Bailee must have, or acquire suitable insurance from an authorized insurance company to cover the Machinery against any type of loss, in an amount which is equal to the value mutually agreed by the Parties from time to time, and which must be equal to or greater than the purchase price of the Machinery.
5.2.The corresponding policy must identify the Bailor as Loss Payee, as applicable.
Article 6 – Return of the Machinery
6.1.Since no specific duration for the commodatum has been agreed upon hereunder, the Bailee shall cease using and immediately return the Machinery to the Bailor when the Bailor so requests. Therefore, pursuant to the applicable legislation, the Bailor maintains the right to demand the return of the Machinery at any time, in which case, this Agreement will immediately terminate.
6.2.The Bailor shall have the right to recover the Machinery at any time and the Bailee covenants to return it at the place as indicated by the Bailor.
6.3.All expenses such as customs fees, export duties, transportation costs, and any other type of expense will be the exclusive responsibility of the Parties, as mutually agreed by them from time to time.
Article 7 – Liability of the Bailee
7.1.The Bailor shall not assume any responsibility or commitment towards the Bailee, or towards any third Party, with respect to their persons or their personal property, resulting from the possession, use of, or misuse due to lack of skilled operation of the Machinery, nor for any other reason whatsoever.
7.2.The Bailee agrees to indemnify the Bailor against and to hold the Bailor harmless from, any such responsibility, liability or commitment, including reasonable legal fees and costs. The Bailor reserves the right to inspect the Machinery at any time whatsoever, for the purpose of verifying the correct use and operation thereof.
Article 8 – Obligations of the Bailee
The Bailee agrees to comply with all laws, regulations and other legal provisions applicable to the use or possession of the Machinery and agrees to notify the Bailor immediately, in writing, of any claim, demand, litigation, or any other lien, that might affect the Machinery.
Article 9 – Expenses
All expenses related to the use, security measures, maintenance and operation of the Machinery shall be borne by the Bailee, unless otherwise agreed by the Parties.
Article 10 – Duration and Termination
This Agreement is entered into by the Parties for an undetermined period of time but shall terminate either jointly with the termination of the manufacturing agreement entered into by the Parties on this date, or immediately upon receipt of written notice from the Bailor.
Article 11 – Relationship between the Parties
None of the provisions of this Agreement shall be interpreted as indicating the intent of the Parties to form a company, association or joint venture.
Article 12 – Miscellaneous Provisions
12.1.This Agreement, together with its Annexes, contains the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes and replaces all prior agreements or understandings, whether written or oral, with respect to the same subject matter that are still in force between the Parties.
12.2.Any amendments to this Agreement, as well as any additions or deletions, shall be agreed in writing by both the Parties.
12.3.Whenever possible, the provisions of this Agreement shall be interpreted in such a manner as to be valid and enforceable under the applicable law. However, if one or more provisions of this Agreement are found to be invalid, illegal or unenforceable, in whole or in part, the remainder of that provision and of this Agreement shall remain in full force and effect as if such invalid, illegal or unenforceable provision had never been contained herein. Moreover, in such an event, the Parties shall amend the invalid, illegal or unenforceable provision(s) or any part thereof and/or agree on a new provision, in such a way as to reflect insofar as possible the purpose of the invalid, illegal or unenforceable provision(s). Neither party shall be liable for failure to perform under this Agreement (except for the payment of any amounts due herein) if such failure is due to causes beyond its reasonable control, such as, but not limited to, fire, flood, strikes, labour disputes or other industrial disturbances, (declared or undeclared) war, embargoes, blockades, legal restrictions, riots, insurrections, governmental regulations or the unavailability of means of transport.
12.4.Any failure or delay by a party in exercising any right under this Agreement, any single or partial exercise of any right under this Agreement or any partial reaction or absence of reaction by a party in the event of a violation by the other party of one or more provisions of this Agreement, shall not operate or be interpreted as a waiver (either express or implied, in whole or in part) of that party’s rights under this Agreement or under the said provision(s), nor shall it preclude any further exercise of any such rights. Any waiver of a right must be express and in writing. If there has been an express written waiver of a right following a specific failure by a party, this waiver cannot be invoked by the other party in favour of a new failure, similar to the prior one, or in favour of any other kind of failure.
12.5.All notices and other forms of communication required under this Agreement must be in writing and delivered or sent to the receiving party (i) by hand through a reputable courier service, (ii) by fax with a confirmation report, or (iii) by registered mail (return receipt requested) to the address indicated below:
To the Bailor: ______
To the Bailee: ______
Any notice shall be considered to have been delivered to the receiving party’s address on the date of delivery if sent by hand, upon confirmation if sent by fax and 3 working days following the date of mailing if sent by registered mail.
12.6.Either party may change the address to which notices are to be delivered or sent by giving the other party written notice to this effect in the manner set forth herein.
12.7.Each party shall bear its own costs (including lawyers’ fees, costs and expenses) for the preparation and negotiation of this Agreement.
12.8.This Agreement is executed in separate copies, each of which is deemed an original and all of which taken together constitute one and the same agreement. Translations into any language other than English may be made but are for the sake of convenience only, even when executed by one or both Parties.
Article 13 – Applicable Law and Jurisdiction
13.1.All issues, questions and disputes concerning the validity, interpretation, enforcement, performance and termination of this Agreement shall be governed by and construed in accordance with Belgian law, and no effect shall be given to any other choice-of-law or conflict-of-laws rules or provisions (Belgian, foreign or international), that would cause the laws of any other jurisdiction to be applicable.
13.2.All disputes concerning the validity, interpretation, enforcement, performance and termination of this Agreement shall be submitted to the exclusive jurisdiction of the______[judicial district] courts.
Executed in ______[place], on ______[date] in two original copies, each party acknowledging receipt of one.
FOR AND ON BEHALF OF THE BAILOR
______[name]
______[title]
______[date]
______[signature]
FOR AND ON BEHALF OF THE BAILEE
______[name]
______[title]
______[date]
______[signature]
LIST OF ANNEXES
Annex I.The Machinery
1