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Advance Purchase Agreement Template for United Arab Emirates

A comprehensive commercial agreement governed by UAE law that establishes the terms and conditions for the advance purchase of goods or materials. The document details the commitment to purchase specified quantities of goods at predetermined prices, with delivery scheduled for future dates. It includes provisions compliant with UAE Civil and Commercial Codes, addressing payment terms, delivery schedules, quality requirements, and risk allocation. The agreement incorporates necessary Sharia law considerations and UAE regulatory requirements, making it suitable for both local and international commercial transactions within the UAE jurisdiction.

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What is a Advance Purchase Agreement?

The Advance Purchase Agreement is a vital commercial document used when a buyer wishes to secure future supply of goods or materials by making advance commitments and payments. This agreement type is particularly relevant in the UAE market where supply chain security and price stability are crucial business considerations. The document addresses key aspects required under UAE law, including detailed specifications of goods, payment structures, delivery schedules, and quality standards. It is commonly used in industries with long lead times, volatile pricing, or where securing supply chain stability is essential. The agreement must comply with UAE Civil Code (Federal Law No. 5 of 1985) and Commercial Transactions Law (Federal Law No. 18 of 1993), while also considering Sharia law principles, particularly regarding advance payments and risk allocation. This document type is especially valuable in the current global market where supply chain security and price predictability are increasingly important.

What sections should be included in a Advance Purchase Agreement?

1. Parties: Identification of buyer and seller with full legal names and addresses

2. Background: Context of the agreement and commercial relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Subject Matter: Detailed description of goods to be purchased and their specifications

5. Purchase Price and Payment Terms: Price, advance payment amount, payment schedule, and payment method

6. Delivery Terms: Delivery schedule, location, and Incoterms (if applicable)

7. Quality and Inspection: Quality standards, inspection procedures, and acceptance criteria

8. Title and Risk: Transfer of ownership and risk allocation

9. Warranties and Representations: Parties' warranties regarding capacity, authority, and goods

10. Term and Termination: Duration of agreement and termination provisions

11. Force Majeure: Events excusing performance and consequences

12. Confidentiality: Protection of confidential information

13. Governing Law and Jurisdiction: UAE law as governing law and dispute resolution mechanism

14. General Provisions: Standard boilerplate clauses including notices, amendments, and assignments

What sections are optional to include in a Advance Purchase Agreement?

1. Regulatory Compliance: Required if goods are subject to specific UAE regulations or permits

2. Security Arrangements: Include if additional security such as bank guarantees or performance bonds are required

3. Insurance: Detailed insurance requirements if specific coverage is needed

4. Intellectual Property: Include if goods involve patents, trademarks, or other IP rights

5. Export/Import Requirements: Required if international shipping or specific customs requirements apply

6. Storage and Handling: Include for goods requiring special storage or handling conditions

7. Step-In Rights: Include if buyer needs rights to ensure continuity of supply

8. Anti-corruption and Sanctions: Required for international transactions or government contracts

What schedules should be included in a Advance Purchase Agreement?

1. Schedule 1 - Product Specifications: Detailed technical specifications of goods

2. Schedule 2 - Pricing Schedule: Detailed breakdown of prices, including any volume-based pricing

3. Schedule 3 - Delivery Schedule: Detailed timeline for deliveries and quantities

4. Schedule 4 - Quality Standards: Specific quality requirements and testing procedures

5. Schedule 5 - Form of Purchase Order: Template for individual purchase orders under the agreement

6. Schedule 6 - Performance Specifications: Performance criteria and acceptance testing procedures

7. Schedule 7 - Contact Details: Key contact persons and their details for both parties

8. Schedule 8 - Required Documents: List of documents required for delivery and acceptance

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use

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