Buyer-protective contract clauses — clause library

A library of clauses adapted to industrial-pump-supply contracts in Brazilian and Latin American jurisdictions. Pick the clauses applicable to your contract; adapt the bracketed placeholders.

These clauses are drafted to favor the buyer. They reflect typical industrial-pump-supply practice and are enforceable under Brazilian contract law (Código Civil), but they are not a substitute for review by qualified legal counsel.

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Clause 1 — Performance guarantee

The Vendor warrants that the equipment supplied under this contract shall meet the performance specifications recorded in Annex [X] (“Performance Datasheet”). Performance shall be measured per ANSI/HI 14.6 (current edition) at the rated point and at 50%, 75%, 110%, and 120% of rated flow.

The acceptance grade is HI 14.6 Grade [1U / 1B] with the following tolerance bands:

• Flow at rated head: ± [5% / 8%] of guaranteed value
• Total head at rated flow: ± [3% / 5%] of guaranteed value
• Hydraulic efficiency: minus [3 / 5] percentage points below guaranteed value (positive deviation accepted without limit)
• NPSHr at rated flow and at 120% rated flow: shall not exceed guaranteed values

Clause 2 — Warranty period and trigger

The Vendor warrants the equipment supplied to be free from defects in material and workmanship for a period of [12 / 18 / 24] months from the date of commissioning OR [18 / 24 / 36] months from the date of delivery (whichever expires later).

The warranty period covers:

• Defects in pressure-containing castings, forgings, and welds
• Defects in rotating components (shaft, impeller, bearings, coupling)
• Defects in mechanical seals
• Performance non-conformance with Clause 1, when caused by Vendor’s manufacturing or design

The warranty does not cover normal wear of consumables (gaskets, packings, lube oil) provided that wear rate is within published manufacturer specification.

Clause 3 — Liquidated damages for late delivery

If delivery (defined as FAT-ready notification with documentation package) is delayed beyond the agreed delivery date specified in Annex [X] for reasons attributable to the Vendor, Vendor shall pay liquidated damages of:

• 0.5% of contract value per calendar week of delay, or fraction thereof,
• up to a maximum of 10% of contract value.

Liquidated damages are payable within 30 days of invoice and are not Buyer’s exclusive remedy. Buyer reserves the right to terminate this contract for material breach if the delay exceeds 60 calendar days beyond the agreed delivery date.

Clause 4 — Spare-parts continuity

The Vendor commits to maintain availability of spare parts for the equipment covered by this contract for a period of ten (10) years from delivery date. Spare-parts pricing for the first 5 years shall not exceed 110% of the prices listed in Annex [X] (“Initial Spare-Parts Schedule”), adjusted by the IPCA index for years 2-5.

The Vendor shall give the Buyer 24 months’ written notice before discontinuing any spare-parts line. Upon discontinuance notice, Vendor shall provide the Buyer with technical specifications sufficient to source equivalent parts from third parties, at no additional cost.

Clause 5 — Inspection and FAT witness rights

The Buyer or Buyer’s nominated representative has the right to witness the Factory Acceptance Test (FAT) at the Vendor’s factory or test bench. Vendor shall provide written notice of FAT date and location not less than 10 business days in advance.

Buyer’s witnessing is not waived by absence; Vendor shall provide complete test records on demand. Vendor shall provide test data at the moment of measurement and not from prior records.

If the FAT identifies non-conformance with the Performance Guarantee (Clause 1), Buyer may at its option:

1. Accept the equipment with documented reservations;
2. Require Vendor to remedy the cause and re-test at Vendor’s cost, including any additional travel costs incurred by Buyer’s witness;
3. Reject the equipment with refund of all CAPEX paid plus reimbursement of Buyer’s documented costs.

The choice between (1), (2), or (3) is at the Buyer’s sole discretion.

Clause 6 — Documentation deliverables

Vendor shall deliver, in physical and electronic format, the following documentation as a precondition to FAT sign-off:

1. Performance curve plot per HI 14.6 with NPSHr line and tolerance bands
2. Hydrostatic test certificate (lab-stamped)
3. Vibration test certificate per HI 9.6.4
4. Bearing temperature test log
5. Coupling alignment record (cold and hot, if applicable)
6. Cross-section drawing with bill of materials
7. General arrangement drawing with critical dimensions
8. Installation, operation, and maintenance manual in Portuguese
9. Spare-parts list, 5-year recommended consumption
10. All certificates referenced in this contract shall be from INMETRO-recognized laboratories or equivalent

Clause 7 — Intellectual property and right to repair

Vendor shall deliver to Buyer, at FAT, the documentation listed in Clause 6 with non-exclusive perpetual licence to use solely for purposes of operating, maintaining, repairing, and refurbishing the equipment covered by this contract.

Vendor shall additionally deliver:

• Mechanical-seal data sheet identifying the original seal manufacturer (where the seal is sourced from a third party such as John Crane, Flowserve, or AESSEAL)
• Bearing arrangement drawings with bearing manufacturer and reference
• Coupling specification with coupling manufacturer and reference

Buyer agrees not to disclose this documentation to third parties for the purpose of competing with Vendor’s manufacture of like equipment.

Clause 8 — Force majeure

Neither party shall be liable for delay or failure to perform any obligation under this contract where such delay or failure is caused by events beyond the reasonable control of the affected party, including but not limited to:

• Acts of God, natural disasters, fire, flood
• War, terrorism, civil unrest
• Government action or regulatory change
• Pandemic or public health emergency
• Disruption of supply chain or critical raw material availability substantially affecting the affected party’s industry
• Strike, lockout, or labor dispute not within the affected party’s reasonable control

The party invoking force majeure shall give written notice within 5 business days of the event, with documented evidence. The other party may terminate this contract for convenience if the force majeure event persists for more than 90 calendar days.

Clause 9 — Anti-corruption and beneficial ownership

Each party represents and warrants that:

• It has not, and shall not, offer, give, or receive any bribe, gift, or improper inducement to any government official, public servant, or private individual in connection with this contract
• It complies with Lei nº 12.846/2013 (Lei Anticorrupção Brasileira), the U.S. Foreign Corrupt Practices Act (FCPA), and the UK Bribery Act 2010 to the extent applicable
• It maintains internal controls and audit procedures sufficient to detect and prevent improper payments

Each party shall disclose, on request, the beneficial ownership structure of its corporate entity to the level of natural persons.

Clause 10 — Governing law and dispute resolution

This contract shall be governed by and construed in accordance with the laws of the [STATE] of the Federative Republic of Brazil.

Disputes arising out of or in connection with this contract shall be resolved by arbitration administered by the [Câmara de Comércio Brasil-Canadá (CCBC) / Câmara de Arbitragem do Mercado (CAM-B3) / ICC] in São Paulo, Brazil, in Portuguese, by [one / three] arbitrator(s) selected per the institution’s rules.

Pending resolution of any dispute, both parties shall continue to perform their obligations under this contract.

Clause 11 — Severability

If any provision of this contract is held invalid or unenforceable by a court of competent jurisdiction or by an arbitration panel, the remainder of the contract shall continue in full force and effect, and the invalid or unenforceable provision shall be replaced by a valid provision that most closely approximates the parties’ original intent.

Clause 12 — Entire agreement

This contract, together with its annexes, constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior negotiations, representations, and agreements whether written or oral.

Any amendment shall be in writing and signed by both parties.

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These twelve clauses cover the most-litigated areas of industrial pump supply contracts. A complete contract typically has 30-50 clauses; the remainder cover commercial and administrative items (payment, taxes, insurance, notices, assignment) which are reasonably well standardized in legal practice and not pump-specific.