Excess Inventory Levels Clause Samples
The Excess Inventory Levels clause defines how surplus stock beyond agreed-upon thresholds is managed between parties. Typically, this clause outlines the process for identifying, reporting, and resolving situations where inventory levels exceed forecasted or contractual amounts, such as requiring the supplier to repurchase or discount excess goods. Its core function is to prevent financial losses and storage issues by ensuring that inventory levels remain aligned with actual demand, thereby allocating the risk of overproduction or overordering.
Excess Inventory Levels. 6.4.1 If PRC intends to designate an Excess Inventory Level for any whole or partial month for any Product Group, then PRC shall use commercially reasonable efforts to notify ▇▇▇▇ of PRC’s intention prior to the Target Cutoff Date for such whole or partial month. If PRC fails to provide such notice in a timely manner, it shall not be entitled for that whole or partial month to designate an Excess Inventory Level for the relevant Product Group and Sections 6.4.4 and 6.4.5 shall apply.
6.4.2 If, pursuant to Section 6.4.1, PRC provides timely notice of its intention to designate an Excess Inventory Level for a Product Group, then ▇▇▇▇ shall promptly advise PRC whether ▇▇▇▇ accepts such Excess Inventory Level (in which case Section 6.4.3 shall apply) or rejects such Excess Inventory Level (in which case Section 6.4.4 and 6.4.5 shall apply).
6.4.3 If ▇▇▇▇ accepts an Excess Inventory Level for any whole or partial month, then, for all purposes of this Agreement, such Excess Inventory Level shall constitute the Maximum Inventory for the relevant Product Group for such whole or partial month; provided that such Excess Inventory Level shall not apply to any other whole or partial month unless expressly accepted by ▇▇▇▇ for such other whole or partial month as contemplated by Section 6.4.2.
6.4.4 If ▇▇▇▇ rejects an Excess Inventory Level for any whole or partial month or PRC fails to provide notice to ▇▇▇▇ of its intention to designate an Excess Inventory Level in a timely manner for any whole or partial month, then the following provisions shall apply:
(i) The Maximum Inventory for such whole or partial month shall remain at the level set forth on Schedule E and the Target Product Inventory for the relevant Product Group for such whole or partial month shall be equal to no more than the Maximum Inventory.
(ii) Prior to the commencement of such whole or partial month, PRC shall, to the extent practicable and commercially reasonable, identify those Tanks that it will, during such whole or partial month, use to hold and isolate any Excess Quantities. In doing so, to the extent practicable and commercially reasonable, PRC will endeavor to use smaller capacity Tanks before larger capacity Tanks to facilitate the segregation of such Excess Quantities from the ▇▇▇▇ Inventory. Prior to the commencement of such whole or partial month, PRC shall provide ▇▇▇▇ with notice of the Tanks it intends to use for such purposes.
(iii) To the extent that PRC is able to store Excess Qua...
Excess Inventory Levels. (a) If, at any time, either Party determines, with respect to any Product Group, that the aggregate quantity of such Product Group being held in the Included Locations exceeds the Maximum Inventory Level for such Product Group (such excess, an “Excess Quantity”), such Party shall promptly notify the other Party of the existence and volume of such Excess Quantity. Within three (3) Business Days after such notice is given, ▇▇▇▇ shall advise the Company as to whether ▇▇▇▇ accepts such Excess Quantity (in which case Section 7.10(b) shall apply) or rejects such Excess Quantity (in which case Section 7.10(c) shall apply).
(b) If ▇▇▇▇ accepts an Excess Quantity then, for all purposes of this Agreement, such Excess Quantity shall constitute the Maximum Inventory Level for the relevant Product Group for the balance of the month in which such Excess Quantity was first identified and, at Aron’s option, for such additional month or months as ▇▇▇▇ may specify; provided that if ▇▇▇▇ does not accept such Excess Quantity for any additional month or months, such Excess Quantity shall only be in effect for the then current month and if such Excess Quantity remains after the end of such current month, the provisions of this Section 7.10 shall apply anew as of the beginning the following month.
(c) If ▇▇▇▇ rejects an Excess Quantity then, for purposes of determining amounts due under Sections 10.1 and 10.2 of this Agreement, such Excess Quantity shall not be counted as Crude Oil or Products being held at an Included Location. In such case, if the Company is able to segregate in one or more Included Tanks a quantity of the relevant Product Group at least equal to such Excess Quantity, the Company may, at its option, elect to designate such Included Tanks and purchase from ▇▇▇▇ the segregated quantity of such Product Group held in such designated Included Tanks so that the quantity of such Product Group owned by ▇▇▇▇ would not exceed the Maximum Inventory Level for the relevant Product Group after giving effect to such purchase, at a price equal to the product of (a) the volume of such Product Group held in such Included Tanks and (b) the Current Month Pricing Benchmark for the applicable Product Group. After settlement of such purchase, such Included Tanks shall no longer constitute Included Locations for purposes hereof unless and until ▇▇▇▇ determines, in its reasonable discretion, that Aron’s ownership of the quantities held in such tanks would not result, as of the time of...
Excess Inventory Levels