Common use of Inspection; Product Replacement Clause in Contracts

Inspection; Product Replacement. Buyer shall have a period of ten (10) Business Days after the date of its receipt of a shipment of Product to inspect and accept or reject such shipment for non-conformance with the Product Specifications based on the outward appearance of such shipment. Buyer shall have a period of thirty (30) days (forty-five (45) days if an outside testing laboratory is used) after the date of its receipt of a shipment of Product to inspect and accept or reject such shipment for any other non-conformance with the Product Specifications or based upon a finding by Buyer of non-conformance, assuming that such non-conformance has not been approved in writing by the Buyer and the Seller, or due to deviation from cGMPs, Regulatory Requirements or any applicable Law, rule, regulation, guideline or procedure, including the Act, in the production of the shipment. If Buyer rejects such shipment, it shall promptly so notify Seller, and the Parties shall thereafter attempt in good faith to determine whether such Products did or did not conform to the applicable Product Specifications and shall reasonably cooperate with each other for such purpose (including, but not limited to, providing the other Party with reasonable access to all documents, filings and other relevant materials then in such Party’s possession or reasonably accessible to such Party and the Buyer’s provision to Seller of samples of such shipment for testing). If either Seller or Buyer determines that such shipment did not conform to the Product Specifications, either Party may, if such Party determines it to be relevant, submit samples of such shipment to an independent laboratory of nationally recognized standing for testing. If such independent laboratory determines that the shipment conformed in all respects to the Product Specifications, Buyer shall bear all expenses of shipping and testing such shipment samples and shall be obligated to accept and pay for such shipment. If Seller or such independent laboratory confirms that such shipment did not meet the Product Specifications in all respects, Seller shall replace, at no cost to Buyer, that portion of the Product shipment that does not conform to the Product Specifications, and shall bear all expenses of shipping and testing the shipment samples, including any costs incurred by Buyer in returning such Product to Seller or its nominee. If based on a facility inspection or audit by Buyer as provided herein, or based on a specific observation made by any Regulatory Authority following an audit or inspection, Buyer determines that a shipment or portion of a shipment was manufactured under conditions that materially deviated from cGMPs, Regulatory Requirements or any applicable Law, rule, regulation, guideline or procedure, including the Act, Buyer and Seller shall agree upon the appropriate action to be taken in conformance with the FDA483 or the action letter received by Seller relating to the Products. If rejection of Product is warranted, Seller shall replace, at no cost to Buyer, that portion of the Product shipment that was manufactured under conditions deviating from cGMP, such Regulatory Requirements or applicable Law, rule, regulation, guideline or procedure, including the Act. Any non-conforming portion of any shipment shall be disposed of as directed by Seller, at Seller’s expense. Any Product that Buyer does not reject pursuant to this Section 2.4 shall be deemed accepted and Buyer’s right to reject Product on the grounds that it does not conform with the Product Specifications shall be deemed fully waived and released by Buyer. Nothing in this Section 2.4 shall limit the Buyer’s right to revoke acceptance of the Product in whole or in part under the circumstances specified in Section 2-608 of the Illinois Uniform Commercial Code for the purposes of determining Seller’s liability under Article 3 of this Agreement. Without limiting the foregoing, it is agreed that for purposes of Section 2-607(3)(a) of the Illinois Uniform Commercial Code, Buyer will not have been deemed to have discovered or should have discovered any breach that is not, or reasonably would not be, discovered or detected by a visual inspection by Buyer consisting of an identification of the Products received by Buyer, a review of the Certificate of Analysis and a visual inspection for physical damage to the Products shipped.