TERMS & CONDITIONS

Art Alliance Standard Terms and Conditions 1^st January 2009 - 31^st December 2009

We have developed these terms and conditions in consultation with our customers, our customs brokers, and our freight agents in order to provide a trouble free and expedited process for sales and deliveries. These terms apply to all Art Alliance contracts, orders, and deliveries of any kind, whether or not reference is made to them in orders, invoices, or other documents. These standard terms govern all relations between Art Alliance, you, our customers and us.

In this document, “you” means our customer, “we” means

Art Alliance, and “Art Alliance” means any of the

Art Alliance group of companies.

1. General

1.1. All Art Alliance sales and deliveries are subject to these terms, whether or not a specific order makes reference to them.

1.2. You accept these terms and conditions whenever you place an order with Art Alliance or accept a delivery from Art Alliance. Neither you nor we can make changes in these terms except in a written document that we both sign.

1.3. Any unwritten agreements become binding only when we confirm them in writing.

1.4. Only authorized officers of Art Alliance can confirm orders and agreements and they can do so only in writing.

2. Specifications

2.1. Almost all of our products are hand made. This means that almost all details of measurement, weight, performance, and composition stated in our catalogs, web site, invoices, and elsewhere are best effort, good faith approximations, not binding representations.

2.2. When we make a special order for you, our estimates of time and costs for design, illustration, production, and other technical matters are also always good faith approximations, never binding representations.

2.3. Deliveries are dependent upon at least two sets of national customs and one or more freight agency. We try use the best freight agents and customs brokers we can find, but beyond this we cannot guarantee delivery times. Our freight agents are almost always able to make deliveries when promised. However, if you absolutely must have items delivered on a drop dead no later than basis, then you should arrange directly with a freight agent or courier service for delivery that is guaranteed to your specifications.

2.4.   When our costs go up for raw materials or because of technical, labor, manufacturing, shipping, or regulatory reasons, we must either reduce quality or increase prices. We will always choose to raise prices if the only alternative is to reduce quality.

3.       Orders

3.1.   No order placed with us is effective until we confirm it in writing.

3.2.   If we confirm your order in writing and you do not immediately change or cancel it, then the order is accepted by both sides as confirmed.

3.3.   On occasion, especially when you require expedited delivery of small quantities, we may confirm your order simply by an invoice sent with the order.

3.4.   In all cases it is our written confirmation that governs how the order will be fulfilled.

3.5.   Neither you nor we will be bound by obvious mistakes or typographical and similar errors in your orders or our confirmations.

3.6.   Once you place an order and we have started to produce it, it is always difficult to make changes and sometimes it is simply impossible. Nonetheless, if you must ask for changes, we will do our best to accommodate you if we can do so physically and if you pay for the added costs. In all other cases, you are bound by the order you originally made.

4.       Price

4.1.   We will always quote you the best price we can offer for the highest quality we can deliver. We don’t think you will ever find a lower price for equivalent quality. If you do, we will do our best to match or better it.

4.2.   We would prefer to state prices ex-works or ex-warehouse, exclusive of all added costs, such as value added tax, packaging, loading, customs, freight, transport, and insurance. This is how things are usually done in international trade and when we state prices in these terms we know that we will always come out ahead of our competitors on the basis of price for quality.

4.3.   Unfortunately, moving goods from Russia to other countries is still difficult and expensive, especially for small orders, and many customers do not have the experience or facilities to perform these operations.

4.4.   Our prices are based upon manufacturing cost and transportation from our manufacturing facilities to our warehouses. The customer is responsible for the costs of transportation, customs fees, brokers fees and warehousing (should it be required) from our warehouse to the final shipping destination.

4.5.   The prices we quote for shipping are based on best rates that we have been able to secure based on aggregated orders and longstanding relations with shipping and customs agents. If you have arrangements that allow you to secure better rates, we will be happy to quote prices excluding shipping and turn over to you all responsibility for shipping, handling, customs, and delivery.

4.6.   When we make shipping arrangements on your behalf, you bear the costs and risks of delivery, including, among others, delays to aggregate orders in order to reach discounted weights or quantities.

5.       Price Increases

5.1.   When our costs increase because of currency fluctuation (most of our paints, lacquers, and other materials other than wood and sometimes even wood are denominated in foreign currencies), or because of changes in the costs of labor and raw materials, or because of new laws and regulations, we have to restate our prices. Sometimes this will affect prices we have quoted to you for future deliveries. It will never affect prices for orders we have already accepted.  When our internal costs decrease (this sometimes happens when we are able to increase the efficiency of our procedures), we also pass the savings on to you.  In general the prices you see on our website are calculated to be used for 1 year (January - January)

6.       Shipment and Risk of Loss

6.1.   Shipment is always at your expense and risk. Your delivered price includes packing, shipping and insurance from Russia to the destination country. You will bear all shipping costs from Russia to the final destination as stated on your invoice. The customer is responsible for any taxes, duties and VATS charges imposed by the destination country.

6.2.   In order to get you the best rates and fastest delivery times, the type, route, and other details of shipment are at the discretion of our shipping agents.

6.3.   Risk of loss passes to you upon our delivery of the goods to the shipping agent.

6.4.   If a shipment is delayed due to circumstances for which you are responsible or happens at your request, risk of loss passes to you when we notify you that your goods are ready for shipment.

6.5.   If you have made arrangements to collect your order directly, ex-works, ex-warehouse, or otherwise, risk of loss passes to you when we notify you that the goods are packed and ready for your pickup.

6.6.   Shipping terms that we use are pursuant to INCOTERMS 2000. Our most common term for shipment is CIP, that is, Carriage and Insurance Paid to (named destination). Others are listed in the Shipping Terms Addendum.

7.       Payment

7.1.   We do not sell on credit, as the best credit terms we could offer would not come close to those offered by your bank. Long-standing customers do have some flexible payments terms. Please contact us for more information.

7.2.   Because we do not want ever to compete with you, our wholesale customers, we sell only in wholesale lots.

7.3.   Because our costs are directly related to the costs of setup and shipping, we can offer discounts only on prepaid orders for quantities that allow us economies of scale. If you need to buy in small quantities, we will be happy to recommend distributors who will meet your specialized needs.

7.4.   Our terms are full payment in advance (unless otherwise agreed). In the words of the immortal Ilf & Petrov, Money this morning, chairs this evening, money this evening chairs tomorrow morning. This is the only way that we sustain our low prices. (Yes, there are exceptions for preapproved customers. See the next paragraph.)

7.5.   Customers who are preapproved by our bank can secure payment terms net thirty days from the date of invoice. These terms must be explicitly agreed to in writing. In cases where we extend such terms, all orders are subject to our security interest. If you wish to secure preapproval for thirty-day terms, please contact us directly.

7.6.   We accept payment in cash, by certified check, by bank transfer or bank check, and also by irrevocable letter of credit approved by our bank. Payments by personal or business check are honored as soon your check has cleared.

8.       General Terms Relating to Orders and Payment

8.1.   If you have more than one open invoices or account, we will always apply payment to the most senior claim.

8.2.   By placing an order, you agree not to withhold payments or make setoffs of any kind.

8.3.   You agree that you cannot assign or pledge your rights under a contract or order with us unless you have our prior written consent.

8.4.   If there are delays in your payments, you agree to pay interest at the rate of 1.5% monthly. We reserve the right to make claims for additional damages for delays. Nonpayment of a part of the purchase price when due will make the entire purchase price, including all ancillary charges such as shipping and handling, immediately due and payable.

8.5.   If you are granted terms and we discover or reasonably believe that your payment is endangered because of a weak financial situation, we may ask for an additional prepayment percentage or other adequate security. If you refuse to provide it, we may rescind all contracts and orders after a reasonable period of grace. In such cases we retain the right to maintain al claims for payment of expenses, for damages, and for lost profits.

8.6.   Unless you and we have agreed to other terms in writing, you agree that any amounts not paid in full within thirty days of delivery can be declared overdue and subject to collection.

8.7.   If any payments from you are overdue and we engage third parties to collect payments that are due from you, you agree to cover all costs of collection, including collection agency charges and reasonable attorneys fees.

9.       Retention of Title

9.1.   In all cases where we have not been paid in full, we reserve all ownership and title in delivered goods until full payment of our invoice for that delivery and for all secondary and subsequent claims.

9.2.   While we retain ownership in the property, you agree to insure the purchased products against theft, fire, water and other damages. The customer assigns claims for damages against the insurer on account of damages to us at the time of shipment and in the amount of the value of the goods without requiring further explanation. You will deliver these insurance policies to us upon request.

9.3. During the period we retain ownership in goods sold and delivered to you, you may not pledge or transfer rights to these goods as security to any other party.

9.4. You agree to report to us immediately any third party attachment to the purchased goods or the assigned claims, in particular under pledge.

9.5.   Upon full satisfaction of our claims, including secondary claims, we will return or annul all security interests.

10.       Delivery

10.1. We always try to ensure that your deliveries are made on time or before time. Nevertheless, quoted delivery dates can be no more than besteffort approximations and may and will vary due to matters beyond our control, including transport delays, inspection delays, customs delays, and delays imposed by security checks.

10.2. The term of delivery begins on the day we confirm your order is ready for pickup or the date on which you have provided all required documents, permits, or other materials to or for relevant authorities (such as customs) and you have met all payment instructions.

11.3. The term of delivery is met if the item to be delivered left our works or warehouse on time or if we notified you on time that your products are ready for collection from the works or warehouse.

11.4. The term of delivery will be automatically extended for a reasonable time in case of strikes, lockouts, acts of force majeure, and other unforeseen obstructions beyond our control. Obstructions beyond our control include such matters as difficulty or impossibility of obtaining required materials, if this affects our production or delivery. These terms also apply if we have a subcontractor and that subcontractor encounters similar problems.

11.5. If your order is delayed more than one month for any reason, our fault or not, you may rescind it in full.

11.6. If you have damages due to a delay that is our fault, you can seek damages in the documented amount of your loss or a maximum of 0.5 % for each week of delay to a total of 5% (five percent) of the net sales price of the contract, whichever is less.

11.7. If you make changes in your order and your changes cause in delays in production or delivery, these delays will not allow you to claim damages or rescission.

11.8. If, due to special circumstances, we cannot effect delivery, we reserve the right to rescind an order in whole or in part.

11.9. If we rescind an order, then we have a duty to return any payments received, together with interest at the prime rate for the time we have held your funds.

11.10. We may make partial deliveries when to do so can accelerate or simplify the delivery process.

11. Delay in Acceptance of Deliveries

11.1. If you delay in your acceptance of an order ex-works or ex-warehouse, then we are entitled to storage charges in the amount of our actual costs of storage or 0.5% monthly on the invoice amount, whichever is greater. These charges begin to accumulate from one week after we notify you that your order is ready for pickup.

11.2. If you do not accept your order on time, then we will set a reasonable deadline and when it expires we have the right to dispose otherwise of the goods and to resupply you later with the goods in your order at a reasonably extended period of time after we satisfy our other obligations.

12. Defects & Returns

12.1. If your shipment is visibly damaged, refuse acceptance of the delivery. If shipping damage is recognizable only upon opening, immediately notify the shipping agent and file a claim for damages. Please note that any claims for damages or defects that you can make with us are subject to deduction for claims that you made or should have made against the shipping agent.

12.2. You must report incomplete or incorrect delivery or apparent defects to us in writing within one week after receipt of your order. You must report hidden defects immediately upon discovery. Unless you make these reports on time, delivery is deemed executed in accordance with the contract. All goods are deemed accepted one week after delivery or, if defects are hidden, one week after reasonable discovery.

12.3. Your report of non-delivery or defects or other errors should completely but concisely describe the damage claimed and should be accompanied by a digital image of any damaged or defective goods.

13. Limitation of Warranties

13.1. Except as explicitly stated below, we sell all products, materials, or services as is and without express or implied warranty of any kind either by us or by any subcontractor or other party involved in the creation, production, or delivery of the products, materials, or services. This disclaimer includes but is not limited to express or implied warranties of merchantability, accuracy, quiet enjoyment, non-infringement, fitness for a particular purpose, and other warranties of any kind. No covenants, warranties, or indemnities of any kind may be claimed beyond those here explicitly stated.

13.2. If you report a defect in a proper and timely manner, we can, at our discretion, repair or replace the defective product. If we cannot repair the defect, or if we cannot replace the defective product with a one that has no defect following multiple deliveries, you may demand a reduction of the purchase price or may rescind your order.

13.3. All warranty claims lapse if you make changes or repair without our prior consent or if our product is improperly used or installed.

13.4. If we identify by name third party products in our confirmation of order, you must make your warranty claims against the third party supplier. We will assign to you any rights we make have in support of your claim. When you have a right to third party claims you can make warranty claims against us only if your claim against the third party are unsuccessful.

13.5. You may always make claims against us in cases of our gross negligence or the absence of a represented feature.

14. Warranty for Used Goods If we ever sell you used goods, this will be at price that incorporates a discount for their condition and they are sold as is and subject to no further discounts and no warranty claims of any kind.

15. Warranty Period

15.1. For defects in our products, including the failure to have expressly represented features, we are liable only for defects that arise in normal usage and for a period of no more than 12 months. This provision excludes all other warranties.

Warranty repairs or replacements made during the warranty period do not suspend or interrupt the running of this period of limitation. In no case are we liable for more than replacement of defective goods.

15.2. If a new period of limitation starts to run because of repair or replacement, the new warranty period shall be no more than an additional 6 months beyond the original.

16. Claims for Damages

16.1. You understand and agree that you have no entitlement to damages except for intentional malpractice or gross negligence by our executive officers; for failure of a product to comply with features as represented if the purpose of representation was to protect you against damages; for grossly negligent breach of material contractual obligations; for claims prescribed by law.  All claims for damages that are not excluded by these provisions are excluded generally unless provided for elsewhere in these Standard Terms.

17. Survival of Rights and Obligations All of these Standard Terms and Conditions are binding upon, inure to the benefit of, and are enforceable by us and by our successors and assigns. All of the provisions of these Standard Terms, including but not limited to your obligations of confidentiality, indemnification, use, assignment, reproduction, warranty, ownership, and all others, survive the our delivery of your orders and your payment of our charges. Any obligations of indemnification shall survive through the end of any period of limitations on a viable cause of action that might be asserted against us.

18. Good Faith Modification in Changed Circumstances If changed circumstances make it impossible or commercially impracticable for us to fulfill your order and this impossibility or impracticability can reasonably be expected to continue for at least ninety (90) days, then we shall notify you and try to work out in good faith appropriate action to take in light of the changed circumstances.

19. Warrant Not to File for any Patent, Design, Trademark, Copyright, or other Intellectual Property Protection. In the course of our dealings it is likely that we will create in our studios or workshops and disclose to you designs, illustrations, devices, and products for your examination, approval, purchase, and use. You warrant and guarantee that you will not at any time, directly or indirectly, file in any country whatever any applications for patent, design, trademark, copyright, or other intellectual property patents based on designs, illustrations, devices, or products that we show or disclose to you.

20. Place of Performance, Jurisdiction, and Applicable Law

20.1. The place for making all claims shall be to Art Alliance llc (USA) at its then principal place of business.

20.2. Except for actions to protect proprietary rights or confidential information or to enforce an arbitrators decision, all disputes, controversies, or claims arising out of or relating to relations between us and our customers shall be submitted to and finally resolved by arbitration under the procedural rules of the American Arbitration Association then in effect, but as modified by the mutual agreement of the arbitrators. There shall be three arbitrators, to be chosen by mutual agreement of the parties or, if the parties cannot agree, one appointed by each of the parties and the third by the first two. Arbitration may take place at a location mutually agreed to by the parties, but if they cannot agree, then in Hanover, New Hampshire. The findings of the arbitrator shall be final and binding on the parties and may be entered in any court of competent jurisdiction for enforcement. Reasonable attorneys fees and other costs shall be awarded to the prevailing party in arbitration. If the arbitrators state that no party has prevailed, then each side shall bear its own costs and divide other costs of arbitration equally between them.

20.3. This agreement and the resolution of disputes under it shall be governed by and interpreted in accord with principles of international contract law, including the UNIDROIT Principles of International Commercial Contracts and taking into account relevant usages of the trade, contract provisions, the parties course of conduct, and changed circumstances.

20.4. If contract or any related document exists in Russian and another language, the English text shall prevail in case of any dispute or ambiguity.

20.5. The arbitrators shall adopt a procedure to ensure speedy resolution, low costs, and shall issue a decision that is based upon substantial justice to the parties.

Severability If any of the provisions of this or any related document are held by a court or arbitration tribunal to be invalid or unenforceable, that invalidity or unenforceability shall not affect the remaining provisions, which shall continue in full force.

Addendum on Special Orders

21. Special Orders

21.1. Special Orders are any orders of specific goods made to your specifications.

21.2. When you place a Special Order, please make sure that you include all your particular needs, including specifications, drawings, calculations, samples, lists, and instructions for specific colors, fonts, designs, illustrations, processes, and methods.

21.3. By sending us designs, drawings, illustrations, or any other materials whatever, you guarantee and warrant that you have full legal right to those materials and to their use.

21.4. If you ask us to produce products that can be manufactured only under license you must provide us with a true notarially authenticated copy of the license, properly notarized and apostilled, together with a signed statement from you that you have full license to the use and manufacture the products under license.

21.5. When you send us specifications for products that can be manufactured only under license, you guarantee and warrant that the specifications you provide are the full and correct specifications under your license.

21.6. When you accept delivery of products that we have made for you under license you guarantee and warrant that the products we made for you are in compliance with your license.

21.7. If anyone makes a claim against us for infringement of its rights or license with respect to a product that we have manufactured for you, at your request, and according to your plans or designs, you agree to defend and indemnify us against all claims of infringement or any loss based upon a competent judgment or settlement of claims, including our reasonable costs of counsel.

22. Rights to Designs

22.1. Designs, drawings, and other intellectual property that you deliver to us are your property. Designs, drawings, and other intellectual property that we produce in response to your inquiry, order, or request are our property.

22.2. All proprietary materials that you receive from us and that we receive from you are bound by our mutual obligations of confidentiality. Proprietary materials include prices, specifications, designs, and anything else you or we do not make available to the general public

23. Non-Disclosure and Confidentiality

23.1. In the course of our dealings it will often occur that we exchange confidential materials and information such as designs, illustrations, drawings, prices, product ideas, and other information that we do not make available to the general public but that we disclose to each other in order for us to manufacture products for you and for you to purchase products from us.

23.2. As part of our dealings with each other we each promise and warrant a) to protect each others confidential information, including all materials clearly marked secret, proprietary, or confidential, in the same way that we protect our own most confidential information; b) that we will not use the others confidential information in any way, or manufacture or test any product embodying confidential information, except for us to manufacture products for you and for you to purchase products from us; c) to use our best efforts to prevent and protect each others confidential information from disclosure to any person other than our employees who need the information for authorized uses; d) to take all steps reasonably necessary to protect the secrecy of the confidential information and prevent the confidential information from falling into the public domain or into the possession of unauthorized persons.

23.3. We further agree that confidential information is not information: that

(a) If it was known to the other party prior to receiving any of the confidential information from the disclosing party; (b) has become publicly known through no wrongful act of the other party; © was received by the other party without breach of this Agreement from a third party without restriction as to the use and disclosure of the information; (d) was independently developed by the other party without use of the confidential information; or (e) was ordered to be publicly released by the requirement of a government agency.

23.4 We agree that all confidential information always remains the property of the disclosing party, and that the disclosing party may use its own confidential information for any purpose without obligation to the other party. Nothing in our relations grants or implies any transfer of rights to the other party in the confidential information, or in any intellectual property relating to the confidential information.

23.5 Our mutual obligations with respect to each other’s confidential information are continuing until the confidential information disclosed to the other party is no longer confidential.

24. Warrant Not to File Patent, Design, Trademark, Copyright, or other Intellectual

Property Application. In the course of our dealings it is likely that we will create in our studios or workshops and disclose to you designs, illustrations, devices, and products for your examination, approval, purchase, and use. You warrant and guarantee that you will not at any time, directly or indirectly, file in any country whatever any applications for patent, design, trademark, copyright, or other intellectual property patents based on designs, illustrations, devices, or products that we disclose or show to you.

25.       Terms of Payment Special Orders

25.1. You must pay in full and in advance for all special orders. Special orders include all products made under license and all other orders that we cannot sell to the general market without restriction.

25.2. Payment can be made in cash, by bank transfer, or by irrevocable letter of credit acceptable to our bank.

25.3. Unless we make other explicit agreement with you in writing, we cannot begin production of special orders until you have paid all amounts due.

25.4. You can deduct any discount we have agreed upon only from the net invoice amount after deducting packing, handling, shipping, customs, freight, and all other charges not part of the purchase price.

25.5. You have no right to withhold payments or make setoff against counterclaims.

25.6. You agree that you have no right assign or pledge your rights under any contract or order except with our prior written consent.

26. Applicability of General Terms. Except as they may be modified by this Addendum, Special Orders, like all other orders, are subject to the

Art Alliance Standard

Terms and Conditions for Sales and Deliveries, of which this Addendum is a part.28.

Shipping Terms Addendum. Art Alliance abides by INCOTERMS 2000 usage for shipping terms. The thirteen most common terms are listed below.

EXW EX WORKS (named place)

FCA FREE CARRIER (named place)

FAS FREE ALONGSIDE SHIP (named port of shipment)

FOB FREE ON BOARD (named port of shipment)

CFR COST AND FREIGHT (named port of destination)

CIF COST, INSURANCE AND FREIGHT (named port of destination)

CPT CARRIAGE PAID TO (named place of destination)

CIP CARRIAGE AND INSURANCE PAID TO (named place of destination)

DAF DELIVERED AT FRONTIER (named place)

DES DELIVERED EX SHIP (named port of destination)

DEQ DELIVERED EX QUAY (named port of destination)

DDU DELIVERED DUTY UNPAID (named place of destination)

DDP DELIVERED DUTY PAID (named place of destination)

 

Incoterms 2000 groups these terms in four categories denoted by the first letter in the three letter abbreviation.

Under the “E” term (EXW), the seller only makes the goods available to the buyer at the seller’s own premises. It is the only one of that category.

Under the “F” terms (FCA, FAS and FOB), the seller is called upon to deliver the goods to a carrier appointed by the buyer.

Under the “C” terms (CFR, CIF, CPT and CIP), the seller has to contract for carriage, but without assuming the risk of loss or damage to the goods or additional costs due to events occurring after shipment or dispatch.

Under the “D” terms (DAF, DES, DEQ, DDU and DDP), the seller has to bear all costs and risks needed to bring the goods to the place of destination.

(The International Chamber of Commerce copyrights INCOTERMS 2000.)