Revision Date 04/18/23


BOF-SA-201 1

1. Terms:

The quotation or proposal to which these Contract Terms And Conditions are incorporated by reference, is an invitation for an order from the identified customer and shall become a binding contract between HIGHWAY MACHINE COMPANY, INC D/B/A HMC GEARS, (“HMC”) and Customer ONLY upon subsequent approval and issuance of a Formal Acceptance from HMC at its chief executive offices in Princeton, Indiana. All quotations or proposals, whether oral or written and whether transmitted by mail, courier, delivery, telephone, facsimile, electronic mail, or other means, are subject to correction and modification at any time prior to a written Formal Acceptance by HMC. Salesmen/Sales Representatives/Consultants have no authority to bind HMC or to make quotations or representations on behalf of HMC. In the event of a conflict, HMC’s Formal Acceptance will govern over the quotation and the Contract Terms. Any representations, warranties, promises, or statements, written or oral, which differ in any way from the terms of the Contract, shall have no force or effect.

2. Acceptance of Order:

Any conflicting or additional terms in a purchase order, proposal, letter, or other offer, issued by Customer, will be incorporated in any Contract, only if specifically accepted by HMC in its Formal Acceptance, even though such terms do not materially alter the terms of the Contract. If Customer places an order or offer orally and transmits a purchase order and subsequently mails or transmits a purchase order or other document with conflicting or additional terms, such terms will not be incorporated in the Contract under any circumstances. If customer is acting as an agent, broker or subcontractor, or otherwise is to purchasing the components and services under this Contract for another party, HMC shall not be bound by the terms of the agreement with a purchase order from customer’s customer, principal, contracting party, general contractor, or owner (all such persons or entities and all in privity with them are referred to hereinafter as Customer). Customer shall cause Customer’s Party to accept these Contract Terms and shall indemnify and defend HMC from any conflicting or additional terms contained in a general contract, subcontract, purchase order, proposal, letter, other offer, or purchase document issued by Customer’s Party.

3. Payment:

Payment shall be due thirty (30) days from date of invoice, which in the case of products shall be date of shipment or, if shipment is deferred, date of completion of manufacture. Overdue payments shall bear interest at the lesser of 1.5% per month or the maximum permitted by law. Customer WAIVES ANY RIGHT OF SET-OFF AND SHALL MAKE NO DEDUCTIONS FROM PAYMENTS DUE TO SELLER OR FOR DAMAGES OF ANY TYPE CLAIMED BY CUSTOMER AGAINST SELLER. Progress payments may be required on orders exceeding $25,000. Extension of credit will be determined by HMC in its sole discretion. If, in HMC’s judgment, customer’s financial responsibility is or becomes impaired or unsatisfactory or if customer has failed or fails to perform under any contract, HMC shall have the right to demand, and customer shall provide advance cash payment or security satisfactory to HMC and HMC may withhold shipment until receipt thereof.

4. Risk of Loss:

Unless otherwise specified by HMC, all deliveries are FOB (or Ex-Works) HMC shipping point. The responsibility of HMC ceases with the delivery of components in good order to the carrier. The Risk of Loss passes to customer upon HMC’s delivery to the carrier. Claims for shortage, loss, or damage, in transit must be made by the customer against the carrier. In the absence of definite shipping instructions, HMC reserves the right to ship product by any available public carrier.

5. Storage:

HMC uses every reasonable effort to protect its products and the bearings, couplings, seals, fasteners, and other hardware that become part of an assembly. However, proper maintenance by customer must be performed to prevent corrosion and other damage during long term storage. Therefore, HMC’s responsibility ceases with the delivery of components in good order to the carrier.

Customer acknowledges that HMC shall be entitled to charge for handling and storage of components that remain at HMC after 5 days notification of their completion. HMC’s responsibilities cease after the 5th day of its notification of completion.

Extended Storage: Although HMC provides maintenance and care for extended storage components, HMC assumes no responsibility for loss or damage to the components.

6. Customer Materials:

Prices and deliveries of products for which the customer furnishes components, castings or other materials, patterns, or tools are based on timely receipt of the customer’s furnished property and that it is free from defects and within specifications, including quantity, condition, metallurgy, hardness, machinability, and dimensionality. If defects are found any expenses incurred by HMC caused due to the defects shall be borne by customer. HMC’s responsibility for damage to customer supplied property caused by HMC’s negligence is limited solely to repair of customer furnished property, receipt of credit for the out-of-pocket costs thereof issued, or replicating the intended service or labor. Customer assumes all other risks of loss.

In the event customer fails to promptly supply drawings, specifications, or other information, if customer otherwise causes delays, or if customer’s materials are incorrectly sized, unsuitable, or incorrectly identified; HMC shall be entitled to change work and delivery schedules and back charge for any non contemplated cost.

7. Delivery:


DEFERRED DELIVERY: Customer may not defer delivery beyond the projected shipment date without the written consent of HMC. Customer requests to defer delivery of products completed or in process are subject to payment of the value of work performed, additional work required, storage charges, and any taxes levied on HMC due to possession. Customer requests to defer delivery of products not yet in process are further subject to price increases for labor, material, component parts and overhead.

8. Shipping Terms:

Except for OTS (Outside Technical Service) contracts, shipments shall be F.O.B. shipping point (or Ex Works) and customer assumes all risk of loss or damage to goods in transit, except to the extent of HMC’s negligence. Customer’s exclusive remedy for shortage, loss or damage in transit shall be a claim against the carrier. For OTS contracts, shipments shall be F.O.B. as agreed to by the parties and Customer assumes all risk of loss or damage to goods in transit, except to the extent of HMC’s negligence. In the absence of specific instructions, HMC reserves the right to ship all goods upon completion by the common or contract carrier of its choice.

Special Circumstances: In select circumstances, requiring prior approval by HMC, HMC may offer the service of handling shipping arrangements in a manner of prepay and add, subject to the terms and conditions of being sent Ex Works from the shipping point of HMC Gears, Princeton Indiana.

Handling Fee: To cover the costs for the services required to ship an order, HMC will charge a handling fee subject to the terms of prepay and add, EXW Shipping Point, HMC Gears, Princeton, Indiana.

9. Cancellation by Customer:

Orders may not be cancelled or terminated by customer without the written consent of HMC and are subject to payment or reimbursement of HMC’s costs, expenses, or losses, including overhead and anticipated profit.

10. Default by Customer:

If Customer fails to make payment or otherwise perform on the Contract in accordance with agreed terms, HMC may delay work or shipments until such defaults are cured, and if the full purchase price was not previously due and payable, HMC may declare the entire purchase price immediately due and payable and may recover from Customer any costs incurred. Alternatively, HMC, at its option, may cancel the Contract and recover all costs and fees.

11. Lien:

HMC shall have all of the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time, in accordance with the laws of the State of Indiana and similar laws in other States or Countries on Products Sold. Customer authorizes HMC to file a UCC financing statement, a copy of this Contract, and/or other documents which might be required to perfect HMC’s security interest. At HMC’s request, Customer additionally agrees to sign all other documents which might be necessary to perfect, protect, and continue HMC’s security interest in the Products Sold. Customer irrevocably appoints HMC to execute such documents for and on behalf of Customer.

12. Release and Indemnity:

Customer hereby Releases, and shall fully protect, Indemnify, keep, save, and hold harmless HMC, its members, directors, officers, employees, agents, insurers, sureties, affiliates, advisors, attorneys, independent contractors, successors and assigns, from and against all suits, claims, losses, damages, costs, expenses, attorneys’ fees, liabilities and legal action(s) or proceeding(s) arising from or as a result of any action, cause of action, right, suit, covenant, claim, agreement, judgment or demand, in law or equity, arising in any way out of the subject matter of customer’s purchase order, HMC’s performance there under or relating to or concerning equipment or work performed by HMC, its agents, or employees; provided, however, that such release and indemnity shall not include direct damages resulting from the gross negligence of HMC, its agents, or employee. In no event shall any liability of HMC exceed the price paid to HMC under its invoices to customer.

13. Additional Charges:

Complexities born during the design and quoting of certain products can, on occasion, not be contemplated. Customer acknowledges and agrees to indemnify and hold HMC harmless in the event of a problem contributed directly or indirectly by this possibility and that HMC has the right to charge for any costs arising from this possibility.

14. Ownership of Materials:

Customer warrants that it owns all necessary rights and authority to any patent, patterns, drawings, plans, specifications, designs, processes, trade secrets, knowhow, tools or other confidential knowledge, or information furnished to HMC and will not induce HMC to use any such items in contravention or violation of the rights of any third party. Customer further agrees to indemnify, defend, and hold HMC harmless from any claims by any third party, including attorneys’ fees, concerning any infringement or unauthorized use of such items.

15. Inspections:

HMC’s inspections are performed on its products before delivery. Customer shall pay HMC additional charges for inspections which customer requires HMC to perform, including any inspections required by customer to be performed in the presence of their representative or customer. In the event of any delays on customer’s part in attending any inspection, after HMC’s notice of the scheduled time for the inspection, HMC shall proceed in Buyer’s absence as if buyer was present.

16. Warranties:

12 Month Rebuild/Repair Warranty:

Unless otherwise approved, HMC’s warranty on repairs or rebuilds is for labor only for a period of (12) months.

Information Requirements for Open Gearing:

  • HP and RPM specs along with the maximum temperatures the gear will experience at any time.

Information Requirements for Enclosed Gearing:

  • HP and RPM specs.

12 Month Customer Material and Manufacturing Warranty:

Customers selecting material and manufacturing specifications other than HMC’s are eligible for a (12) month warranty if the conditions of those specifications meet HMC’s minimal accepted requirements.

To determine material and mechanical property requirements for Open Gearing, HMC will require HP and RPM specs.

To determine material and mechanical property requirements for Enclosed Gearing, HMC will require HP and RPM specs.

18 Month Product Warranty:

Pinions, gears, new/rebuilt gearboxes, and other products made from HMC approved material and manufacturing specifications shall be of quality workmanship and free from defects for a period of (18) months. Revision Date 04/18/23 CUSTOMER CONTRACT TERMS AND CONDITIONS HIGHWAY MACHINE COMPANY, INC.

  • 1st Audit, immediately after run-off.
  • 2nd Audit, within 6 months of run-off.
  • 3rd Audit, 24 months of installation.
  • 4th Audit, 36 months of installation.
  • 5th Audit, 48 months of installation.
  • 6th Audit, 60 months of installation.

5 Year Open Gear Warranty:

Customers electing to choose HMC’s 5 year Open Gear Warranty agree to use HMC’s Alloy enhanced

gear material, manufacturing specs., and DTC Audit Guidelines:

  • Customer must notify HMC of the intended installation and runoff date, at least 4 weeks prior to

the planned occasion.

  • Customer will provide HMC with no less than a 90-day notification for the audits.
  • Customer bears exclusive responsibility for compliance with the Audit Conditions.
  • Costs for Inspection Audits have been included in the price of this proposal.

The above Warranties remain in effect only when the following conditions are met:

1. HMC is allowed to perform its recommended Audits within the time frames specified.

2. Products are protected from the elements in accordance with normal use, due care, and consideration for all foreseeable environmental conditions.

3. The product is properly installed, operated, maintained, inspected, and lubricated.

4. The system of connected rotating parts is operated within specified operating speed ranges and remain free from temperatures that exceed the mid 200-degree F range, critical torsion, vibration, or other stresses, however induced.

5. The gear and connected operating parts will not be operated within an excessive heat environment of which the product has not been designed to withstand.

6. Transmitted load, imposed torsion, and thrust are within the capacity limits for which the product was designed.

7. Customer bears exclusive responsibility for compliance with HMC’s audit conditions and recommendations.

Customer acknowledges and agrees that any warranty for products not manufactured by HMC, (such as bearings, seals, or fasteners), which are to be attached to, assembled with, incorporated in, or made a part of HMC’s Product, shall be covered by the respective original manufacturer’s warranty.

17. Design Inadequacies:

Customer acknowledges that complexities born during the design and quoting of certain products cannot, on occasion, be contemplated when information is not made available by customer. Customer acknowledges and agrees to indemnify and hold HMC harmless in the event of a problem contributed directly or indirectly from design features not included, due to lack of information from customer.

18. Limitation of Liability:

Customer’s exclusive remedy and HMC’s obligations under this warranty shall be limited to repair or replacement by HMC of the work, product, components or parts proving defective or damaged, or a credit in lieu of repair or replacement issued at HMC’s sole option. HMC shall not be responsible for the cost of removal or reinstallation of products for inspection, replacement, or repair. HMC’s liability under this warranty shall under no circumstances exceed the purchase price of the product or that portion of the price allocable to defective or damaged parts or components. Failure of customer to submit any warranty claim within the applicable warranty period shall constitute an acknowledgement that the products sold are in every respect as warranted.

Customer further acknowledges and agrees that any errors caused by HMC or its Vendors that cannot be proven to significantly alter or affect performance or life of the product will not be cause for rejection.

19. Repair and Refurbishment Orders:

Repair or refurbishment by HMC does not imply that customer’s equipment, parts, or components will conform to as-new assembly or performance conditions or tolerances. Unless otherwise approved in writing HMC will not warrant products that are weld repaired or modified in any manner that alters the original dimensionality or mechanical properties of the component. On repair orders, HMC shall have no obligations, responsibilities, or liabilities for any work or inspections beyond that which was specifically directed by customer and confirmed by HMC. HMC shall not be responsible for defects or deficiencies on customer’s equipment not discovered during inspection and or examination. The scope of work, pricing, and recommendations in any proposal are subject to change upon disassembly of customer’s equipment. Customer’s failure to follow HMC’s recommendations or instructions concerning repair or refurbishment voids any warranty whatsoever.

20. Force Majeure:

Seller shall not be liable for any loss, damage, expense, cost, product failure, cover, non-performance, delay or breach caused or occasioned by acts of God or any governmental authority, labor disputes (including lockouts), unusual weather conditions, fire, flood, accident, unavailability of materials or components or late delivery thereof, boycott, embargo, insurrection, riot, civil disturbance, war, exposure to conditions or processes not specified by Seller, or any other cause which is unavoidable or beyond Seller’s reasonable control.

21. Customer’s Inspection and Acceptance:

Customer shall inform HMC in writing if the products are damaged or short in any respect. Failure to inform HMC before installation of the products by customer shall constitute a conclusive waiver of any right of rejection or claim of damage or shortage. HMC reserves the right to re-inspect at delivery point or require return shipment with freight prepaid by customer pending investigation of the claim. Non-conformities or defects, which do not impair satisfactory operation, shall not be cause for rejection. NO PRODUCTS, PARTS, OR COMPONENTS MAY BE RETURNED WITHOUT PRIOR WRITTEN AUTHORIZATION FROM HMC.

22. Field Service:

HMC shall only provide technical advice and assistance. Customer shall furnish all supervision, labor, materials, tools, and utilities required for work on the equipment. Use of the word “supervision,” “supervise” or like words by HMC shall not mean that HMC intends to control the adequacy or performance of the work. Should customer use or request an employee of HMC to supervise, they shall become customer’s employee for whom customer shall be fully liable. Customer shall indemnify and hold HMC harmless from any claims arising out of such activities. Work by HMC on used equipment will be performed in a workmanlike manner to the extent reasonably possible, considering its condition, age, design, exposure to wear, and damage. HMC assumes no liability for the condition or performance of such equipment or of any equipment if any work thereon is or was performed solely under the direction of customer or other parties. Any information from HMC concerning the work performed, condition of the equipment, or other related matters does not imply that HMC examined or approved any aspects, details, or conditions of the equipment, installation, or other items. HMC shall have no liability resulting from any such information or use thereof.

23. Environment:

As used herein, “Hazardous Substances” means and includes all hazardous, toxic, ignitable, reactive, or corrosive substances, wastes, materials, compounds, pollutants, and contaminants (including, without limitation, asbestos, polychlorinated biphenyls, and petroleum products) which are included under or regulated by the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §9601, et seq., the Toxic Substances Control Act, 15 U.S.C. §2601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §6901, el seq., the Clean Air Act, 42 U.S.C. §7401, et seq., or any other federal, state, or local statute, ordinance, law, code, rule, regulation or order regulating or imposing liability (including strict liability) or standards of conduct regarding hazardous substances or materials as the same may now exist or may hereafter be amended (collectively the “Environmental Laws”). Customer agrees to comply with the Environmental Laws in all respects with regard to performance of any service at HMC or supply of any materials to HMC. Customer further agrees to eliminate Hazardous Substances and reduce wastes at the source of generation. In particular, Customer agrees to clean and remove all lubricants and other coatings on or in Materials, Equipment, Machine Tools, Gearboxes, or other Components delivered to HMC. Customer will immediately reimburse HMC for any and all cost and expense related to the material preparation, decontamination, cleaning, degreasing, removal, remediation, disposal, sampling and testing, disposal fees, permit fees, consultant fees, labor, attorneys fees, fines or penalties, incurred by HMC due to “Hazardous Substances” left on or in Materials, Equipment, Machine Tools, Gearboxes, or other Components supplied by Customer.

24. Dispute Resolution:

Any claim, controversy or dispute arising out of or relating to the transaction between HMC and Customer shall be resolved through a mediation/arbitration approach. The parties will select a mutually agreeable, neutral third-party mediator to assist in mediating any dispute which might arise with any costs of mediation shared equally by the parties. Mediation shall be held in Gibson County, Indiana or such other place in Indiana as might be agreed upon by the parties.

If mediation should be unsuccessful, the dispute, claim or controversy shall be decided by a single arbitrator by binding arbitration under the rules of the American Arbitration Association (AAA) and judgment on the award entered by the arbitrator(s) may be entered in Court. The arbitrator(s) shall be entitled to award the charges of the arbitrator(s) and the AAA to the prevailing party. Exclusive venue for any Court proceedings shall be Gibson County, Indiana or the United States District Court, Southern District of Indiana. By acceptance of these Terms and Conditions, Customer waives any defenses or objections to venue and jurisdiction and waives any right to Trial by Jury.

25. Governing Law:

These Terms and Conditions and the transaction between HMC and Customer shall be governed, interpreted, and enforced in accordance with the laws of the State of Indiana without regard to its conflict of laws.

26. Limitation Period and Fees:

No claim for breach of contract or warranty shall be asserted in any Court or arbitration proceeding after one (1) year from the date of the cause of action accrues, except for claims by HMC to recover all or part of the purchase price or additional charges. HMC shall be entitled to recover its reasonable attorney fees incurred in connection with collection of all or a portion of the purchase price and/or reasonable charges from Customer.

27. Miscellaneous:

The terms of the Contract are intended by the parties as a final and complete expression of their agreement with respect to its terms. Except as otherwise provided, the Contract may not be modified or rescinded in any manner, except by the written agreement of the parties. The Contract shall be binding on and inure to the benefit of the parties and the respective heirs, executors, administrators, legal representatives, successors, and assigns, when permitted by the Contract. This Contract shall also be binding upon and inure to the benefit of Customer’s Party as a direct party; however, nothing in the Contract shall be interpreted to create a third-party beneficiary arrangement. In case any one or more of the provisions contained in the Contract shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the invalidity, illegality, or unenforceability, shall not affect any other provision and the Contract shall be construed as if the invalid, illegal, or other unenforceable provision had never been contained therein.

28. Non-acceptance:

If Customer cannot accept for any reason the conditions herein these Contract Terms, they must submit written notification, (Registered Mail), to HMC specifically rejecting each non acceptance. HMC will thereafter make revisions to their original quotation reflecting the necessary additional costs for the amendments or reject the order.

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