Glossary

Net Sales

Last updated 05 June 2007

Description

Gross product sales minus agreed deductions.

Specified deductions may include sales returns, credits, taxes, cost of goods, marketing costs etc.

Net sales is a key term in ensuring that the correct revenues are paid to the licensor.

Deductable items should be capable of objective determination so as to reduce problems that may aise is deductable items were open to subjective (and more often than not, different) judgement by either party.

Examples

Definition: "Net Sales" means, with respect to the Product, the gross invoiced sales amount of the Product sold by WYETH or its Affiliates to non-affiliate Third Parties, after deduction of the following items, to the extent that such deductions are reasonable and actually allowed, taken or incurred, and (provided that such items do not exceed reasonable and customary amounts in the country in which the sale occurred): (a) trade and quantity discounts, net of any give-backs received by WYETH in return; (b) refunds, rebates, retroactive price adjustments, service allowances and broker's or agent's commissions; (c) credits or allowances given for rejection or return of previously sold Product or for wastage replacement actually taken or allowed; and (d) any tax, duties or government charge levied on the sale of Product and borne by WYETH and/or its Affiliates (excluding national, state or local taxes based on income). Such amounts shall be determined from the books and records of WYETH and its Affiliates maintained in accordance with generally accepted accounting principles, consistently applied. Sales of the Product by and between a Party and its Affiliates for further distribution to a Third Party are not sales to Third Parties and shall be excluded from Net Sales calculations for all purposes. -- License and Supply agreement between Access and Wyeth, January 2004