Technology Manufacturing Contracts: Don't Start Work Without 'Em

Below are a few key terms that may be clarified in such agreements.

Product and Pricing. Naturally, the agreement should include precise descriptions of the product, packaging and pricing, including design, specifications, materials, components, logos, and so forth. Such items are best described in addendums to the agreement, so they may be easily modified as needed. The agreement may also describe the process for making any price adjustments.

Quality and Inspections. The agreement should specify all governmental, environmental, industry, compatibility and customer quality requirements to be complied with, as well as required testing and certifications. It may permit quality audits by the customer (the customer may outsource that task if needed) and should clearly describe inspection rights and remedies for non-conforming products.

Forecasts and Volume. The manufacturer will want binding, rolling forecasts and a guaranteed minimum purchasing volume. The customer will typically provide only non-binding forecasts and will refuse to commit to a particular volume. Various compromises are possible.

Orders & Delivery. The agreement should describe placement and acceptance of orders, minimum order quantity, delivery terms, and respective rights and remedies concerning cancelation, modification or re-scheduling delivery of orders, all prime areas for potential disputes.

Intellectual Property. The agreement may state that each party's Background IP shall remain its own property and may place restrictions on use of the customer's trademarks and trade names.

Warranties and Indemnification. Usually, the manufacturer will be required to warrant that the goods comply with the specifications and are free from defects, and to provide spare parts and service for a certain period. The manufacturer will also, typically, agree to indemnify the customer in the event any goods are accused of intellectual property infringement. Such provisions are critical, but both parties have substantial room for negotiating the exact terms and any exceptions.

Term and Termination. The agreement should allow for termination immediately in the event of bankruptcy, or after a certain notice period in the event of default. The challenge is allowing for termination at will, while providing the other party with reasonable protection against resulting damages. In particular, the manufacturer may demand compensation for long lead-time parts or un-purchased inventory that fell within the customer's forecasts.

Dispute Resolution. As with all contracts, the agreement should specify jurisdiction, venue, governing law and possibly alternative dispute resolution procedures in the event of a dispute.

The above list is not comprehensive, but just a sampling of important issues that may be nailed down in a manufacturing agreement, to simplify the resolution of future disputes. Once the business people reach agreement on the key points, they should call in Legal to ensure that all is stated clearly in an agreement and nothing is missed.

Finally, as the business team will be eager to move forward with the manufacturing, Legal should follow up to ensure that both parties sign the agreement and it is filed in a secure location.

Thanks for your interest. If you liked this article, please contact our law firm to speak with a Taiwan contract attorney or visit the International Tech Law Blog.

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International Contracts - Enforceable?

International contracts are still considered to be a complex and mysterious subject for laywers who do not have experience or training in cross-border transactions. This is even more concerning for business people, to whom the basic principles of contract law, and particularly cross-border contracts, are completely unknown.

In the case of contracts between companies from the same country (domestic contracts) the rules governing the agreement will usually be those provided by the national law of the parties and the local courts having jurisdiction in event of a dispute. The scenario changes when a contract is classified as 'international'. There are various elements that would define one as such, but the most common could be the fact that the contracting parties are in different countries.

Cross-border contracts are fast becoming a common practice for most traders, yet very few of them are adequately protected. Most lawyers tend to consider international contracts as local contracts (in line with their home jurisdiction) as most do not have the appropriate expertise to deal with them.

The two main issues arising in relation to international contracts are those regarding the applicable law and jurisdiction. These arise due to the absence of an adequate legal framework for cross-border transactions.

Conflict of laws or private international law (the latter usually named as such by civil law countries) are the set of rules that nations will constitute and build in order to protect its sovereingnity but at the same time allowing interference of foreing rules into its own jurisdictions so that certain matters can be adequately dealt with in line with legal principles. In this case specifically, international trade and commerce between countries.

Conflict of laws (private international law); valid choice of applicable law; hardship clauses; enforceability of a contract; valid choice of language; Convention on Contracts for the International Sale of Goods; are all examples of issues that one might face when negotiating these type of contracts.

Contracts may have NO EFFECT at all if the points above and/or other principles are ignored. An example would be the fact that certain local courts, depending on the country, might strike out the content of an entire contract simply because the choice of language isn't properly defined or the official language isn't provided in the body of the agreement.

That's why it is extremely important that businesses get the appropriate legal assistance when trading internationally. Expert lawyers should always be considered when your scope of work includes countries outside of your jurisdiction.

Intercontracts is a company specialised in providing international contract law and commercial law consultancy.

Intercontracts' expert lawyers are well experienced in international trade and cross-border contracts, providing top-quality legal services to your business.

We focus on a niche market where our expertise is unique. With the globalisation and accessibility of information increasing exponentially as years pass by, international trading is consequently accompanying such phenomena. And that's where we come in, to help you with the legalities of international contracts and international trading in general.

Contact us today for a free quote on affordable consultancy - simple and easy:
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What's The Difference Between Exchange Of Contracts And Completion In Conveyancing?

When moving house one of the problems encountered is the new terminology that you will encounter. Often phrases such as 'exchange of contracts' and 'completion' are known to your solicitor and estate agent but not to you. It's important to know the difference, and which stage of your sale or purchase they relate to, as both have significant implications for you.

Exchange of contracts is the stage at which you have agreed all the various terms on which you will buy or sell your property and includes the exact price to be paid taking account of any allowances (reductions to the price) to be made and any additional payments for contents. For contracts to be exchanged your solicitor also needs to have received all of your search results, have received your mortgage offer, and resolved all the legal queries and any problems. Before exchange of contracts can take place, everyone needs to have agreed the date for moving in. Once all of these issues have been resolved and agreed it is at this point that your solicitor will proceed with exchanging contracts with the solicitor acting for your seller or buyer. If you have a sale and purchase your solicitor will ensure that contracts are exchanged on your sale and purchase at the same time.

Exchange of contracts is very important because once it has taken place the contracts become legally binding and you are committed to selling or buying or both (as the case may be). This means that no-one will be able to pull out of the deal without being in breach of contract and incurring significant legal penalties. You do not move home on exchange of contracts, but you do set the date on which you move home (known as the completion date) which is also the date by which you must have all funds available to buy your new property.

It is therefore important that exchange of contracts is not confused with completion, and you leave a sufficiently large period of time between exchange of contracts and completion to allow you to finalise all matters in respect of your move before you have to vacate your property. Because anyone can pull out of the deal before exchange of contracts takes place your solicitor will advise you not to make any firm moving arrangements, such as booking your removals, until after exchange of contracts.

Completion is the day of moving, and is often fraught with difficulties, stress and pressure. You not only have to ensure that everything has been packed and that your removals are booked and ready, there is often a delay between you moving out of your old house and being able to collect the keys to enable you to move into your new house. Any such delay tends to be caused by issues with the banking system and the transfer of monies on the day of completion between all of the solicitors in the chain.

If there is a long chain, each solicitor has to send the money on to the next solicitor and that party will have to wait for money to be received (and sometimes mortgage funds to be received) before they can then send the money further up the chain. You may therefore have to be patient in waiting for your seller to receive the monies from your solicitor, before you're able to collect your keys and start to move in. Often the delay can mean waiting for a few hours, however, typically the delay is not too long and you should be able to move into your new property fairly quickly.

So to summarise, exchange of contracts is the point at which you are legally bound to sell or buy your property, and completion is the day when money changes hands and you move out of your old home and into your new one.

Are you are looking for expert conveyancing solicitors in Hull? Talk to Solicitors in Hull Myer Wolff. Ashley Easterbrook is a partner in the firm's private client department.

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