International Contracts Models

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INTERNATIONAL CONTRACTS MODELS

The International Contracts most used in trade are: international sale, distribution, agency,
representative, services, joint venture, strategic alliance, franchise, supply and manufacturing.

The majority of international trade transactions carried out involve signing some type of
contract that contains details of the agreements made between the parties. The contract is
therefore an essential instrument in three areas: negotiation, agreement and legal certainty.

The international contracts available herein have been written by legal experts who use
specific legal terms that are easy to understand; technicalities, which could make the content
unclear for the interested parties, have been avoided. Different ways of wording the most
important clauses (exclusive rights, method of payment, compensation, conflict resolution,
etc.) are proposed so that the most appropriate option for each particular situation can be
chosen.

The contracts are designed seek to strike a fair balance between the interests of al parties
involved (buyer/seller, supplier/distributor, principal/agent, etc.) without giving an undue
advantage to any. They also take into account recognized and generally accepted international
standards and practices.

These contracts are especially meant for small companies and international trade
professionals and they cover the most common activities involved in international business
such as the sale of products, distribution, agency, representation, joint ventures, strategic
alliances, services, etc.

1. International Sale Contract 3
- Introduction 3
- Model Contract 4

2. International Distribution Contract 6
- Introduction 6
- Model Contract 7

3. International Commercial Agency Contract 9
- Introduction 9
- Model Contract 10

4. International Sales Representative Agreement 12
- Introduction 12
- Model Contract 13

5. International Joint Venture Contract 15
- Introduction 15
- Model Contract 16

6. International Strategic Alliance Contract 18
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- Introduction 18
- Model Contract 19

7. International Services Contract 21
- Introduction 21
- Model Contract 22

8. International Supply Contract 24
- Introduction 24
- Model Contract 25

9. International Manufacturing Contract 27
- Introduction 27
- Model Contract 28

10. International Technology Transfer Agreement 30
- Introduction 30
- Model Contract 31

11. International Trademark License Agreement 33
- Introduction 33
- Model Contract 34

12. International Franchise Contract 36
- Introduction 36
- Model Contract 37

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1. International Sale Contract

Introduction

This contract is used by companies positioned in different countries for the sale and purchase
of goods. The exporter (Seller) is responsible for delivering the stated products, and the
importer (Buyer) shall acquire them under the agreed conditions of payment, delivery and
transaction schedule.

The International Sale Contract is intended to be used for the sale of products from business to
business, not to end clients, and where each operation represents a sale in itself, that it is to
say, it is not a long term agreement for the supply of products.

This contract is designed for the international sale of different types of products (raw
materials, manufacturing parts, consumer goods, equipment/machinery, etc.) and was created
pursuant to the principles established in 1980 Vienna Convention on the International Sale of
Goods.

This Model Contract contains the substantive main rules for an international sales contract, i.e.
the main rights and obligations of the Parties, the remedies for breach of the contract by the
buyer; the remedies for breach of the contract by the seller; and the general rules that apply
equally to both Parties. It also contains the clauses broadly accepted in international
commercial contracts.

The International Sale Contract is greatly influenced by the United Nations Convention on
Contracts for the International Sale of Goods (CISG), widely accepted by lawyers from different
countries and backgrounds. It sets forth practical requirements arising from commercial
practice with general rules of the CISG.

The Contract can be viewed as a general framework for the numerous types of sales contracts
in international trade. In implementing it, the Parties should adapt it to the nature of each
particular sales contract as well as to the specific requirements of the applicable law, where
such requirements exist.

The Contract can be divided into four parts: the first sets out the delivery, price, payment
conditions and documents to be provided; the second part governs the remedies of the Seller
in case of non-payment at the agreed time, the remedies of the Buyer in case of non-delivery
of goods at the agreed time, the lack of conformity of goods, the transfer of property and legal
defects; the third part contains the rules on avoidance of contract and damages: grounds for
avoidance of contract, avoidance procedure, effects of avoidance in general, as well as rules on
restitution, damages and mitigation of harm; the fourth part contains the standard provisions.

Besides United Nations Convention on Contracts for the International Sale of Goods other
sources of uniform contract law used in drafting the International Sale Contract are: Uniform
Law on the International Sale of Goods (ULIS); UNIDROIT Principles of International Sale
Commercial Contracts; Principles of European Contract Law (PECL); and ICC Model for
International Sale of Goods.
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Model International Sale Contract

DATE: ....................................................................................................................................

BETWEEN:

................................. [company legal name] whose registered office is at
..................................... [address, city and country] and registration/fiscal number is
.............................. (hereafter referred to as the Seller),

AND:

.............................. (hereafter referred to as the Buyer).

Both Parties declare an interest in the sale and purchase of goods under the present Contract
and undertake to observe the following agreement:

1. PRODUCTS

Under the present Contract, the Seller undertakes to provide, and the Buyer to purchase:

Alternative A. The following Products and quantities: ...................................................................

Alternative B. The Products and quantities as set out in Annex 1 of the present Contract.

2. PRICE

The total price of the Products which the Buyer undertakes to pay the Seller shall be
.................... [write in numbers and letters]. The aforementioned price:

Alternative A. Is the sum total of the prices of all Products and quantities as set out in Clause 1.

Alternative B. Is the sum total of the prices of all Products and quantities as set out in Annex 1.

Both Parties undertake to renegotiate the agreed price when affected by significant changes in
the international market, or by political, economic or social situations in the country of
dispatch or destination of the Product, which may damage the interests of either party.

3. DELIVERY CONDITIONS

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The Seller shall deliver the Products to ................... [mention the place: warehouse, port,
airport, etc.], ..................... [city and country], under conditions .............. [mention Incoterm].
The goods shall be delivered at the agreed place, and to the transport agent designated by the
Buyer, at least twenty-four hours before the deadline established in the present Contract.
Should the Buyer fail to take charge of the goods on arrival, the Seller shall be entitled to
demand the fulfillment of the Contract and payment of the agreed price.

4. PACKAGING

The Seller undertakes to deliver the Products hereunder, suitably wrapped and packaged for
their specific characteristics and for the conditions of transport to be used.

5. MEANS OF PAYMENT

The Buyer undertakes to pay the total price which appears in the present Contract. Payment of
said price shall be effected by:

Alternative A. Cash, check or bank transfer to the account and bank branch designated by the
Seller.

Alternative B. Bill of exchange or direct debit to the account and bank branch designated by
the Buyer.

Alternative C. Irrevocable and guaranteed letter of credit payable to the account and bank
branch designated by the Seller.

6. DATE OF PAYMENT

The price shall be paid on the following terms:

Alternative A. ....... %, being ..................... [write in numbers and letters], on signing the present
Contract; and the rest, being .................... [write in numbers and letters], on delivery of the
goods.

Alternative B. ........ %, being ..................... [write in numbers and letters], on submitting
documents of property to the transport agent designated by the Buyer; and the rest, being
.................... [write in numbers and letters), within .......... calendar days of receipt of the goods
by the Buyer.
_____________________________________________________________________________

This is a sample of 2 pages out of 8 of the International Sale Contract.
To get more information about this contract click here:
INTERNATIONAL SALE CONTRACT

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2. International Distribution Contract

Introduction

This Contract is designed to be used where a Supplier grants to a Distributor the right to
promote and commercialize merchandise under its own name and on its own account with the
intention of re-selling it to end clients or retailers located in an agreed territory.

The main reason to appoint a Distributor is that the Supplier is unable to carry out the
distribution in a particular territory (usually a country) alone, or is unwilling to invest in the
distribution infrastructure that is required in order to so.

The supplier will wish to be assured that the distribution of the goods will be undertaken in an
efficient and vigorous manner. The Distributor will usually seek assurances that its efforts will
be protected in some way, possibly by being appointed as the exclusive Distributor in a given
territory. The Supplier may wish to ensure that the Distributors efforts are concentrated on
the territory in question.

Territorial restrictions on either Party may have consequences under applicable law, and these
aspects need to be carefully considered. Also, the increasing importance electronic commerce
is a further aspect of distribution that needs to be addressed in the Contract.

Many International Distribution Contracts include a clause of "no competition" whereby the
Distributor is prohibited from selling directly competitive products sold by the Supplier, except
in certain cases where its approval is required.

The main clauses of an International Distribution Contract deal with the supply of goods, the
procedure of ordering the goods, the price of the goods, payment of the price, as well as
warranties relating to the goods.

The goods to be distributed will often be protected by various forms of Intellectual Property, in
particular, Trademarks, which the Distributor will need to use in the course of its marketing
and distribution activities.

This Contract can be used for the international distribution of different types of products such
as food, beverages, consumer goods, industrial supplies, machinery, etc. It can also be edited
to be used for other types of distribution, i.e. mass, selective and exclusive.

An International Distribution Contract involves greater engagement between the Parties than
an International Commercial Agency Contract so the term of the contract is usually longer:
usually three to five years, although you can set a trial period of one year.

Furthermore, this Model Contract includes references to the regulations of the EU and
competition rights which influence distribution contracts undertaken in the member countries.

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Model International Distribution Contract

DATE: ............................................................................................................................................

BETWEEN:

.............................., represented by ............................................................. [surname and first
name, position] (hereinafter referred to as the Supplier),

AND:

.............................., represented by ............................................................. [surname and first
name, position] (hereinafter referred to as the Distributor).

PREAMBLE [Parties may include a preamble explaining the activities of each and describing the
history of their relationship, if for example the contract continues a prior relationship].
.........................................................................................................................................................
.........................................................................................................................................................

IT IS AGREED AS FOLLOWS:

1. PRODUCTS AND TERRITORY

Alternative A. The Supplier, by virtue of manufacturing and/or commercializing the products
known as ................................................. (hereafter, the Products), declares full ownership
rights thereto, and grants to the Distributor the right to promote and commercialize them
within the territory known as ...................................... (hereafter, the Territory).

Alternative B. The Supplier, by virtue of manufacturing and/or commercializing the products
described in Annex 1 of the present Contract (hereafter, the Products), declares full
ownership rights thereto, and grants to the Distributor the right to promote and commercialize
them within the territory specified in Annex 1 (hereafter, the Territory).

2. OBLIGATIONS OF THE DISTRIBUTOR

The Distributor shall purchase and sell under its own name and on its own account the
Products provided by the Supplier within the Territory. The Distributor shall not act under the
name or on the account of the Supplier without the latters previous authorization in writing to
that end. Similarly, the Distributor shall not make any modification to the products covered by
the present Contract.
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3. EXCLUSIVITY

Alternative A. For the duration of the present Contract, the Supplier grants the Distributor the
exclusive right to commercialize and sell the Products within the Territory. Should the Supplier
sell any other product within the Territory, they shall inform the Distributor in order to
determine the possibility of including it in the products described in ................... [Clause 1 (for
Alternative A of Clause 1) or Annex 1 (for Alternative B of Clause 1)] of the present Contract.

Alternative B. For the duration of the present Contract, the Supplier grants the Distributor the
exclusive right to commercialize and sell the products within the Territory. The Supplier may
nonetheless negotiate and sell directly within the Territory to potential clients meeting the
requirements established in Annex 2 of the present Contract.

Alternative C. For the duration of the present Contract, the Supplier may commercialize and
sell the Products within the Territory, either directly or through other agents. The Distributor
shall not be entitled to receive any sort of payment for such sales.

4. DIRECT SALES

In the case of sales operations with clients located within the Territory, and in which the
Distributor does not wish to participate:

Alternative A. The Distributor shall inform the Supplier and make known the details of the
client without entitlement to commission of any kind.

Alternative B. The Distributor may act as an intermediary, thereby being entitled to
commission equivalent to .......... % of the value of the sales operation once complete.

5. SALES OUTSIDE THE TERRITORY

The Distributor hereby pledges not to procure clients, advertise, sell or keep stocks outside the
Territory. The Distributor shall decline to sell any client located within the Territory when there
is reason to believe that the Products may thereby be resold outside the Territory. The
Supplier shall also decline to sell to any client located outside the Territory when there is
reason to believe that the Products may thereby be resold within the Territory.

___________________________________________________________________________

This is a sample of 2 pages out of 10 of the International Distribution Contract.
INTERNATIONAL DISTRIBUTION CONTRACT

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3. International Commercial Agency Contract

Introduction

This Contract is used for activities requiring a commercial agent to promote the sale of goods
in overseas markets. In this contract, one party (Principal) asks other party (Agent), either a
person or a company to carry out the promotion of international trade transactions for a
continuous period of time as an independent intermediary without assuming liability for
those transactions.

The main reason for appointing an Agent is that the Principal is unable to carry out the
promotion, negotiation and conclusion of sales of products or services in a particular
territory by itself, or is unwilling to make the necessary investments that are required.

The Agent may be a physical person or a company. When the agent is a physical person,
under no circumstances can it be considered as an employee of the Principal.

When the Agency Contract applies to products, the Principal may or may not be the
manufacturer of these products. The Principal may be, for instance, a distributor.

In the International Commercial Agency Contract, the agent receives payment exclusively
through commission on transactions which are completed successfully, and in some cases
certain costs may be taken into account, for example travelling expenses or promotional
activity.

The Agents strength lies in its contacts with customers and its weakness derives from the fact
that such customers belong to the Principal. This explains why, in many countries, such as
European Union countries, public policy laws aim to protect the Agents right, especially upon
the termination of the contract. Before any discussion takes place between the Parties, it is
therefore strongly recommended to check whether the agency contract contemplated may be
impacted by such local laws.

The main purpose of the contract is to establish the level of each Partys obligations towards
the other, such as: the authority of the Agent to commit the Principal or to receive payments;
the obligation for the Principal to accept the orders transmitted by the Agent; the information
which the Principal should pass on the Agent; minimum orders; advertising, fairs and
exhibitions; trademarks and property rights; exclusivity; consequences of termination;
assignment and appointment of sub-Agents; etc.

The Contract is created according to commercial practices about agency contracts accepted in
local laws. Additionally, it complies with the UNIDROIT Principles of International Commercial
Contracts and refers to European Commission Directive 86/653 about agency contracts.

Parties should review alternatives proposed in this Contract in order to eliminate those that
are irrelevant to the Parties common intentions.

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Model International Commercial Agency Contract

DATE: ...........................................................................................................................................

BETWEEN:
.............................. (hereafter referred to as "the Principal),

AND:

Alternative A [When the Agent is an individual]

Mr./Ms. .., of legal age, ........... [include professional qualification], Tax
Identification Number.., registered address , acting on his/her own behalf
(hereafter, the Agent).

Alternative B [When the Agent is a company]

.............................. (hereafter referred to as the Agent).


1. PRODUCTS AND TERRITORY

The Principal authorizes the Agent, and the Agent accepts, the right to act as Commercial
Agent to promote the sale of:

Alternative A. The following products .................... (hereafter the Products), in the following
designated territory: .................... (hereafter the Territory).

Alternative B. The products as described in Annex 1 of the present Contract (hereafter the
Products) in the territory as set out in Annex 1 (hereafter the Territory).

2. FUNCTIONS OF THE AGENT

Alternative A. The Agent may negotiate sales transactions on behalf of the Principal, without
being entitled to sign contracts on the Principals behalf or impose any sort of legal or other
obligation upon the Principal. The Agent shall merely inform clients as to the sales conditions
established by the Principal.

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Alternative B. The Agent shall negotiate and close sales transactions on the Principals behalf.
When negotiating with clients, the Agent shall promote the Products strictly under the sales
conditions and clauses stipulated by the Principal.

3. ACCEPTANCE OF ORDERS

The Agent shall inform the Principal of any order received. The Principal may refuse to deal
with any order managed by the Agent; nevertheless the continued rejection of orders shall be
deemed contrary to good faith and shall be considered a breach of contract by the Principal.
The Principal shall inform the Agent within .......... [3, 7, 10] calendar days of the acceptance or
rejection of orders passed on by the Agent.

4. OBLIGATION TO MEET A MINIMUM SALES OBJECTIVE

The Agent undertakes, for each year of the term of the Contract, to pass on orders for a
minimum of ............................. [insert amount of money] and/or ............................... [insert
amount of products]. Should the Agent fail to meet the minimum objective established
hereunder by the end of each year, the Principal shall be entitled to choose between: a)
termination of the Contract; b) cancellation of exclusivity, where applicable; c) reduce the size
of the Territory. The Principal must given written notice to the Agent of the exercise of such
rights within 30 calendar days from the end of the year in which the minimum objective was
not achieved.

5. EXCLUSIVITY

Alternative A. Throughout the term of the present Contract, the Principal shall not grant sales
rights for the Products within the Territory, to any third party. Nevertheless, the Principal shall
be entitled to negotiate directly, without the Agent intermediating, with clients located in the
Territory on condition that the Principal informs the Agent of such agreements. In such cases,
the Agent shall be entitled to receive a reduced commission as set out in Annex 2, unless the
Principal has reserved the right to negotiate exclusively with clients mentioned in Annex 3 of
the present Contract.

Alternative B. The Principal may grant to any third party the right to represent and sell its
Products in the Territory. The Agent shall not be entitled to commission for sales thus generated.
_____________________________________________________________________________

This is a sample of 2 pages out of 10 of the International Commercial Agency Contract.
INTERNATIONAL COMMERCIAL AGENCY CONTRACT

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4. International Sales Representative Agreement

Introduction

This agreement is intended to be used when one company (Principal), which supplies products
or services, is interested in expanding its sales overseas and appoints either an individual or a
company (the Representative) with in-deph knowledge and expertise in overseas trade and
international marketing.

The International Sales Representative Agreement allows the Representative to negotiate and
close negotiations on the companys behalf. Nevertheless, when negotiating with clients, the
Representative shall offer the products strictly according to the clauses and circumstances of
sale, which the company has predetermined.

The Representative carries out his/her activity continuously and is paid by commission based
on sales achieved, although on occasions there may be agreement as to the payment of fees
for management and representation expenses.

It is common practice for companies to offer different types of commissions to their Sales
Representative depending on the type of sale. Usually the higher the amount of the sale the
lower the commission will be. The Contract should also specify whether the Representative is
entitled to commission if the sale is made directly by the Principal or a third party (either a
business or an individual) within the same country. Besides, the amount - if net value (only the
value of the goods) or gross value (including transportation costs or other expenses ) - on
which the commission should be applied, should also be clearly stated. Also the currency in
which the commission will be paid.

In an International Sales Representative Agreement the most important duties of the Principal
are: to provide the Representative with the materials and documents necessary for the
development of its business; respond at once regarding the acceptance or rejection of the
proposed orders; comply with the terms agreed in the sales made to customers; communicate
any changes occurring in the products, prices or conditions of delivery; communicate orders
received directly from clients attributed to Representative.

For its part the Representative has, among others, the following duties: to perform the
necessary activities to promote products or services of the Principal; supply immediate
information on operations and any circumstances which may affect its execution; manage the
collection of operations that would have directly involved in the Contract; keep the Principal
informed on the activity for the promotion of the operations as well as the circumstances that
may affect the customer and the situation of the company in the market; not provide services
to competitors.

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Model International Sales Representative Agreement

DATE: ...................................................................................................................................

BETWEEN:

.............................. (hereafter referred to as the Company),

AND:

Alternative A [When the Representative is an individual and independent professional]

Mr./Ms. .., of legal age, ........... [include professional qualification], Tax
(hereafter, the Representative).

Alternative B [When the Representative is a company]

.............................. (hereafter referred to as the Representative).

Both parties acknowledge each others right and ability to undertake the terms of the present
Contract and,

DECLARE

I. That the Company manufactures and sells ............................. [describe the
Companys products], and is interested in expanding into international markets.

II. That the Representative is interested in carrying out the tasks of promotion and
export management of the products manufactured by the Company, given his/her
professional knowledge and experience in overseas trade and international
marketing.

III. That the Parties have reached an agreement as to the overseas promotion of the
aforementioned products, subject to the following points:

1. OBJECT OF THE CONTRACT

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The object of the present Contract consists of the promotion and sale in international markets
of the products manufactured by the Company as specified in Annex 1 of the present Contract.

2. EXCLUSIVITY AND TERRITORY

The Representative shall carry out his/her activity exclusively for the Company in the territory
named in Annex 2 of the present Contract, and may not carry out such activity beyond the
designated territory.

3. COMMITMENT TO NON COMPETITION

Alternative A. The Representative shall not, without authorization in writing from the
Company, manufacture, distribute or represent the type of product which competes directly
with the products manufactured by the Company. To this end, the Representative declares
that on the date of signing the present Contract, (s)he acts as a representative, agent or
distributor for the companies and products listed in Annex 3 of the present Contract. The
commitment to non competition is to be upheld throughout the term of the present Contract
and for a further .. [1, 2, 3] years after its date of completion.

Alternative B. Throughout the term of the present Contract, the Representative may
manufacture, distribute or represent products similar to those of the Company, provided that
the Representative informs the Company in writing of such intention.

5. NEGOTIATION OF TRANSACTIONS

Alternative A. The Representative may negotiate transactions of purchase and sale, though is
not authorized to close negotiations on the Companys behalf, nor bring about any legal
obligation upon the Company in any other way. The Representative shall merely inform clients
as to the sales conditions established by the Company.

Alternative B. The Representative shall negotiate and close transactions of purchase and sale
on behalf of the Company. When negotiating with clients, the Representative shall offer the
products in strict observance of the clauses and conditions of sale which the Company has
expounded.

_____________________________________________________________________________

This is a sample of 2 pages out of 7 of the International Sales Representative Agreement.
INTERNATIONAL SALES REPRESENTATIVE AGREEMENT

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5. International Joint Venture Contract

Introduction

This Contract governs the relationship between two companies located in different countries,
and which have set up a third company (the Joint Venture). This new company would usually
be located in the same country as one of the two partner companies, with the purpose of
mutually establishing an activity with its own objectives: marketing and distribution, research,
manufacturing, etc.

The International Joint Venture Contract establishes all the agreements needed to start up and
manage the Joint Venture. Furthermore, the contract makes reference to the viability studies
prior to the setting-up of the company and the financing of its costs.

The Contract contemplates 50-50 equal ownership. Each Party makes an initial contribution to
the capital of the Joint Venture. It is important to establish whether or not a Party will have
any continuing obligation to provide further finance to the Joint Venture.

For clarity regarding development of the Joint Venture, it is a good practice to have a Business
Plan agreed between the Parties at the outset. This could be attached to, or at least identified
in the Joint Venture Contract.

Many Joint Ventures involve contribution by a Party of assets, property, technology or services
or associated distributorship or supply arrangements. These will often require "ancillary
contracts" to be entered into in order to spell out the detailed terms (price, specification,
liability, etc.).

Overall direction and management of the Joint Venture is usually in the hands of the Joint
Venture Board of Directors. It is important at the outset to clarify the balance of decision-
making power between (i) the Parties as shareholders, (ii) the Board and (iii) individual
executives of the Joint Venture. it is common to specify that certain "Reserved Matters" will
require mutual consent of the Parties either as shareholders or at the Board.

In a Joint Venture Contract a sale by a Party of its shares in the Joint Venture can only be made
with mutual consent. Besides, if a Party wishes to bring the Joint Venture to an end, mutual
agreement will usually be required.

Each Joint Venture must be formed in a particular jurisdiction. Usually, this will determine the
laws which are applicable. It will necessary to prepare by laws or other formal constitutional
documents in that jurisdiction that are consistent with the Joint Venture Contract. It is a good
practice to ensure that the Joint Venture Contract addresses key items as a matter of contract
between the Parties.

This Contract has been drafted taking into account the principles established for the
UNCTAD/OMC International Trade Centre for Joint Venture contracts.

16

Model International Joint Venture Contract

DATE: ..............................................................................................................................................

BETWEEN:

.............................. (hereafter referred to as "Company A),

AND:

.............................. (hereafter referred to as Company B).

Both parties express a mutual recognition of their legal authority to undertake the present
Joint Venture contract and declare that:

I. Company A is a company based in ...................., with presence in ................. [mention
countries] and extensive experience in the .................... sector, its core activity being
.....................

II. Company B is a company based in ...................., with presence in ................ [mention
.....................

III. Both parties are interested in establishing mutual cooperation and consequently agree
to the creation of a Joint Venture.

IV. The constitution of the Joint Venture shall be implemented according to the laws
pertaining to foreign investment in the country in which the company is established,
and within the regulatory environment of the .................... sector.

V. To this end, both Parties agree to abide by the following agreements:

ARTICLE 1. OBJECT OF THE JOINT VENTURE

Both Parties agree to join resources and endeavours according to the stipulations of the
present contract in order to:

Alternative A. Develop jointly .................................................................... [describe the activity]

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Alternative B. Exploit jointly..................................................... [describe the activity]

Alternative C. Research jointly..................................................... [describe the activity]

Alternative D. Commercialize jointly.................................................. [describe the activity]

Alternative E. Produce jointly ....................................................[describe the activity]

ARTICLE 2. TERRITORY

Alternative A. The territory in which the Joint Venture is concerned shall be exclusively the
whole of .................... [mention country or countries].

Alternative B. The territory in which the Joint Venture is concerned shall be initially the
whole of .................... [mention country or countries], and at a later stage the territory that
includes .................... [mention country or countries].

ARTICLE 3. FEASIBILITY STUDY

Prior to the constitution of the Joint Venture, both parties may agree to the implementation of
a Feasibility Study including, among others, the following elements:

(a) Definition of the business model;
(b) Analysis of the regulatory environment pertaining to the activities to be undertaken
within the territory hereunder;
(c) Evaluation of market potential;
(d) Valuing of assets contributed by the partners;
(e) Business plan; and
(f) Schedule of action.

Article 4. Constitution of Joint Venture

Both parties undertake to establish by .................... [mention date] a Joint Venture in
.................... [town/country] to be defined legally as .................... and doing business under the
name of .....................

_____________________________________________________________________________

This is a sample of 2 pages out of 15 of the International Joint Venture Contract.
INTERNATIONAL JOINT VENTURE CONTRACT

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6. International Strategic Alliance Contract

Introduction

This Contract governs the relationship between two companies located in different countries
that desire to achieve joint benefits through the formation of a Strategic Alliance that may
have distinct objectives. Some of these may include carrying out a research project, designing
and manufacturing new products, providing complementary services, exchanging clients and
commercial networks, etc.

The Contract is a framework for an Alliance or collaboration between two Parties where no
separate jointly owned corporate entity is created. The Alliance is based solely on the Contract
between the Parties.

Each Strategic Alliance is different. This Contract provides a series or "menu" of possibilities
depending on the purpose of the Alliance.

A International Strategic Alliance Contract does not involve the creation of a separate profit-
making business in which the Parties share profits as well as costs. If the arrangements do
involve income or profit-sharing, be aware of (i) the need for advice on the tax implications
and (ii) the danger that, in many jurisdictions, each Party could become jointly liable to third
Parties for any claims (caused by whichever Party) arising out of activities of either Party
connected with the Alliance. If you are interested in a contract that facilitates the formation of
a separate company you may want to use the International Joint Venture Contract.

The Strategic Alliance Contract contemplates that the two Parties share 50-50 in the costs of
the Alliance. It is important to establish what types of costs are to be shared; if a Party is to be
paid for its work or other contribution, the basis for remuneration should be clearly
established, either in the contract or through the Management Committee.

The two Parties are jointly represented in the Management Committee. It may be appropriate
in some cases (i) to spell out the authority of particular individuals or subcommittees and (ii)
to ensure that certain "reserved matters" require unanimous decision.

The contract states that each Party will have areas of responsibility to contribute towards the
success of the Alliance. In some cases these will be expressed in general terms and not involve
forma legal commitment. In other cases, specific legally binding commitment will be
appropriate.

The contract sets out provisions for a relatively straightforward sharing of know-how and
technical development. In some cases (e.g. where Intellectual Property Rights are of vital
importance), more detailed license or other contracts will be necessary.

Lastly, the contract establish the duration of the Alliance. Will it have a specific term with
subsequent renewal requiring mutual agreement? Or will it continue indefinitely subject to a
Partys right to terminate - either unilaterally by notice or in specified circumstances?

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Model International Strategic Alliance Contract

DATE: ..............................................................................................................................................

BETWEEN:
.............................. (hereafter referred to as "Company A),

AND:
.............................. (hereafter referred to as Company B).

Both parties express a mutual recognition of their legal authority to enter into this Strategic
Alliance Contract and declare that:

I. Company A is a company based in ...................., which operates in ................. [mention
.....................

II. Company B is a company based in ...................., which operates in ................ [mention
.....................

III. The Parties believe that there are mutual benefits to be achieved by working together
and have agreed to establish a Strategic Alliance (the "Alliance") in the field of
.................... [specify] on the terms of this Contract.

ARTICLE 1. OBJECTIVES OF THE ALLIANCE

1.1. The Parties agree to establish an Alliance whose primary objectives are [specify
primary objectives; the following are examples]:

1.1.1 To explore the various synergies which may be obtained by working together,
particularly in the field of ......................... [specify].
1.1.2 To undertake joint research Projects as may be agreed and consider the joint
commercial exploitation of any new technology or products resulting from
their joint research.
1.1.3 To make Company As technical expertise in the field of ................ [specify]
available to Company B in order to develop its business in .....................
[describe].
1.1.4 Generally, to explore commercial agreements that will be for the mutual
benefit of the Parties.
20

1.2 Each Party acknowledges that the success of the Alliance will require a cooperative
working relationship based upon good communications and team work between the
Parties at all levels.
1.3 Alternative A [when an Action Plan of the Alliance is not included as Annex of the
Contract]


Alternative A. The territory in which the Alliance is concerned shall be the whole of
.................... [mention country or countries].

Alternative B. The territory in which the Alliance is concerned shall be initially the whole of
.................... [mention country or countries], and at a later stage the territory that includes
.................... [mention country or countries].

ARTICLE 3. MANAGEMENT COMMITTEE

3.1 The Parties shall establish a committee ("Management Committee) responsible for
overall organization, direction and management of the Alliance.

3.2 The functions of the Management Committee will include, inter alia:
3.2.1 To give strategic and operational direction to the Alliance;
3.2.2 To approve particular Projects to be carried out through the Alliance, including
any financing commitments of the Parties for those approved Projects;
3.2.3 To establish targets and goals in order that the progress of the Alliance can be
measured;
3.2.4 To identify and evaluate resources required to support the Alliance and agree
the responsibilities of each Party to provide those resources;
_____________________________________________________________________________

This is a sample of 2 pages out of 15 of the International Strategic Alliance Contract.
INTERNATIONAL STRATEGIC ALLIANCE CONTRACT

21

7. International Services Contract

Introduction

This contract establishes the commercial relationship, which arising from the supply of services
from one party (Service Provider) to the other (Client) when these are located in different
countries.

The International Services Contract is designed in a way that it can easily be adapted for the
supply of a variety of services: business management, technology, consulting, education and
training, software and web services, engineering, marketing research, advertising and design,
etc., in global markets.

As far as the duration of provision of services is concerned, the contract provides two main
schemes: in the main option, the services have to be provided on a specific date; the
alternative option is that the services will be provided on different dates and/or during a
certain period of time.

Depending on the nature of the service, the approval procedure may need to be adapted if, for
example, there are several stages, with each one needing to be signed off by the company
before work moves on to next stage.

As far as the duration of the contract is concerned, it has to be consistently aligned with the
scheme provided. An option could be that the contract has a specific term with subsequent
renewal requiring mutual agreement.

The clause of personnel makes clear that the Service Providers personnel should be suitably
qualified and also provides for a representative to be identified as the Service Providers main
point of contact with the Client. If the Client wishes, an extra schedule naming key personnel
can be added to the Contract.

As far as damages are concerned, the Parties may wish to include liability of the supplier for
lost profit suffered by the Client as a consequence of any breach by the Supplier of his
obligations under the contract

Especially when the Service Provider has access to company software and other Intellectual
Property Rights (IPR), it is sensible to have wording designed to protect the IPR. Sometimes a
Service Provider will want to retain ownership and grant a license to the company, and this
may be a matter of negotiation. From the companys point of view, it is paying for a service
and if the product of that service is integrated with the systems of the company, then it is
better to have the outright ownership.

The International Services Contract imposes strict confidentiality obligations on the Service
Provider. In addition, any publicity concerning the contract - e.g. if the Service Provider wants
to refer to its brochures - has to be approved in advance by the Client.

This Model Contract is a general framework and must be tailored to the circumstances of the
particular collaboration.

22

Model International Services Contract

DATE:...............................................................................................................................................

BETWEEN:

.............................. (hereafter referred to as the "Service Provider),

AND:

.............................. (hereafter referred to as the "Client).

DECLARE THAT:

I. The Service Providers main activity is ............................... and possesses the
knowledge, human resources and equipment necessary to provide the required
services.

II. The Client is a company wishing to contract the services offered by the Service
Provider.

III. Both parties undertake to observe the following contract:

1. OBJECT

The Service Provider undertakes to provide the services set out in Annex 1 (hereafter the
Services) under the terms and conditions established in the present Contract.

2. DURATION

Alternative A. The Services covered by the present Contract shall be effected within a period of
no more than ......... [days, months, years) as from the date of signing of the present Contract.
On completion of the Services, both Parties shall reach explicit agreement as to its renewal as
well as to the Contract conditions.

Alternative B. The Service Provider shall effect the Services covered by the present Contract
throughout a period of .......... [days, months, years] as from the signing of the present
Contract. On completion of this period, unless either Party has manifestly expressed
otherwise, the present Contract shall be considered renewed by both Parties.

23

3. PRICE

The price which the Client shall pay the Service Provider for the implementation of the Services
covered by the present Contract is ................... [insert amount and currency]. This price does not
include indirect taxation applicable according to the laws of the Clients country of origin. The
price shall be established according to the descriptions of Services and fees set out in Annex 1 of
the present Contract. In case of amendment or extension of such services, the Client and Service
Provider undertake to negotiate new prices for the Services provided.

4. TERMS OF PAYMENT

The price shall be paid according to the following terms:

Alternative A. The Client shall pay ........ % of the price on signing the present Contract and the
rest shall be paid on completion of the Services provided.

Alternative B. the Client shall pay .......... % on signing the present Contract, ......... % on the
............................... [date], and ........ % on completion of the Services provided.

Alternative C. The Client shall pay within ......... calendar days the invoices which the Service
Provider sends ................ [weekly, monthly, quarterly] for the Services provided over that
same period.

Alternative D. The Client shall pay for the Services by means of monthly installments, of equal
amount and at months ......... [beginning/end] until the completion of the present Contract.

5. Travel Expenses

Alternative A. All travel expenses incurred by the Service Provider (journeys, board and
lodgings) necessary for compliance with the present Contract shall be met by the Client. Such
expenses shall be paid, after due presentation of documents justifying such expenses, within
......... calendar days.

Alternative B. All travel expenses incurred by the Service Provider, necessary for compliance
with the present Contract, shall be met by the Service Provider itself.

_____________________________________________________________________________

This is a sample of 2 pages out of 8 of the International Services Contract.
INTERNATIONAL SERVICES CONTRACT

24

8. International Supply Contract

Introduction

This Contract is used to establish long-term agreements (i.e. over a year) between a
manufacturer (referred to as the Supplier) and its client (the Buyer) for the supply of products
at pre-arranged prices. The Contract establishes the minimum and maximum amounts to be
supplied, as well as a number of alternatives to adjust the price at the end of each year within
the term of the Contract.

The International Supply Contract may be used for two different kinds of supply: (a) the regular
acquisition of products (components, raw materials, etc.) which the Buyer must incorporate
into the manufacturing process of its own products; (b) the regular acquisition of products
which the Buyer must sell elsewhere under its own brand, and without any considerable
modifications, in order to complete its range of products.

The quality of the Products is defined by reference to the specification which will be in an
Annex of the Contract. The Buyer must inform the Supplier if the products do not conform, in
which case the Supplier is responsible for the replacement.

One main aim of the contract is to establish the level of each Partys obligation to the other -
whether this involves goods ordered from time to time, or fixed quantities -. Options are
included for these possibilities. In addition, there may be a provision for minimum or
maximum order quantities.

Another aim is to establish the procedure for ordering and delivering the goods as to maximize
the level of certainty for each Party.

A third aim is to provide a mechanism to establish prices at which the goods are to be supplied
over a period of the contract. Again, various options are included for pricing, as well as
payment.

The Contract specifies where and when deliveries are to be made. Both ownership and risk in
product passes from the Supplier to the Buyer at the delivery point. The Supplier is responsible
for packaging and the Buyer is responsible for reimbursing the Supplier for any storage costs
which are incurred as a result of failure to take delivery.

A contract of this type may also deal with issues of liability, subject to (or possibly overriding)
the default position under applicable law.

The International Supply Contract also includes duration. In view of the different
considerations one can take into account, it is not possible to provide for all possibilities.
Commonly such a contract will be for several years, sometimes with the right of one Party or
both Parties to terminate early for convenience, for breach of contract or for insolvency of the
Party. A maximum period may be imposed by applicable law, depending on the circumstances.

In some cases, the International Supply Contract is used in connection with The General
Conditions of International Sale or even the standard Terms of Purchase of the Customer.

25

Model International Supply Contract

DATE: .............................................................................................................................................

BETWEEN:

.............................. [company legal name] whose registered office is at .....................................
[address, city and country] and registration/fiscal number is .............................. (hereafter
referred to as the Supplier),

AND:

.............................. [company legal name] whose registered office is at .....................................
referred to as the Purchaser).

history of their relationship, if for example the Contract continues a prior relationship].

.........................................................................................................................................................

.........................................................................................................................................................


1. AGREEMENT TO SUPPLY

1.1 The Supplier will sell and deliver and the Purchaser will buy the products specified in
Annex 1.

1.2 The list of products in Annex 1 may be amended by written agreement during the life
of this Contract.

2. DURATION

2.1 This Contract is for an initial period of .......... [1, 2, 3, 4, 5] years commencing on
.............. [date].

2.2 At the end of the initial period the Contract will continue on a yearly basis unless it is
terminated by either Party giving not less than .......... [1, 2, 3] months written notice to
the other to expire at the end of the initial period or of any subsequent period.

3. QUALITY

26

3.1 Products to be supplied under this Contract must conform to the description and
specifications contained in Annex 2.

3.2 The Purchaser must notify the Supplier promptly in writing if it becomes aware of any
Products which do not conform to the requirements set out in this Contract. The
Purchaser will not be obliged to pay for non-conforming Products and the Supplier will
be responsible for their removal and replacement with Products that conform to the
requirements of the Contract.

3.3 Where appropriate, independent inspection and testing of Products will be carried out
at agreed intervals with an independent third Party appointed by the ..............[Supplier
or Purchaser] and approved by the .............. [Purchaser or Supplier]. A copy of every
test report will be made available to the ............. [Supplier or Purchaser] .............. by
the .............. [Purchaser or Supplier].

3.4 The costs of such inspections and tests:

Alternative A. Will be borne by the Supplier.

Alternative B. Will be borne by the Purchaser.

Alternative C. Will be borne equally by the Supplier and the Purchaser.

4. QUANTITIES AND ORDERING PROCEDURES

4.1 The minimum and maximum quantities of Products which the Purchaser will order in
each Contract Year are set out in Annex 3. A "Contract Year" is the 12 month period
commencing on the date established in Clause 2.1 and on each anniversary of that
date.

4.2 The Purchaser will provide a written forecast of its anticipated annual requirements at
least 30 days before the commencement of each Contract Year and will also provide
regular written quarterly forecasts of its requirements on ................... [1 January, 1
April, 1 July and 1 October] each year. These forecasts will be updated as
circumstances require.

_____________________________________________________________________________

This is a sample of 2 pages out of 8 of the International Supply Contract.
THE INTERNATIONAL SUPPLY CONTRACT

27

9. International Manufacturing Contract

Introduction

This Contract is used in situations when one company arranges for another company in a
different country to manufacture its products; this is also known as international
subcontracting. The company provides the manufacturer with all the specifications, and, if
applicable, also the materials required for the production process.

The International Manufacturing Contract sets out the requirements, which the manufacturer
must meet concerning the quality of the products, certification, quantities, conditions and
dates of delivery, etc. It also establishes guidelines for the inspection and testing of the
products set forth by the company which contracts out the manufacture, or by its own clients.
Furthermore it also outlines modifications to orders, as well as guarantees and compensation
in case of breach of contract.

The Contract provides for a basic scheme, and two main options. The basic scheme is based on
the assumption that the manufacturer is fully equipped and has the technology to produce
conforming goods, in its position as most specialized Party. The options, which do not exclude
the basic scheme but may combined with it and with each other, are tailored to cases in which
(i) the Company has to supply the Manufacturer with certain specific equipment or tooling and
(ii) the Company has to transfer parts of its own technology to the Manufacturer to enable him
to finalize the products.

The Contract also covers the situation where the Parties have agreed that the Manufacturer
shall submit samples before production is launched.

The International Manufacturing Contract also deals with issues of Intellectual Property Rights
(IPR). It is assumed that the IPR are properly protected by appropriate registration. Moreover,
the contract imposes a duty of confidentiality upon both Parties, which should provide
additional protection in particular if know-how is communicated by one Party to the other. It
is suggested to verify that the regime set out in the Contract for improvements is acceptable in
the light of any applicable anti-trust/competition law.

Because of the cooperation between the Parties, the International Manufacturing Contract
might be enduring. It is therefore important to establish the duration of the alliance. An option
could be that the contract has a specific term with subsequent renewal requiring mutual
agreement.

As far as the Law applicable to the contract is concerned, it is important to note expressly that
the UN Convention on the International Commercial sale of Goods (CISG) does not apply to
that type of agreement "in which the preponderant part of the obligations of the Party which
furnishes the goods consists in the supply of labour or other services."

The alternatives provided by the Contract may be of course be adapted to the specific needs of
the Parties, or deleted. They are not exclusive of each other and may be combined.

28

Model International Manufacturing Contract

DATE: ..............................................................................................................................................

BETWEEN:

.................................................................... [address, city and country] and registration/fiscal
number is .............................. (hereafter referred to as the Company),

AND:

.................................................................... [address, city and country] and registration/fiscal
number is .............................. (hereafter referred to as the Manufacturer).

history of their relationship, if for example the Contract continues a prior relationship].

.........................................................................................................................................................

.........................................................................................................................................................


1. APPOINTMENT

1.1 The Company appoints the Manufacturer to manufacture the products.

1.2 The Manufacturer agrees to manufacture all products describe in Annex 1 of this
Contract in accordance with orders issued by the Company and to supply the
products as set out in this Contract.

1.3 This Contract shall commence on the date written above and continue for an initial
period of [6 or 12] months. It shall then continue for further consecutive
periods of [6 or 12] months until terminated by the Company at any time on
one months written notice to expire at the end of the initial or any subsequent
period of [6 or 12] months.

1.4 The Manufacturer acknowledges that this appointment is non-exclusive and The
Company is free to appoint other manufacturers, in the Manufacturers country or
in other countries, to manufacture products on its behalf.

2. ORDERS

29

2.1 Each order for products shall be in writing and shall contain a detailed specification
to enable the Manufacturer to fulfil the order including any special requirements
and the date for delivery of the completed Products.

2.2 Unless otherwise agreed in writing when an order is placed, the terms and
conditions in this Contract will apply to it.

2.3 The Manufacturer will promptly confirm in writing receipt of each order and
confirm to the Company the delivery date of products based on the information
provided by the Company. Any discrepancy or omission in the information supplied
by the Company must be notified by the Manufacturer to the Company within
[3, 5, 7] calendar days of the date of each order.

2.4 The Company may but is not obliged to give the Manufacturer a forward estimate
of requirements for products in advance of placing specific orders and will notify
any changes in its estimates.

3. OBLIGATIONS OF THE MANUFACTURER

3.1 The Manufacturer shall manufacture and deliver all products so as to meet the
requirements of all orders.

3.2 Every order for products must be completed ready for delivery within . [3, 5, 10]
weeks from the date of the order unless otherwise specified in the order or agreed
in writing within [3, 5, 7] calendar days of the order being received by the
Manufacturer.

3.3 All products must:

3.3.1 Fully comply with the order and with any specification, samples or
patterns comprised in the order.

3.3.2 Be of high quality, comprise only suitable materials and be fit for the
purposes for which they are supplied.

3.3.3 Comply with all applicable laws, regulations and standards including but
not limited to fire, health and safety regulations.

3.4 The Manufacturer shall for the duration of this Contract maintain adequate product
liability insurance in respect of all products and against loss or damage of materials
and products at his factory or when in transit.

_____________________________________________________________________________

This is a sample of 2 pages out of 10 of the International Manufacturing Contract.
INTERNATIONAL MANUFACTURING CONTRACT
30

10. International Technology Transfer Agreement

Introduction

This Contract is used by companies for technology transfer, either through granting Intellectual
Property Rights (IRP) such as patents, trademarks, utility models, industrial designs, or
technical assistance and know-how. In the first case, the IPR are granted, acknowledged and
internationally registered, in order to manufactured and trade products. In the second case,
the contract deals with the transfer of IPR which has no international legal recognition, but
does have intrinsic value.

The International Technology Transfer Agreement is designed for international operations in
which the Licensor and Licensee are in different countries, but slight adjustments can also be
used for domestic transactions in which both are located in the same country.

The License being granted extends not only to manufacture but also to the use of the
Licensors names which may already be internationally know and therefore of value to the
Licensee to promote the products.

In the Contract there is a clause that deals with trademarks and other IPR. The clause does not,
as drafted, give the Licensee the right to register any of the Licensors trademarks. Rather, it
allows the Licensor to apply for registration of its trademarks and other IPR in the Licenses
territory.

The Licensee is required to notify the Licensor if some third Party infringement occurs in the
territory, but any legal proceedings to rectify the position will be at the Licensors expense as it
is the Licensors proprietary rights which are being protected.

The Contract also specifies the percentage royalty the licensor will receive on Net Sales. There
is also a clause for a minimum royalty which is payable regardless of whether the Licensee
makes any sales. Since there will be an initial period when no sales are made, the minimum
royalty will not apply to the first royalty period under the Contract.

The Licensee is free to fix its own prices for the goods, but this would not be necessarily
applicable because manufacturing costs will vary from country to country, although some
uniformity of pricing may be desirable.

Clearly an agreement such as this requires time to establish and capital will have to be injected
by the Licensee. The agreement is therefore likely to be fairly long-term in nature.
Termination, other than in the event of some serious breach, should also be on a reasonably
long notice period - probably at least six months and possibly longer.

Sometimes an agreement such as this also involves the Licensor acquiring an interest in the
Licensee and the two Parties may want to establish a joint venture company in which the
Licensor has an equity interest as well as obtaining a royalty. Alternatively, the Licensor may
want an option to take an equity in the Licensee if the venture is successful. These provisions
are not covered by this agreement, but they can be inserted.

31

Model International Technology Transfer Agreement

DATE: ..............................................................................................................................................

BETWEEN:

...................................... [company legal name] whose registered office is at
............................................................. [address, city and country] and registration/fiscal
number is ...................

AND:

................................... [company legal name] whose registered office is at
.............................................................. [address, city and country] and registration/fiscal
number is ....................

Both Parties recognize the capacity to grant this Technology Transfer Agreement and declare
the following:

I. That the company .................... (hereafter, the "Licensor") owns the patents and
trademarks as set out in Annex I of the present Contract. It therefore has full rights to
grant licenses for the exploitation of the said patents, to pass on the appropriate
information necessary for the aforementioned exploitation, and to authorize the
inclusion of the trademarks into products manufactured and sold.

II. That the company .................... (hereafter, the "Licensee") wishes to obtain license to
manufacture, use and sell the products covered by the patents and trademarks as set
out in Annex 2 of the present Contract.

Both Parties agree to the following:

ARTICLE 1. OBJECT

The object of the present Technology Transfer Agreement is:

(a) The license to manufacture the products described in Annex 1;
(b) All know-how and technical assistance necessary for the exploitation of the said
patents and the manufacture of the aforementioned products; and
(c) The use of the trademarks as set out in Annex I, for products manufactured under
license.


32

The licensed rights of patent, trademark and know-how granted by the Licensor to the
Licensee shall be valid only within the following territory .................... [insert country o
countries]. The Licensee shall not exploit the licensed technology, nor shall it sell products
manufactured under license, in countries covered by parallel patents as set out in Annex 1 for
a period of .......... years as from the date on which the said products were first put on sale in
the territory described in the present Contract.

ARTICLE 3. TECHNOLOGY

Alternative A. The license may be used in all areas of technical activity in which the licensed
technology is applied and for any use which the said technology may imply. Should it be
deemed necessary, the Parties shall include in the annexes to the present Contract a
description of all uses of the technology not foreseen at the time of the signing of the present
Contract, but which may arise at any time throughout the term.

Alternative B. The license is granted exclusively for the following applications of the
technology: ..............................................................................................................................
...............................................................................................................................................

ARTICLE 4. EXCLUSIVITY

Alternative A. The License of patents and trademarks shall be exclusive, and consequently the
Licensor shall not exploit the same licenses itself, nor commercialize the products under
license, nor grant other licenses in the territory described in the present Contract for the
duration of the same. Similarly, it shall not enter into contracts granting the know-how related
to the said technology.

Alternative B. The license of patents and trademarks shall be exclusive; nevertheless, the
Licensee reserves the right to exploit the patents itself and commercialize the products under
license in the territory described in the present Contract for the duration of the same. It shall
not grant licenses to third parties, nor enter into contracts granting the know-how related to
the said technology.

Alternative C. The license of patents and trademarks shall not be exclusive. The Licensor may
exploit the said licenses itself, commercialize the products under license, and grant licenses to
third parties in the territory described in the present Contract for the duration of the same.

_____________________________________________________________________________

This is a sample of 2 pages out of 12 of the International Technology Transfer Agreement.
INTERNATIONAL TECHNOLOGY TRANSFER AGREEMENT

33

11. International Trademark License Agreement

Introduction

A companys ability to buy and sell Intellectual Property Rights (IPR) is essential to its long-term
life and vitality. Licensing intellectual property can have an immediate positive effect on a
companys finances, generating revenue and decreasing costs. A company looking to obtain a
license must be sure that the licensor does, in fact, have title to the desired items. A properly-
drafted trademark license agreement can help in both circumstances.

An International Trademark License Agreement allows the licensee to use (but not own) the
licensors trademark in connection with agreed-on products or services. Licensing can help a
company expand into new markets effectively and easily while lending the licensee an
established name and reputation. The marketing efforts made by the licensee will in turn
benefit the licensors goods and goodwill.

In this agreement the proprietor (Licensor) of a registered trademark gives authorization to
another company (Licensee) to manufacture and distribute products under this trademark.
The license is given for a specific range of products (typically consumer and fashion products)
for which the licensee obtains exclusivity in a distinct territory (typically a country). In
exchange for the rights granted, the Licensee shall pay to the Licensor a certain amount of
money and a percentage (royalties) based on the sales value of the products sold under the
license.

A trademark protects names, terms, or symbols used to identify the products of a certain
manufacturer or company. With a trademark license, the owner of the trademark allows the
licensee to use that mark in exchange for certain fees and/or royalties. No ownership rights are
transferred in this exchange.

The advantage of licensing a trademark is that the owner (Licensor) retains the potential for
future income, both in the use and development of the mark and in royalties received from
licensees. However, such income is by no means certain, and there are not only opportunities,
but also risks.

International Laws permit an owner to license its trademarks only if the company controls the
nature and quality of the goods or services that bear those marks. It is necessary to pay
particular attention to the provisions in the agreement that discuss quality standards and the
appearance of the marks. The owner is permitted to monitor the licensees use of the marks,
and should do so continuously to protect them and the goodwill associated with them.

Before licensing a trademark, it is advisable to get information about the potential licensees
business reputation and position, product portfolio and scope, and scale of production and
distribution.

This agreement is distinctively worded to cover the granting of trademark licenses in
international markets, but with slight changes it may also be used when the Licensor and the
Licensee are based in the same country.

34

Model International Trademark License Agreement

DATE: ..............................................................................................................................................

BETWEEN:

........................................................

AND:

.......................................................

Both Parties declare a mutual recognition of their capacity to undertake the following:

I. That the company .................... (hereinafter, the Licensor) owns Trademarks as set
out in Annex 1 of the present Contract. It therefore has full rights to grant license for
the exploitation of the said Trademarks and to authorize the inclusion of the trade
marks into products manufactured and sold.

II. That the company .................... (hereinafter, the Licensee) wishes to obtain license
to manufacture, use and sell the products (hereinafter, "the Licensed Products")
covered by the Trademarks as set out in Annex 2 of the present Contract.

Both Parties agree to the following:

ARTICLE 1. GRANT OF THE LICENSE

1.1 Licensor hereby grants to Licensee, which accepts, upon the terms and conditions set
out in this Contract, the exclusive right to use the Trademarks in connection with the
Licensed Products in order to produce, distribute, promote and sell the Licensed
Products in the Territory specified in Annex 2 of the present Contract.

1.2 Licensee is not entitled to sublicense the trademark, unless it has received a prior
written authorization to this effect from the Licensor.

ARTICLE 2. EXCLUSIVE RIGHTS

2.1 The license is exclusive.

35

2.2 For the whole duration of this Contract, the Licensor will not use the Trademarks nor
license to others the use of the Trademarks in the Territory in connection with the
Licensed Products.

ARTICLE 3. SALES OUTSIDE DE TERRITORY

3.1 Alternative A. Licensee will refrain from making any sale outside the Territory, and will
request that those purchasers to whom it sells the Licensed Products do not to sell
them outside the Territory.

Alternative B. Licensee will not actively promote the sale of the Licensed Products
outside the Territory.

ARTICLE 4. APPROVAL OF THE LICENSE PRODUCTS

4.1 The parties shall establish and update from time to time a programme of the Licensed
Products to be developed. The initial programme is provided in Annex 3.

4.2 Licensee shall in due time submit to Licensor for approval sketches or designs of the
products it proposes to manufacture. Once the design is approved the Licensee shall
produce a prototype of each Product, which will be submitted for approval to Licensor. On
the basis of Licensors remarks, Licensee shall make such modifications as are appropriate
in order to meet Licensors standards. After Licensor has definitively approved the
prototype in writing, the manufacture of the Licensed Product can start.

4.3 Licensor must answer the request of approval of any design or prototype of a Product
in writing within ........... [30, 60] calendar days from such request. 15 16 Parties may
wish to maintain specific situations outside the exclusivity. For instance, the licensor
may wish to retain the right to market promotional products in the Territory, to be
offered free of charge to its customers, which belong to the same category of licensed
products, but come under a totally different quality and price range: e.g. licensee
makes luxury watches under the license and licensor wishes to sell low-cost watches
bearing the same trademarks as promotional materials. A shorter or longer time limit
may be appropriate according to the circumstances of the case.

_____________________________________________________________________________

This is a sample of 2 pages out of 10 of the International Trademark License Agreement
INTERNATIONAL TRADEMARK LICENSE AGREEMENT

36

12. International Franchise Contract

Introduction

This is a contract between two legally independent parties (Franchisor and Franchisee) located
in different countries. In this agreement the Franchisor grants to the Franchisee the exclusive
power to distribute its products or services in establishments which are equivalently equipped
and furnished, as well as the right to use Intellectual Property Rights (commercial signs,
brands, trademarks etc.). It also provides the Know-how (Franchise Handbook), and the
technical and commercial support for distribution to be carried out correctly.

The International Franchise Contract is intended for franchises that distribute products (food
stuffs, cosmetics, decorations, textiles, etc.) but with a few slight modifications it may also be
used for franchises that provide services (real estate, consultancies, financial services, internet,
cleaning services, catering, etc.).

This Contract has been elaborated taking into account the most commonly used clauses in
franchise contracts, and therefore may be used as checklist of the core obligations of a cross-
border franchise contract.

There are a number of points at which the Parties must insert their requirements (definition of
territory, products, minimum target, stocks, etc.). Some of these points have been
incorporated in the Annexes of the Contract, which the Parties can complete and, where
necessary, modify during the life of the Contract, without making changes to the basis text of
the Contract. Before signing the Contract the Parties should complete the Annexes and, if
appropriate, delete the parts that they do not need.

In addition there are a number of points at which the Parties must insert data, regarding for
example percentages or amounts. There are also certain clauses specifying periods of time,
which periods the Parties may choose to modify, depending on the circumstances of their
particular transaction.

This Contract has been based on the assumption that it will not be governed by a specific
national law, but only by the clauses of the Contract itself and the principles of law generally
recognised in international trade as applicable to franchising contracts (also called "lex
mercatoria"). The purpose of this solution is that the rules of this contract can be applied in a
uniform way to franchisors and franchisees of different countries, without giving one Party
advantage, and the other Party the disadvantage, of applying one Partys national law of a
third country.

When negotiating franchising contracts abroad, one of the main difficulties faced by Parties
engaged in international trade is the lack of uniform rules for such contracts. The International
Franchise Contract conforms to the UNIDROIT (Unification of Private Law) principles and to the
procedures established by the International Chamber of Commerce for international franchise
contracts.

37

Model International Franchise Contract

DATE: ......................................................................................................................................

BETWEEN:

.............................. (hereafter referred to as the "Franchisor"),

AND:

Alternative A [When the Franchisee is an individual]

Mr./Ms. .., of legal age, ...........[include professional qualification], Tax
(hereafter, the "Franchisee").

Alternative B [When de Franchisee is a company]

................................. [company legal name] whose registered office is at ..................................
referred to as the Franchisee").

Both parties undertake to observe the following agreement:

RECITALS

I. That the Franchisor is a company which . [Describe the
economic activity of the company and specify the nature of the products which it
supplies].

II. That the Franchisor has developed, as the Franchisee acknowledges:

(a) A specific design for its establishments;
(b) A management process for its establishments; and
(c) Guidelines for customer attention,

which together make up the know-how acquired by the Franchisee by means of the
investment of financial and human resources, in addition to his/her experience in
managing the business to which the present Contract refers. All of this will be referred
to in the present Contract as the Franchisors Know-How.

38

III. That the Franchisors know-how is of secret, substantial and identifiable nature. The
secret nature is derived from the fact that the Franchisors Know-How, in its totality
and as the aggregate of its component parts, is not common knowledge, nor is it
readily available. The substantial nature is derived from the fact that the Franchisors
Know-How includes important information as to the correct management of the
business to which the franchise applies. The identifiable nature is derived from the
fact that the Franchisors Know-How is described in sufficient detail in the preliminary
training programs and in the Franchise Handbook which the Franchisee shall receive
on signing the present Contract.

IV. That the activity of the Franchisor is carried out under the auspices of Industrial Property
Deeds (trademarks, brands, patents) or Intellectual Property Deeds (rights of authorship,
software), acting as the owner, as described in Annex 1 of the present Contract.

V. That the Franchisee acknowledges his/her enhanced competitive position in the
market which arises from acquiring the Franchisors Know-How, as well as the
management of the business under the corporate image of the Franchisor, including
Industrial and Intellectual Property Deeds as laid out in Section IV above.

VI. That the Franchisee acknowledges that the preliminary market and viability studies
that (s)he has carried out, together with the Franchisor, have been calculated upon
prudent economic estimates, which the Franchisee must not regard as any sort of
undertaking or commitment of profitability on the part of the Franchisor. The
Franchisee acknowledges that the economic results which arise from the present
Contract, shall be largely due to his/her own ability to manage the business, customer
service, as well as other external factors such as competitor initiatives or changes in
consumer tastes; such outcomes are mentioned solely as examples and not as a
defining list. The Franchisee acknowledges that, prior to signing this contact, (s)he has
enjoyed the right to receive from whichever professionals (s)he sees fit, independent
legal and financial advice.

VII. That the Franchisee acknowledges the terms and conditions of the present Contract as
reasonable and necessary for maintaining the high levels of quality and customer
service with which the network of .. [name of Franchisor] establishments is to be
identified and recognised in the market, to the benefit of the Franchisor and all
Franchisees belonging to the .. [name of Franchisor] network.

ARTICLE 1. OBJECT OF THE CONTRACT

By means of the present Contract, the Franchisor grants the Franchisee, who correspondingly
accepts, the right to form part of the ..[name of Franchisor], as a franchise, using
under licence the Property Deeds stipulated in Section IV of the Preamble of the present
Contract as well as the Know-How of the Franchisor, according to the terms and conditions laid
out in the following articles.
39

ARTICLE 2. INDEPENDENCE OF THE PARTIES

2.1. Franchisor and Franchisee are legally and financially independent Parties. The present
Contract does not confer any sort of relationship between them other than that which is the
object of the franchise.

2.2. The Franchisee shall not represent the Franchisor in any way, nor assume any short of
commitment in the Franchisors name. The Franchisee assumes sole responsibility, before any
third party, including but not limited to official local and national bodies and administration
entities, for his/her own actions and inaction, thus relieving the Franchisor of any liability
arising from any action or inaction of the Franchisee. The Franchisee shall compensate the
Franchisor for any complaint, responsibility or jeopardy which the Franchisor may bear on
account o the actions or inaction of the Franchisee. The Franchisor shall be responsible to the
Franchisee solely for complaints, responsibilities or jeopardy which result from the Franchisors
neglect of the obligations which (s)he assumes in the present Contract.

2.3. It is the sole duty of the Franchisee to Contract, pay and dismiss his/her employees,
regardless of the nature of the Contract which the Franchisee chooses to use, as well as
fulfilling the labour and social security obligations which may arise from those.

2.4. It is the sole duty of the Franchisee to comply with all obligations of trade,
administrative, fiscal or other nature for which liability may arise through the commercial
activity which the Franchisee shall develop by means of the present Contract.

2.5. It is the sole duty of the Franchisee to apply for, receive and conserve whatever
licences or other administrative authorizations may be required by any official authority for all
construction and refurbishing work within the establishment in which the commercial activity,
to which the present Contract applies, shall be carried out; as well as any other authorization
or licence required for the running of the business to which the present Contract applies.

2.6. The Franchisee, being an independent businessperson, shall manage the business as
his/her own, assuming the consequent benefits and risks.

_____________________________________________________________________________

This is a sample of 3 pages out of 20 of the International Franchise Contract.
INTERNATIONAL FRANCHISE CONTRACT

40

Other International Contracts and Trade Documents

As well as the aforementioned, there are other international trade contracts and documents
available on the Globalnegotiator Website:

International Contracts in 5 languages (English, Spanish, French, German and Portuguese).
Contracts for China in dual version English-Chinese
International Trade and Transport Documents: CMR Document, Bill of Lading B/L, Air
Waybill AWB.
Models of Business Letters in English.
E-books on international trade.

International Contracts Models

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