INTERNATIONAL CONTRACTS

CIA 1

Shashwat Malhotra
1523637
 1. International Strategic Alliance contract:

International strategic alliance is a type of contract which establishes an agreement between

parties in two or more countries where the purpose of the agreement is to achieve an desired
goal/objective. The objective of the contract may be to do a research project, introduce a new
product into the market. An important feature of a strategic alliance is that there is no formation
of a new entity. Usually an international strategic alliance contract signifies parties share in the
alliance, what type of cost is shared, resources and liabilities that are jointly used. Strategic
alliance is usually a contract for a specific period of time to achieve the goals, once the objective
is achieved the companies’ separate- there is no legal binding between the involved parties. The
limited period contract sets provision for sharing of technological know-how, or even IPR (if
applicable).

As varied as the purposes for a strategic alliance are, so too, are the legal structures that embody
them. In fact, these structures often fall along a spectrum ranging from traditional contractual
arrangements to joint ventures to corporate acquisitions. The most important legal binding for
strategic alliance is the law of non-disclosure. As we know in strategic alliance
companies/entities share their resources, technical competencies and know-how each of the
parties should ensure that the resources being transferred are not used indiscriminately. A non-
disclosure law brings out the restrictions on the entities use, rights and ob

2. International Licensing Contract:

International Licensing contract is a form of legal document binding the licensor and the
licensee. According to this contract, the licensee is granted the right by the licensor to use its
trademark and patent technology for which the licensee should inreturn pay license fee. The
licensee will have an access to the technology, patents, copyrights and other IPR of the licensor.
The license agreement usually deals with contract length, financial aspects, renewal and other
aspects of the license contract.

World Intellectual Property Right Organization

It was created in the year 1967 to promote the protection of intellectual property right all over the
world. This organization provides the regulations for determining the applicable law to a
transaction involving licensing and transfer of technology. It is important to take into
consideration of the contracts of the licensee issuer and subsequent laws of other countries.

Patent Law Treaty

It is a multilateral treaty signed by 53 states and European Patent Organization formed in the
year 2000 to provide rules and regulations of formal procedures for filing a patent. The
developed countries like Canada, France and United States have formulated their state rules for
filing patents according to the Patent Law Treaty.

Ulmer Draft

The article K(c) of Ulmer Act states that the country which issues the patent determines the law
of country applicable to the form of contracts which either assign patents or license. In United
Kingdom, the law of the country which issued patents determines the right of original licensee
and also determines if registration in a public register is necessary for the purpose.

3. International Service Contract:

The Logistics Contract of Logistics Services Contract regulates affairs between the companies
that provide these services and their clients, manufacturers and distributors of products.

Logistics services include general services such as transportation, distribution and storage of
different types of products and merchandises, as well as other more specialized services that are
considered additional services such as point of sale management, labeling and marking of prices,
invoicing, after sales, collection management, etc.

This Logistics Services Contract template includes the usual clauses for this type of contract,
such as: obligations and responsibilities of the Logistics Service Provider, ownership and
characteristics of the products, Client obligations, rates, claims, insurance, no exclusiveness,
confidentiality, subcontracting, etc. Through the Global Conditions clause, this Contract serves
both for hiring domestic and international logistics services. This Contract template can also
serve as a guide for manufacturers and distributors of products that must negotiate the terms and
conditions of logistics services that they will hire. The language of this contract is English. It is
also available in Spanish.
 4. International Commercial Agency Contract

The International Commercial Agency is the contract between principal and Agent to carry out
the promotion of international trade transactions for a continuous period of time as an
independent authority without assuming any liability for the transactions. The intermediary is
paid commission after completing the work on transactions like trips expenses, promotional
expenses etc

Main Clauses in the Commercial Agency Contract include Exclusivity, Commitment not to
compete, Obligation to Inform, Agents Commission and Commission for termination. In the
Exclusivity Clause, The principal will not grant any sales right to any third party within a
geographical area. However if the principal accepts the Agents condition to grant sales right,
then the agents are entitled to receive less commission as mentioned in the Annexes. In the
commitment not to complete clause, the agent should not manufacture, distribute or represent the
products that may compete directly. The Agent will inform market conditions, competition etc to
the principal in return, the principle provides information about products like user manuals,
price, catalogs etc. The Agents commission clause provides information on the commission that
should be paid based on the product sales transactions. The Compensation for Termination
clause gives the details about who is entitled to take responsibilities for breach of contract and
damages

If any controversy or a dispute occurs between the two parties, the parties will exercise their best
efforts to resolve by negotiation. If they are not able to resolve the dispute by themselves, then
they are free to submit conflicts either to International Arbitration or they can resolve the issue
through laws prevailing in one of the parties country. The conflicts are generally subjected to the
country courts of the principal instead of Agent.

International Chamber of Commerce (ICC) states that there are no internationally agreed rules
for commercial agency, so the parties of the contract rely on the national laws.

The contract also includes an not obligatory clause on sales made through the Internet to clients
established in the Territory of the Agent.
The contract is formed according to commercial practices about agency contracts convention 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.

5. International Franchise Contract:

This is a contract among two legally self-governing parties (Franchisor and Franchisee)
positioned in diverse countries. In this agreement the Franchisor grants to the Franchisee the
limited power to distribute its products or services in establishments which are homogeneously
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 Franchisee
follows the directions stated by the Franchisor in regards to the appearance, commercialization
and corporate image on the authorized premises. For the services provided, the Franchisee pays
the Franchisor a series of different fees (sales fee, Front-end fee, advertising fee, etc.).

The contract is intended for franchises that distribute products (food stuff, 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, the internet, cleaning services,
catering, etc.).

This agreement conforms to the UNIDROIT (Unification of Private Law) principles and to the
procedures established by the International Chamber of Commerce for international franchise
contracts. The language of this contract is English. It is also available in Spanish, French,
German and Italian.

Franchising agreements are exposed to a wide variety of rules and regulations including the
following:

General contract Law:

General contract law is the general clauses and regulations that is applicable for any commercial
contract which deals with the rights and obligations of the concerned parties, nature and type of
contract and other provisions relating to it.

Leasing and security interest laws:

According to this law, in a franchising agreement, the premises and equipments can also be
leased by the franchisor to the franchisee especially in cases where specific equipment has to be
used by the franchisee for manufacturing of the goods/services.

Agency law:

Agency law is a specific law which covers various areas of relationship between a franchisor and
a franchisee. It deals with the nature of relationship, sharing of resources, technology transfer
and profit sharing (if applicable) etc,

Competition Law:

The terms of the Franchise contract that may be secured by competition law are those that
identify with the value that a franchisee should charge for the items or administrations it offers
and those identifying with the restrictive rights conceded franchisees in an establishment
relationship, as they may offer ascent to doubts of market sharing and coordinated activity
between the individuals from the system.

Intellectual property law:

IPR is the base on which a franchise contract is made. Since the laws governing intellectual
property rights are nation-specific, specific laws and conditions regarding IPR has to be properly
analyzed before entering into a franchise agreement.

6. International Distribution Contract:

The International Distribution Contract is planned 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 objective of re-selling it to end customers or retailers situated in an agreed
province. This contract can be used for the international distribution of diverse variety of
products such as food, beverages, consumer goods, industrial supplies, machinery, etc. It can
also be shortened to be used for other types of distribution, i.e. mass, selective and exclusive. in
addition, this model contract include references to the convention of the EU and competition
rights which persuade distribution contracts undertaken in the member countries.
There are distinctive models of international distribution contracts made by various organizations
and associations whose reason for existing is to facilitate the transaction and understanding
amongst providers and wholesalers.

The important laws that govern international distribution contract is the ant-trust laws. This law
is applicable on distribution contracts when the value of contract exceeds 5% of the turnover of
the suppliers (the supplying party in the contract). This type of anti-trust laws are very stringent
if one or both of the parties in the contract is from the European Union and is applicable
irrespective of where the contract undertaking is located. Another major governing law is the
competition act which is defined the article 81 of the ECT which puts a restriction on any
agreement that is against the fair trade practice covering both horizontal, vertical and distribution
contracts.

7. International Joint venture contract:

An international joint venture contract is where 2 or more businesses from two or more countries
form a partnership. International joint venture is accomplished when a company which is willing
to enter into the foreign market but is not ready to take up the burden of complex cross-boarder
transactions, so it ends up forming a partnership with a foreign company. This is found to be one
of the convenient ways of offsetting risk for a foreign investor.

IJVs help organizations to frame vital alliances, which enable them to increase upper hand
through access to an partner’s assets, including markets, technology advances, capital and human
resource. Global joint ventures are thus seen as a down to earth vehicle for learning exchange,
for example, innovation exchange, from multinational ability to nearby organizations, and such
information exchange can add to the execution change of local companies.

Currently most of the laws regarding joint ventures are regulated only at national level, but there
can also be federal and state laws that deals with issues of joint venture.

8. International Construction Contract:

The International Construction Contract governs the relations between a company (Contractor)
and its client, situated in diverse countries, for the responsibility of a project, usually house or
office building, although it may also be used for other civil works, for example, mechanical or
electrical constructions.

The contract regulates a clear and practical tender offer and acceptance procedure between the
Contractor and the Client. The Client specifications and necessities as regards the works project
which are to be undertaken by the Contractor are incorporated in the Annex to the Contract.

The contract incorporate the most common clauses used for these types of contract tailored to
construction in the international area: General clauses, offer and approval, project, contract price
and terms of payment, termination period, breach, insurance etc.

Antitrust Laws

In the antitrust statutes, Section 1 of the Sherman Act and Section 5 of the Federal Trade
Commission (FTC) Act gives the detailed information about principles and laws applicable to
companies and individuals that take part in trade activities. Antitrust policies and monitoring are
done by antitrust Board of Directors along with the committee members and legal counsel.

Intellectual Property Rights Regulations

Intellectual Property Rights especially patents lie at the centre of consortium activities and
standard settings. In order to avoid liability under antitrust and other laws, it is important for an
individual or an organization to adopt a carefully written IPR policy to govern their activities.
The members of the consortium form a technical committee where notice and quoram
requirements, chairperson duties and meeting rules are specified in concise.

Tax Laws

Consortia is exempted from certain tax benefits. One of the exempt is it is freed from zeroing out
its profits at the end of the year which helps in simplification of financial planning. It is also
possible for a consortium to conduct its tax exempt activities either through parent organizations
or through for profit subsidiary. Consortia can form as public charity under IRS Section 501 (c)
(6) and as tax exempt trade associations under IRS Section 501(C)(3). The Consortium should
prepare a detailed application describing its budget and activities and should be accompanied by
the bylaws to avail tax exemption.
 9. International turnkey contract:

An international turnkey contract is a type of contract where the contractor builds/constructs a

project which is sold to the buyer as a full/complete product. Though turnkey is a old term used
and is not specific to international contracts, it has gained an significant importance in the area of
international construction. This type of contract is generally existent in technology industry and
real estate industry. In technology, it may relate to pre-built computer packaging and in real
estate it may relate to any projects like house, factory or any other facility which when
completed is ready to occupy, use or sale.

General contract law:

The general contract law states the contractual duties and rights of the parties involved in the
contract. The parties are given the liberty to choose their law of their choice but usually the laws
of the purchaser’s country apply. But there can be certain cases where the parties cannot come to
consensus about the applicable law for the contract, which is when conflict laws come to play.
These conflict laws establish a single legal system for all type of turnkey contracts. It is usually
based on the common regulations laid down by the Federal Trade commission or the EU laws.
Other than this general law, other basic laws like intellectual property rights, anti-trust and
competition law apply for turnkey contracts too.

10. International Technology Transfer Agreement:

This is a model of contract to be used by multinational companies for technology transfer, either
through conceding intellectual property rights (trademarks, utility models, industrial designs, and
patents) or technical assistance and know how. In the first case, the intellectual property and
limited rights are approved, recognized and internationally registered, in order to manufacture
and trade products. In the second case, the contract deals with the transfer of intellectual property
which has no international legal recognition, but does have intrinsic value.

In the most important aspects of the contract (technology, exclusivity, royalties, termination of
the contract, applicable law and competent jurisdiction, etc.) different alternatives have been
provided, for the most appropriate one to be selected according to who drafts the contract
(Licensor or Licensee).

This International Technology Transfer Contract is designed for international operations in

which the Licensor and Licensee are in different countries, but with slight adjustments can also
be used for domestic transactions in which both are located in the same country.