Subcontracting Agreements Clause Samples

Subcontracting Agreements. Purchaser shall have delivered to Seller the Subcontracting Agreements listed on Schedule 8.1.14(ii).

Subcontracting Agreements. Subcontracting agreements generally refer to arrangements where one party (the contrac- tor) entrusts the production of a product to another party (the subcontractor). Such agree- ments are deemed important for encouraging the use and creation of new technologies and increasing specialisation, lowering costs and enhancing efficiencies in production and distribution relationships. However, one needs to be cautious when such arrange- ments include certain restrictions. For instance, under subcontracting arrangements, the subcontractor may have to make use of the technology or equipment to be provided by the contractor in order to fulfil the requirements set out in the relevant agreement. Accordingly, the contractor may request such technologies or equipment to be used solely for the purposes of the agreement. In such cases, uncertainty may arise as to whether the subcontracting agreements are caught by Article 4 of Law No. 4054.692 On this note, the Guidelines on Certain Subcontracting Agreements provide explanations on assessment of such arrangements. Pursuant to paragraph 3 of the Guidelines on Certain Subcontracting Agreements, sub- contracting agreements are defined as agreements under which an undertaking (subcon- tractor) commits to produce goods, provide services or perform work on behalf of or for another undertaking (the contractor) in line with such undertaking’s instructions.693 For instance, in Henkel/Hobi,694 the subcontracting agreement sets forth the obligation for Hobi Kozmetik to produce and package ▇▇▇▇▇▇’▇ “▇▇▇▇” branded hair gels in accor- dance with ▇▇▇▇▇▇’▇ specifications. In this respect, Henkel is under the obligation to buy the products from Hobi Kozmetik at the unit price determined in the agreement. The agreement also includes the transfer of ▇▇▇▇▇▇’▇ know-how to ▇▇▇▇ ▇▇▇▇▇▇▇▇. Subcontracting agreements are generally characterised as vertical agreements, as one of the parties produces a good and supplies it to the other party. However, in cases where the parties of a subcontracting agreement are also competitors to each other, these agreements are no longer accepted as vertical agreements.