Although it is not possible to be exhaustive in covering all the elements of a foreign collaboration agreement mainly because of the varied nature of the agreements. The requirements of an individual agreement need to be taken care of . However it is possible to highlight the salient features of a foreign collaboration agreement which may be elaborated as follows:

 

It is important to outline with clarity the capability of the collaborator and the requirements of the party. A lot many difficulties can be avoided in the actual operation of a foreign collaboration agreement if proper care is taken in using precise legal terms to remove ambiguities.

 

It is very common to come across technical terms which are frequently used in commercial and trade parlance and the person drafting an agreement which incorporates terms which are of infrequent use, should take special care to define the these terms free from all vagueness and ambiguities and in a manner reflecting the true intentions of the parties to an agreement.

 

It is absolutely necessary to make provision for terms and conditions regarding the exact nature of technical know-how, disclosure of drawings, specifications and other documents, technical information regarding processes with flow-charts etc, plant outlay and list of equipment, machinery and tools with specifications.

 

A proper agreement should ideally provide for the services of the engineers and skilled personnel, their stay in India and mode of remuneration etc.

 

Similarly there should be details in respect of specification and quality of the product to be manufactured as well as provision for quality control and trademarks to be used. The responsibilities of the collaborator in regard to establishment and maintenance of assembly plants should be clearly laid down.

 

A foreign collaboration agreement should also incorporate provisions in respect of rate of royalty, mode of calculation and most importantly the tax matters . The provisions regarding arbitration in the face of any disputes and a force majeure clause and payment of interest on delayed payments are the other important features of an ideal foreign collaboration agreement.

 


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