Essentials Of Compensation Trade Contract Writing

There are mainly four ways of compensation:

1. direct compensation (direct compensation): also known as product sales (buyback), that is, imported equipment, technology directly produced products to compensate for the price of equipment and technology.

2. indirect compensation (indirect compensation), also known as counter purchase, refers to commodities used for compensation, not directly produced by imported equipment or technology.

3. comprehensive compensation (comprehensive compensation): refers to the product used for compensation, part of the direct product, part of the indirect products, and sometimes part of the cash or labor to compensate.

4. labour compensation: refers to the processing, assembly, service and other labor income to compensate for import equipment, technology costs.

Therefore, compensation trade involves not only the import of equipment and technology, but also the export of compensation products, which is a relatively large, important and long trade.

After the two sides reach an agreement, they usually sign a compensation trade agreement, stipulate the general principles and general conditions for the compensation trade, and the specifications, quantity, price, total value, payment method and delivery time of the specific import and export commodities.

However, several written contracts can also be signed at the same time: compensation trade agreement, equipment import contract and export contract for compensation products.

If it involves the pfer of advanced technology, it may also sign a technology pfer contract.

1. the legality of the document.

It must not violate the relevant laws and regulations of the country where it is located.

In most countries, there are trade control laws, foreign exchange control laws and other decrees.

If agreements and contracts are inconsistent with the relevant statutes of the state, they cannot be enforced.

2. are there any restrictive clauses against ourselves?

For example, in the area of product repurchase, if the other party accepts only part of the direct product instead of all, it stipulates in the compensation trade agreement that the export of all the products produced by the equipment must use the brand name of the other party and can only be sold through the other party, so that it can be completely helpless in the export of the remaining products.

3. is it contrary to other agreements?

As a product, we have already signed a sole agency or exclusive sales agreement with a certain firm. When we make compensation trade, if we sign a contract for the sale or purchase of the product with the country, it will be inconsistent with the original agency underwriting agreement.

4. if the equipment and technology supplied by the other party cause infringement disputes such as trademarks or patents, the other party shall be responsible for the settlement.