Key Terms of Outsourcing

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Contract, Key to Success. Contract is Enforceable in ChinaOvercome Cultural Barrier: be Specific and DetailedMutuality: Meet Other Side Half Way. Documentation. Master Supply Agreement Plus Purchase OrdersGeneral Terms and Conditions Plus Purchase Order: Lack of Long Term Commitment. Exclusi

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Key Terms of Outsourcing

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1. Key Terms of Outsourcing/ Supply Agreement Z. Y. James Fang, Partner/Attorney ??? ?????

2. Contract, Key to Success Contract is Enforceable in China Overcome Cultural Barrier: be Specific and Detailed Mutuality: Meet Other Side Half Way

3. Documentation Master Supply Agreement Plus Purchase Orders General Terms and Conditions Plus Purchase Order: Lack of Long Term Commitment

4. Exclusivity Exclusive vs. Non-exclusive Territory Defined Term Defined and Exit Products Defined: Addition to and Removal from Product List Minimum Orders/Purchase “Milestone”: a Tough Bargain

5. Intellectual Property Protection Confidentiality Non-Unauthorized disclosure forever Limit access to necessary personnel/steps taken for protection Return upon expiration and discontinuation of supply Trademark: Limited License and Registration Is Recommended Know-how: Supply Key Components Containing Know-how Instead of Allowing Supplier to Manufacture

6. Inspection Purposes: Quality control Ensure security for IP Continued auditing; labor; technical specification; raw material certification Inspection Methodologies: On-site physical inspection Access to related books Request for documentation Access to personnel for interview: technical, managerial personnel and operator Play the Fair Game: Reasonable Time and Sufficient Prior Notice

7. Governing Law Conflict of Laws Situation in Sino-US Outsourcing: U.S. Law; Chinese Law and UNCITRAL Convention of International Sales of Goods Contracts UNCITRAL Convention Rule: Automatically Applicable Unless Otherwise Provided

8. Dispute Settlement Judicial Proceeding vs. International Commercial Arbitration: preserve good relationship; flexibility; timing Third Country Arbitration is Accepted: Stockolme, Hong Kong International Arbitration Center CIETAC or BAC/SAC Are More Common No Waiver to Injunctive Remedies

9. Z. Y. James Fang, Partner/Attorney ??? ????? [email protected] Los Angeles Office ?????? 865 S. Figueroa St. 24th Floor Los Angeles, CA 90017-2566 (213) 633 – 6800 (213) 633 – 6899 Fax Shanghai Office ????? 1376 Nanjing Xi Lu Suite 640 East Tower, Shanghai Centre Shanghai, China 200040 (011) 86-21-6279-8560 (011) 86-21-6279-8547 Fax

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