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FORM OF LICENCE CONTRACT
Sources:International Trade Law, Time:2012-09-04 16:22, Click:, Comment
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         FORM OF LICENCE CONTRACT
   FOR TECHNICAL KNOW-HOW
   
   Contents of Contract
   
   Article 1  Definition
   Article 2 Scope of the Contract
   Article 3 Price of the Contract
   Article 4 Conditions of Payment
   Article 5 Delivery of the Technical Documentation
   Article 6 Technical Service and Personnel Training
   Article 7 Tests and Acceptances
   Article 8 Guarantees and Claims
   Article 9 Infringements and Confidentiality
   Article 10 Taxes and Duties
   Article 11 Force Majeure
   Article 12 Disputes Settlement
   Article 13 Effectiveness of the Contract and Miscellaneous
   Article 14 Legal Addresses
   
   Annexes
   
   Annex 1 Names, Models, Specifications and Technical Indices of
   the Contract Products. (omitted)
   Annex 2 The Contents, Numbers and Schedules of Delivery for
   the Technical Documentation.
   (omitted)
   Annex 3 Test procedure and Acceptance Standard of the Contract
   Products. (omitted)
   Annex 4 The Contents and Requirements of the Technical Service
   of Licensor. (omitted)
   Annex 5 The Contents and Requirements for Training of
   Licensee’s Personnel. (omitted)
   Annex 6 Specimen for Irrevocable Letter of Guarantee issued by
   the Licensor’s Bank.
   
   The Licence Contract for ……know-how
   
   Signature Date:
   Signature place:
   Contract No.:
   China, Beijing, ______Company (hereinafter referred to as
   “Licensee”) on the one hand, and ______Company, _______City,
   _____Country (hereinafter referred to as “Licensor”) on the
   other hand;
   Whereas Licensor has the Technical Know-how, which design,
   manufacture, install and sell the ____ products; Whereas
   Licensor has right and agreed to transfer the above-mentioned
   technical know-how to Licensee;
   Whereas Licensee hopes to use to technical know-how of
   Licensor to design, manufacture, sell and export the ____
   products;
   The authorized representatives of both parties, through
   friendly negotiations, have agreed to enter into the Contract
   under the terms and conditions as stipulated below:
   
   Article 1   Definition
   
   1.1       “Licensee” means China ____ Company or the legal
   representative, agent and inheritor to the property of the
   Company.
   1.2       “Licensor” means _____Company, ______City,
   _____Country or the legal representative, agent and inheritor
   to the property of the Company.
   1.3       “The Contract products” means all the products,
   model and specifications as stipulated in Annex 1 to the
   Contract.
   1.4       “The Technical Documentation” means all the
   technical indices, drawing, design and other documents
   relating to the calculation, operation, maintenance and
   inspection of the Contract Products as stipulated in Annex 2
   to the Contract.
   1.5       “The Contract Factory” means the place, which
   Licensee manufactures the Contract Products by using the
   Technical Documentation and know-how supplied by Licensor.
   That is _____factory, _______City, ______ Province.
   1.6       “Net Selling Price” means the remaining amount of
   invoice value of the Contract Products, deducted by the
   charges for packing, freight, insurance premium, commission,
   commercial discount, taxation and other dues as well as the
   value of the parts purchased from out-side the factory.
   1.7       “The Technical Service” means the technical
   instruction and the technical training to be rendered by
   Licensor to Licensee with respect to the design, manufacture,
   assembly, inspection, adjustment, operation and other work of
   the Contract Products as stipulated in Annex 4 and annex 5 to
   the Contract.
   1.8       “Commercial Production” means the production after
   Set No. _____ of the Contract Products is made in the Contract
   Factory.
   1.9       “The Date of Effectiveness” means the date of
   approval for the Contract by the competent authorities of both
   parties’ Government, whichever comes later.
   
   Article 2 Scope of the Contract
   
      2.1  “Licensor has agreed to transfer to Licensee and
   Licensee has agreed to obtain from Licensor the technical
   know-how for the design, manufacture, sale, install and
   maintain of the Contract Products. The name, model,
   specifications and technical indices of the contract Products
   are detailed in Annex 1 to the Contract.”
     2.2  “The Licensor has agreed to grant Licensee to licence
   and right to design, manufacture, use, sell and export the
   Contract Products in the People’s Republic of China. The
   Licence and right are nonexclusive and non-transferable.”
     2.3 The Licensor has been responsible to provide Licensee
   with the relevant know-how and technical documentations
   related to the Contract Products. Their contents, quantity and
   time of delivery are detailed in Annex 2 to the Contract.
     2.4 Licensor will be responsible to dispatch his technical
   personnel to China for explaining the technical documentations
   and rendering technical instruction and service on design,
   manufacturing, assembly, inspection and acceptance test of the
   Contract products. The specific contents and requirements of
   the technical instruction and service are detailed in Annex 4
   to the Contract.
     2.5 Licensor will be responsible to receive and arrange for
   technical training of the Licensee’s personnel in the
   Licensor’s factory, Licensor shall make his best effects to
   satisfy the needs of Licensee so that the said technical
   personnel are able to master the above-mentioned know-how. The
   specific training contents and requirements are detailed in
   Annex 5 to the Contract.
     2.6  Licensor shall be obligated to supply Licensee at the
   most favorable price with the parts, components, raw materials
   and standard parts for the contract Products, when Licensee so
   requires. Both parties shall have consultation and sign the
   new contract for the specific contents of supplying in due
   time.
     2.7  Licensor agrees that Licensee has the right to use the
   Licensor’s trademark. The contract products can also be
   adopted combination trademark of both parties or marked the
   words: “Made in China under licence of Licensor.”
     2.8 After the contract Products manufactured by Licensee are
   up to standard through the acceptance tests, Licensor agrees
   to buy=back a part of the Contract Products in accordance with
   stipulations in Article 8,9 of the Contract.
   
   Article 3 Price of the Contract
   
     3.1 The total Contract price which shall be paid by Licensee
   to Licensor in accordance with the contents and scopes
   stipulated in Article 2 to the contract shall be _____ U.S.
   Dollars (Say: _____). Their break down prices are as follows:
     A. The technology transfer fee is _____U.S. Dollars.
   (Say: _______) (or the licence fee)
     B. Design fee is ____U.S. dollars. (Say:_____)
     C. Technical documentation fee is ______ U.S. Dollars.
   (Say: _______)
     D. Personnel training fee is ________ U.S. Dollars. (Say:
   _____)
     3.2 The above-mentioned total contract price shall be firm
   and fixed, all their technical documentation price shall be
   all expenses incurred before delivery of the technical
   documentation at the airport. (Note: the airport shall be the
   international airport which is close to the Contract Factory
   of Licensee.)
   
   Selection Proposal 1
   Suitable for the contracts to be priced on
   Royalty of products
   
     3.1 In accordance with the contents and scopes stipulated in
   Article 2 to the Contract, this contract shall be priced on
   royalty of products made by Licensee. The Contract currency
   shall be US Dollar.
     3.2 Royalty of the Contract shall be calculated starting
   from the date which both parties sign the acceptance
   certificate for the Contract Products, the date of settling
   accounts shall be 31, December of each year in terms of
   Calendar year.
     3.3 Royalty at the rate of ____ % shall be calculated in
   terms of net selling price after the Contract products sold in
   those year. The Contract Products which not sold shall not be
   included.
     3.4 The quantity of selling, net selling amount and Royalty
   which Licensee shall pay for the Contract products in last
   year shall be submitted to Licensor in written forms by
   Licensee within 10 (ten) days after the date of settling
   accounts for the Royalty. The specific methods which calculate
   net selling amount and royalty are detailed in Annex _____ to
   the Contract.
     3.5 The fee of the Technical Service and personnel training
   of the Contract shall be calculated according to the real
   workday. The standard of day work wage and calculating methods
   are detailed in Annex _____ to the Contract.
     3.6 If Licensor demand to audit accounts of Licensee, it
   shall notice Licensee within 10 (ten) days after receiving the
   written notice issued by licensee in accordance with the
   stipulation of Clause. 3.4. The specific contents, procedure
   and methods of audit are detailed in Annex ___ to the
Contract.
   
   Selection Proposal 2
   Suitable for the contracts to be priced on
   Combination of fixed price and Royalty
   
     3.1 The initial payment and Royalty shall be adopted in
   calculating the prices of the Contract in accordance with the
   contents and scopes stipulated in Article 2 to the Contract.
   The Contract currency shall be U.S. Dollar.
     3.2 The initial payment of the Contract shall be ______ U.S.
   Dollars (Say: ____), and shall be fixed price.
     3.3 The royalty of the Contract shall be calculated starting
   from the date which both parties sign the acceptance
   certificate of the Contract products in terms of Calendar
   year, the date of settling accounts shall be 31, December of
   each year. Royalty at rate of ___% shall be calculated in
   terms of net selling price after the Contract products sold in
   those year. The specific calculating methods are the same with
   Clause 3.4 of Selection Proposal 1.
     3.4 The calculating methods of fee for technical service and
   personnel training is the same with Clause 3.5 of Selection
   proposal 1.
     3.5 The procedure, contents and methods of audit are the
   same with Clause 3.6 of Selection proposal 1.
   
   Article 4   Conditions of Payment

 

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