Topic 5.

Exports of industrial objects

5.1. Characteristics of the industrial objects export.

5.2 Contractual basis of the operation.

5.3 Specific clauses of industrial objects export contract.

5.1. Characteristics of the industrial objects export.

It consists in building industrial objects (plant, factory etc.) in the country of the beneficiary by realizing by the exporter (alone or with another tertiary firms) of certain activities as: supply and installation of technological facilities, execution of installation, construction and civil engineering, supply of inputs, labor training, etc..

Characteristics of the industrial objects export.

Is a form of international transactions that combine features of traditional export with FDI; Is a high value transaction; Medium and long-term transaction; It can be treated as a form of cooperation due to co-participation of partners in achieving the industrial object; Are also called turnkey exports or complex exports

FEATURES
It represents a system of functional relations between the participating firms (beneficiary, subcontractors, public authorities, banking and financial institutions etc.) where commercial, cooperation and investment activities are implied as well as intellectual and financial services, production processes etc.; As these transactions are considered high value ones, the risk (frequency and severity) of these is also high;

FEATURES
Have

a great impact on the financial and economic activity of the parties involved; times, the contract is sighed as a result of an auction organized by the beneficiary firm;

Many

5.2 Contractual basis of the operation

Contractual basis of the industrial object export transaction can be represented by more separate contracts, by a global or turnkey contract. Separate contracts: in this case are sighed separate contracts between the beneficiary and tertiary firms concerning: technology and equipment supply, licensing and knowhow sale, construction and infrastructure building etc. The exporter is liable just for his obligations stipulated in the direct contract signed with the beneficiary.

Global contracts
Is signed a combined contract which is referring both to constructions assembly and infrastructure building, and machinery and equipment providing and services rendering; The exporter is liable for all works, even if the execution of one is transferred to a subcontractor

Turnkey contracts
The exporter assumes the responsibility for carrying out the whole industrial object: design, commissioning (punere in functiune), operation assistance etc.; The exporter receives a pre-established lump sum.

Forms of realization the industrial object export

Consortium its members are liable independently and not solidary do not have juridical personality; Association without legal personality two contracts: 1) that founded the association and regulates the relations among partners; 2)basic contract signed by the client and association; Society (usually JV) has juridical personality profits and losses are shared among partners

5.3. Specific clauses of the industrial objects export contract

The clause of complex installations reception; The clause of performance bond warranty; The clause of maintaining the contractual balance.

The clause of complex installations reception

Is referring to: defining assembly operations and establishing the terms for achieving them; specifying the obligations of the parties at the i reception beginning: checking equipment and materials supplied by the seller before installation; reception performance (after the installation) in accordance with some technological samples used to demonstrate the realization of designed parameters; Performing the reception under operating conditions and contractually agreed period and record results in a report that stipulates if the plant is considered receptive or faulty, in this last case, the seller is obliged to repair and then proceed to a new reception.

The clause of performance bond warranty

Is referring to: supplier's obligation to ensure that the deliveries necessary to build the object are suitable for achieving the installation parameters; Period in which the supplier ensures the normal functioning of the installation, having the obligation to remove all defects detected.

The clause of maintaining the contractual balance.

Is referring to: adjustment clause (automatic) to the new circumstances of the contract (price escalation, indexation clause, foreign exchange clause etc.); renegotiation of the contract clause in conditions of major cyclical changes (price revision, force major, hardship clause)

Topics for reports:

Negotiation

and contracting the export of complex installations.

Realization

of complex objects experience of different countries.

Thank you for attention!!!