Pre-Contract Services

Pre-Contract Services

The services of this part start after the end of feasibility study phase (if applicable) and include all services related to legal and contractual feasibility analysis up to the preparation of the first draft of the contract.

These services without limitation include:

Analysis of the limitations and opportunities set out in feasibility study

In this phase the institute explores the capability of spelling feasible study outcome in to action, considering the current state of laws and regulation. For example, assume that feasible study recommends joint investment in a sector monopolized by government; such a recommendation faces many legal barriers. This may also be the case where Iranian Buyer intends to buy goods by LC from a country which is has no credit line agreement with Iran. Forsat institute through its skillful personnel holding not only the knowledge of law but also a good record in practicality can engineer alternative solutions to tackle legal barriers.

Identification of the pivots of contract based on feasible study

After resolving legal barrier issues, next step is identification of the pivots of the contract, such pivots are as follow: a) Scope of the contract and scale of activities (scope and scale) b) Price c) Payment conditions d) Responsibilities.

By the end this stage minimum legal requirements which set out negotiation red lines will be determined.

Choosing best suited contract model based on feasibility study

A business transaction is usually capable of being formulised in several contract formats. The institute introducing pros and cons of each contract type recommends the best format suited to that particular relation.

 For example, a joint industrial or commercial project can be formalised in form of a “joint venture”, “Consortium”, “Finance agreement” etc. Another example is sale of foreign goods which can be in form of “distribution agreement”, “agency” etc.

Negotiation

Negotiation phase is composed of two stages which are as follow: firstly, considering each parties’ viewpoints that results in Minute of Meetings (MOM) and secondly, reaching an agreement on the general conditions acceptable for both parties on the format and main terms of contract that results in conclusion of Memorandum of Understanding (MOU).

Revision of the foreign law (law of the foreign party’s state) by the assistance of foreign legal advisors

After passing initial negotiation phase, next step is checking conformity of contract conditions with law of the contractor’s home state. This is a crucial issue as it has direct effect in enforceability of contract terms and conditions. The institute performs this crucial task by the use of services of contractor’s home state lawyers and legal advisors. For example stipulation of a condition setting forth transfer of title before delivery in a contract with a German national is null.

Revision of customs and practice applicable to the business relationship

In addition to domestic laws, commercial customs and practice rule over commercial relations; knowledge of applicable customs and practice is vital as foreign parties invoke their applicability. In the view of arbitral tribunals customs and practice precede domestic laws and regulations. For example in a case of defected goods, in Iran domestic law the buyer is entitle to terminate the contract even if he/she had not given an immediate notice of the account while in international practice an immediate notice is required and buyer is in many cases is only entitled to claim damages (not termination).

Preparing the first draft of the contract

Accomplishing the 6 abovementioned stages, the institute prepares the first draft of the contract taking into account client’s requirements, feasibility study outcome and domestic and international laws and practice. That is a draft to rely on in negotiations assured of legal accuracy.

 

Operation

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