Contract services

Contractual services

Contractual services include services covering all stages from first draft up to preparation of final draft ready to be signed by the parties.

Main headings of this part without limitation are as follow:

Industrial contracts:

Industrial contracts are used in industrial projects and cover a wide category of contracts from simple construction contracts to turn key contracts. This type of contract includes:

Engineering – Procurement (E.P)

This type of contracts is usually to be used in projects in which the effective weight of project is on engineering and procurement and construction constitutes a small part of project. The goods to be procured under this type of contract are usually of high-tech nature.

Engineering - Construction (E.C.)

On the contrary to the first group this type of contract is used in projects in which construction constitutes the focal activity of the project. Roads and dams building and infrastructure construction are of such nature and are usually perform under EC contracts.

Engineering – Procurement – Construction (E.P.C)

E.P.C contract is the most inclusive contract among industrial contracts and the nearest to the turn key contract. This type of contract is in use in large scale industrial and petroleum projects. There are E.P.C formats prepared by FIDIC and also by President Deputy Strategic Planning and Control. These formats are useful but need to be modified and adopted by experts according to particular conditions of each case and depending on being in owner or contractor’s positions. 

Management Contract (M.C)

Management contract or fourth agent contract is new in Iran industrial projects. This type of contract will be used when owner is willing to assign the management and executive tasks to an agent.

Transfer of Technology (T.O.T)

Transfer of Technology contracts are used either as a part of turnkey contracts or independently. This type of contract is of importance as to the nature of the technology that is to be transferred and the Intellectual Property rights regulations. In particular conditions of production after completion of construction phase are of crucial importance.

Engineering Bureau

The best contract form for transfer of technology is establishment of an engineering bureau which constitutes in localization of technology. Engineering bureaus are authorized to independently endorse drawings.

Training Contracts

A Training contract is usually sued for transfer of technology or improving workforce efficiency. Training contracts in many cases fail because of the lack of comprehensive definition of the conditions of the training courses, method of assessment, trainers’ and trainees’ qualifications.

Consortium Contracts

This type of contract will be used in a situation where two or more parties are willing to jointly construct a project. This being the case, a new legal independent entity is not established but as to the responsibility consortium constitutes an unlimited company and all the parties are jointly and severally responsible for the consortium. Determining the responsibility of each party and defining leadership rights are the important issues of this type of contract.

Investment Contracts

Investment contracts are used either independently, or in a course of long term industrial and commercial cooperation. There are various forms of investment contract some of which are to be discussed as follow.

Joint Venture Agreement (J.V. Agr.)

Joint venture agreement is a more advanced version of a consortium agreement used in long-term cooperation and in various project types. Such agreements are often concluded prior to corporation of investors companies and form a basis for drafting constitution of investors companies and their conditions precede articles of constitution.

Joint Investors Company Agreements

This type of contract is peculiarly used for foreign investment in Iran. Although in some jurisdictions mere joint investment results in corporation and establishment of a new legal personality, in Iran registration is a necessity for incorporation.

Finance Agreements

There are various types of finance agreements and methods of raising finance for contracts. While one or two types are common in Iran more than 10 types are in use worldwide. For example industrial Buy Back (that is distinctly different from Buy Back petroleum agreement) can be used for financing industrial projects.

Commercial Agreements

Commercial agreements are often used by traders’ in international dealings and among others include:

International Sale of Goods

Domestic sale of goods and international sale are distinct phenomena. Reliance on domestic rules for conclusion of international sale contracts exposes the parties to a great risk as there would be issues such as irrevocability of offer, remedies,  right to cure, time and place of the transfer of title which may not be the case in domestic laws of Iran. Therefore, in international sale of goods international laws and customs are to be taken in consideration.

Hire-Purchase Contract

Hire-Purchase contracts are new in Iran but of importance as to their capacity for raising finance.   

Distribution Contracts

In trade dealings there is not often a clear border between distribution and agency contracts in such a way that holders of distribution contracts may claim agency. The important issue to be considered in this type of contract is the method applied to control import of goods from other sources and coordination with other distributors.

Agency Contracts

While in distribution contracts distributor can to an extent act independent form the seller, an agents’ activities are under direct supervision of principle. In addition financial relations between the parties are distinctly different.

Franchise Agreement

Nowadays few but successful examples of such contracts can be found in Iran. This type of contract is of importance as a way of developing business without access to large capital and creation of trade name.

Anti-Trust Agreements

Particularly by enactment of 44 principle executive bill, Anti-Trust Agreements became of special importance. Lack of such agreements may even result in criminal prosecution of the managers.

Carriage Contracts

Carriage contracts whether by sea, land or air are divided into two categories of charter party and assignment of a carrier. In both types, there are particular rules and customs which must be observed otherwise may result in invalidation of contract conditions and leaving damages without remedy; such is the conditions setting out the limitation of carrier’s liability.

Insurance Agreements

The forms and functions of insurance policies have become manifold. There are also a variety of clauses annexed to the policies, liability insurances can be procured in many types and are usually prepared not as an adhesion contract but negotiated between the parties.

Banking Agreements

Although in monetary and banking relations the rules are set out by the banks and there usually is not a room for negotiation, awareness of the legal nature of the rules is important. For example many traders may not be aware of the legal nature of an L/C which may result in difficulties and differences.

In this regard the institute provides services as follow: in addition to preparing educational reports guidelines clarifying the legal nature and function of banking agreements, the institute harmonises terms and conditions of other contracts with the banking agreements.

 

 

 

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