Advisory Case on Reviewing a Product Purchase Agreement with an Overseas Supplier

1. The Client's Situation

Before concluding a large-scale product purchase contract with an overseas supplier, domestic company A requested advice from a law firm in order to examine the legal risks of the contract terms and to adjust unfavorable clauses in advance.

After analyzing the overall structure of the contract, the law firm reviewed the key issues.

(1) We confirmed that the supplier had set unfavorable conditions for the purchasing company by including a clause excluding the warranty for certain parts, and we presented a negotiation direction to expand the scope of the quality warranty.

(2) We pointed out that the contract included a clause imposing excessive depreciation costs on the purchasing company, and advised that reasonable return procedures and cost-allocation standards be established.

(3) We adjusted the clause under which the supplier demanded a high penalty upon termination of the contract, so that mutually fair termination conditions would be set.

Based on Your Legal Team's advice, the client was able to adjust the unreasonable clauses of the contract and secure more favorable conditions in the course of negotiations. Accordingly, the client laid a foundation for preventing in advance the legal risks that could arise when purchasing products and for proceeding with the transaction smoothly.