The outsourcing agreement is probably one of the most common types of contracts you will see, no matter what industry you are in.

Attached file is an example of outsourcing agreement as a quasi-mandate ("Jun-Inin") contract (Therefore, no article such as liability for non-conformity, duty to complete work etc. exists). However, it only describes the basic contents in a nutshell, and the specific details and conditions of the outsourcing agreement are varied by each case. The attached example is also based on the assumption that individual contracts will vary from case to case.

On that basis, following the following is a slight supplemental explanation.

Compared to agreement in Western countries, the contents are very simple. This is because agreements in Western countries, or more precisely contracts based on Common Law, tend to specify everything, including the finer details, whereas Japanese agreements tend to specify only basic matters, and any matters not specified are left to be resolved through interpretation or negotiation. If you are going to enter into an agreement with a Japanese company, you may be surprised when you see the proposed contract draft, but please understand such differences.

＜Appointment of person in charge＞
Although this is not about the content of the outsourcing agreement itself, the relationship between outsourcing and contracting tends to be one in which the contractor gives instructions and the contracted party follows them, which may be evaluated as a disguised outsourcing agreement (outsourcing). In addition, even if the contractor does not give instructions, if individual requests are made at the on-site level, it is possible that control may be lost.

＜Representations and warranties＞
The agreement example is written in a strict manner for the trustee. However, it is possible to limit the scope by stating "to the best of Party B's knowledge" or by excluding indirect damages from the scope of damages described below.

＜Payment of fees etc.＞
This is based on the assumption that payments will be made monthly. In the case of an agreement for completing work, this may differ, as payments will be made after completion and inspection.

＜Confidentiality＞
The clause itself is generally general, but paragraph 5 may be confusing. This assumes that the contract is a subcontractor's outsourcing agreement.

＜Damage Compensation＞
In the example agreement, indirect damages are excluded. This is based on the fact that if indirect damages are included, the scope of damages will be unlimited. However, if the damages are based on the intentional or gross negligence of the party responsible, the limitation of the scope of damages will be removed.
 
＜Attribution of Intellectual Property Rights＞
In the example agreement, the newly generated intellectual property rights are attributed to the consignor. Of course, there is another way of attributing the intellectual property rights to the consignor, but in any case, it would be reflected in the outsourcing fee. However, it should be noted that this will result in restrictions such as the inability to exercise or dispose of the property against the will of one party, and in the end, it will only postpone the dispute to a later date.

​The contents of the agreement will differ depending on whether it is the client or the contractor, and as mentioned at the beginning, it also differs for each case. If you need further consultations about a customized contract, please feel free to contact us.