Okay, that sounds like a one-sided definition. Try this: Affiliate: As far as a party is concerned, it means anyone who controls that party, who is controlled by it or who is under common control with it. Control: direct or indirect economic ownership of [more] 50% (or, outside the area of origin of a Party, a percentage below the maximum permitted of foreign investment) [or more] of the share capital, shares or other holdings entitled to vote or distribute the profits of that Party. Mark, excellent article and I totally agree with your comments. I`ve never imagined a good reason to set a party as an affiliate, and I`m always hacked. Keep up with the good work on the blog. Good luck with 2014, does George accept readers? Are there circumstances in which you think it is appropriate to include related enterprises in a contracting party`s definition? If you use a functional reference to define a party, the name must indicate the functional role of the party in the agreement (for example.B. seller, licensor, lender). Alternatively, it could relate to the form of the party`s legal person (corporation; Society). There are people in a contractual situation who prefer to avoid the terms « paired » that differ only in their syllable end (for example. B lessors, licensors). If you use a functional reference, let the specific item disappear (i.e. prefer the buyer over the buyer).
This will make it much easier to use contractual applications for which replacing the reference with a name reference is very easy, but more difficult if the article is used (i.e. two replacement algorithms are needed, for both The and the). However, be consistent in the use or non-use of the particular item throughout the contract. Of course, Mark`s concerns are justified, but they are not limited to licensing agreements. Most of the transaction projects used by multinational companies, such as. B framework contracts, contain broad language for related companies and are subject to the uncertainties identified by Mark. About the only form of precision you ever see is in the definition of affiliate, often (but not always) when it comes to 51% ownership by a parent. I have seen hundreds of deals reached by two multinationals and I do not recall a single occasion when one of Mark`s concerns was raised during the negotiations. I think the lawyers involved know that the affiliates` approach is imprecise, but they prefer to focus their energies on other topics during the development and trial – and let the courts clarify in the event of a dispute over the language of affiliation.
In a transaction agreement where buyers and sellers each have 50 subsidiaries around the world, with hundreds of combinations of country pairs, trying to resolve any potential problems might take time and perhaps be inconclusive. (Excerpt from our « Detailed License Agreement » proposal) IP Draughts suspects that the practice of throwing associates into the party definition may in part be based on a fuzzy idea that all group companies are treated in one way or another as a single entity. . . .
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