Discussing general questions

Licensor: As we see you wish to start the production of surface pump units under our licence. There are several questions I'd like to clarify before we move on to particulars.

Licensee: I'm ready to answer any query you may have.

Licensor: Could you put us in the picture about the number of units you're going to produce per year? Also about prospective buyers on the do­mestic market and abroad, and when you're planning to start the pro­duction?

Licensee: I can give you only preliminary figures now. We're planning to produce for home needs about 1,000 surface pump units per year, that's two years after signing a contract with .... There are also plans to ex­port them to some Asian countries in the future.

Licensor: How about raw materials you may require? Then, we may have to know all about the personnel, both professionals and skilled workers you may need to run the factory. Are they available? You realize that the quality of the licensed product should keep up the standard of the Russian Federation.

Licensee: Oh, yes, we have got all that. However, we hope that your ex­perts will help us by giving consultations and transferring the know-how to our people.

Licensor: We shall certainly do that. Another thing, Mr A. You should real­ize that several types of licences are internationally accepted. I was wondering what type would you prefer?

Licensee: We want the production to run for 8-10 years. Also we're going to grant one or two sub-licences in the country. Considering all this, we would prefer an exclusive right to use the know-how and technical docu­mentation and to sell the licensed product on the territory.

Licensor: That's clear enough, but could you be more specific about techni­cal documentation? What exactly do you have in mind?

Licensee: What I mean is design and process documentation for the licensed products. That would include working drawings, types and sizes of ma­chines and materials. In short, the whole package.

Licensor: Is there anything else you'd like to have?

Licensee: One more thing, we'll need your assistance during the plant trial run, that's until we make 500 items of product. We also believe you'll have our people trained at your manufacturing works.

Licensor: There'll be no problems about that.

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The contract price

Licensee: We've come to terms about all major questions of our agreement but one: the contract price.

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Licensor: I think we should include the price of the licence, cost of technical documentation and know-how. Sending our specialists for further stages of cooperation will be the subject of a separate contract. The same goes for training your people in Russia.

Licensee: I'm not sure we want this breakdown. What I mean is we must know the total costs on surface pump units production. Our financial people feel very strongly about it, you know.

Licensor: You see, at the moment it's next to impossible to determine the ■ number of our experts, the time of their stay in ..., as well as the number of your people to be sent to Russia. Now we can give you only a rough \ idea of the costs. ;

Licensee: All right then, we'll return to the matter at a later stage and now 'j let's discuss the contract price as it is, shall we?

Licensor: That's really the point of today's meeting. The price of an exclu­sive licence together with technical documentation makes ... mln In­dian rupees.

Licensee: That's rather a lot. If we take into account what we've just said, the price of... mln Indian rupees should be quite fair.

Licensor: I can't agree with you here. The price we quote is almost equal to what we had in a similar contract with a ... firm. Look, you can see it if you wish.

Licensee: But as far as I can see, the price there is ... US dollars or ... mln

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Indian rupees which is twice as low as your present quotations.

Licensor: Right. The cost of the equipment under the licence we transfer to you is really 10 % higher. But the duration of your licence agreement is 10 years, while the other is valid for 8 years. Besides, payments are in different currencies. You'll have to admit that our quotations are very fair. Anyway we wish to establish long-standing cooperation and agree to look again at the initial quotations.

Licensee: We are also asking you for a 10 % discount.

Licensor: We could give you 5 % off the price, that'll make ... .

Licensee: I'm afraid we'll have to think the matter over.

D.