What is the best way to alleviate the risks associated with an international Purchaser?
The most effective way to alleviate risk associated with an international Purchaser is to ensure that the financing of the transactions provides the OEM Supplier with a guarantee of payment through a secure bank or factoring institution. In addition, a manufacturing service provider should make absolutely certain that it is aware of any possible scope changes in the business and what those scope changes would require in the form of technology held by the OEM Supplier. Another preventative measure to alleviate this risk is to incorporate a penalty into the contract in the event that the Purchaser chooses to opt out of the contract due to a change in the scope of the business. Such penalties are termed “termination fees” or “payment for unearned profits.
