The Outsourcing Agreement Between Two Companies is a crucial document used when one company (the client) wishes to engage another company (the service provider) to perform specific functions or services on its behalf in South Africa. This agreement is particularly important given South Africa's unique regulatory environment, including requirements under POPIA, Labour Relations Act, and B-BBEE legislation. The document typically includes detailed service specifications, performance metrics, pricing structures, and compliance requirements. It's designed to protect both parties' interests while ensuring clear accountability and risk allocation. The agreement is commonly used across various sectors from IT and business process outsourcing to manufacturing and facilities management, and must comply with South African contract law while incorporating international best practices in outsourcing arrangements.
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1. Parties: Identification and details of the contracting parties including registration numbers and registered addresses
2. Background: Context of the agreement and brief description of the parties' business relationship
3. Definitions and Interpretation: Detailed definitions of terms used in the agreement and rules for interpretation
4. Appointment and Scope of Services: Formal appointment of the service provider and high-level description of services to be provided
5. Duration and Commencement: Term of the agreement, including start date, initial period, and renewal terms
6. Service Provider's Obligations: Detailed obligations and responsibilities of the service provider
7. Client's Obligations: Responsibilities and obligations of the client, including provision of necessary information and access
8. Service Levels: Performance standards, metrics, and measurement methodology
9. Charges and Payment Terms: Pricing, payment schedule, invoicing, and payment terms
10. Intellectual Property Rights: Ownership and usage rights of existing and newly created IP
11. Confidentiality: Protection and handling of confidential information
12. Data Protection and POPIA Compliance: Obligations regarding personal information processing and protection
13. Personnel: Requirements regarding staff, vetting, and key personnel
14. Warranties and Representations: Standard and specific warranties provided by both parties
15. Indemnities: Mutual and specific indemnification provisions
16. Limitation of Liability: Caps on liability and excluded losses
17. Force Majeure: Provisions for handling events beyond parties' reasonable control
18. Termination: Grounds for termination and termination process
19. Exit Management: Procedures for handover and transition upon termination
20. General Provisions: Standard boilerplate clauses including notices, governing law, etc.
1. B-BBEE Compliance: Required when B-BBEE status is material to the agreement or for public sector contracts
2. Business Continuity and Disaster Recovery: Needed for critical services or when service disruption could have significant impact
3. Change Control: Required for complex services likely to require changes during the term
4. Anti-Bribery and Corruption: Important when dealing with public sector or international companies
5. Employment and Transfer of Employees: Necessary when the agreement involves transfer of employees or Section 197 implications
6. Security Requirements: Required when service provider needs access to client's systems or sensitive information
7. Subcontracting: Needed when service provider likely to use subcontractors
8. Insurance: Important for high-risk services or when specific insurance coverage is required
9. Environmental Compliance: Required for services with environmental impact
10. Foreign Exchange and International Payments: Needed for cross-border services with foreign currency implications
1. Schedule 1 - Services Description: Detailed description of services, deliverables, and technical requirements
2. Schedule 2 - Service Levels and KPIs: Detailed service level specifications, measurement criteria, and penalties
3. Schedule 3 - Charges: Detailed pricing structure, rates, and payment milestones
4. Schedule 4 - Client Dependencies: Detailed list of client-provided resources, information, and assistance
5. Schedule 5 - Governance and Reporting: Management structure, meeting schedule, and reporting requirements
6. Schedule 6 - Key Personnel: Details of key staff members and their roles
7. Schedule 7 - Exit Plan: Detailed procedures for service transition upon termination
8. Schedule 8 - Technical Requirements: Technical specifications, systems requirements, and interfaces
9. Schedule 9 - Security Policies: Detailed security requirements and compliance standards
10. Appendix A - Pro Forma Reports: Templates for required reports and documentation
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