This blog focusses on different terminology in the defence industry. We selected 11 terms that every defence industry professional might come across in the daily activity.
Confidentiality of business relations
We often refer to confidential business information as “proprietary information” or “trade secrets”. Information that’s not generally known to the public and would not ordinarily be available to competitors except via illegal or improper means. “Trade secrets” does not include information that a company voluntarily gives to potential customers, posts on its website, or otherwise freely provides to others outside of the company.
Contractor
A defence contractor (or security contractor) is a business organization or individual that provides products or services to a military or intelligence department of a government. Products typically include vehicles, weaponry and electronic systems. Services can include logistics, technical, communications – and engineering – support. Security contractors do not generally provide direct support to military operation.
End User Statement
An End-User Statement certifies that a buyer is the final recipient of the exported product and has no intention of re-exporting them to anyone else. This document can play a vital role in preventing export violations and providing proof of the original exporter’s efforts to do the right thing.
Gentlemen’s Agreement
The essence of a gentlemen’s agreement is that it relies upon the honor of the parties for its fulfillment, rather than being in any way enforceable. It is, therefore, distinct from a legal agreement or contract, which can be enforced if necessary. In the defence industry the gentlemen’s agreement is an extra assurance of business commitment besides the professionalism of defence personnel.
Incoterms
The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. The Incoterms are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods. It does not define where titles transfer and does not address the price payable, currency or credit items.
ITAR Restricted
The International Traffic in Arms Regulations (ITAR) is an important United States export control law that affects the manufacturing, sales and distribution of technology. Its goal is to prevent the disclosure or transfer of sensitive information to a foreign national. It is the responsibility of the manufacturer or exporter to take the necessary steps to certify that they follow ITAR regulations.
Non-Disclosure Agreement
A Non-disclosure agreement (NDA) is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties.
Power of Attorney
A power of attorney is a document, signed by a principal and typically notarized, that gives another person the power to make decisions on behalf of the principal in accordance with the terms of the document. The party being granted authority to act is commonly referred to as an “agent” or “attorney in fact.”
Procurement
The defence procurement process refers to the acquisition of material, equipment and services. Effective management across the procurement lifecycle is necessary to be able to deliver on time, on budget and to the required quality and safety standards required by the client.
Shipping methods
Various shipping methods are available, depending on the cost and size of the product being shipped.
- In CIF agreements, insurance and other costs are assumed by the seller, with liability and costs associated with successful transit paid by the seller up until the goods are received by the buyer. Goods are not considered to be delivered until they are in the buyer’s possession.
- FOB contracts relieve the seller of responsibility once the goods are shipped. Once goods have passed the ship’s rail, they are considered to be delivered into the control of the buyer. When shipping to the buyer begins, the buyer then assumes all liability. Each agreement has particular advantages and drawbacks for both parties.
- Under a CFR agreement, the shipper has a larger responsibility for arranging and paying for transportation. For goods shipped CFR, the shipper is responsible for arranging and paying for transportation all the way to the destination port specified by the receiver.
- CTP: “Carriage paid to…” means that the seller pays the freight for the carriage of the goods to the named destination. The risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered to the carrier is transferred from the seller to the buyer when the goods have been delivered into the custody of the carrier.
Tender
Tender usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline. Issuing a tender document typically begins the tender process by which a business selects qualified and interested suppliers based on such things as their price, availability and proposed delivery terms.
Within our business network of customers, influencers, manufacturers and business partners (distributors, resellers and agents) from all over the world, we have first hand experience in all the different business practices and terminology involved. Please contact our experienced staff if you have any questions about a business situation or need help, we are ready to assist!