Loan for Use Agreement - Long Form
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Download our Loan for Use Agreement - Long Form template in Word format. This document is located in the Procurement chapter of Edilex's catalogue of Contract Templates.
Introduction
When a business retains the services of a subcontractor to produce a specific part, it may need to loan the subcontractor a matrix or template. The business may supply said matrix or template to the subcontractor at no cost, through a loan for use, of which the terms should be evidenced in writing so as to avoid certain problems, such as conflicts relating to the ownership of the matrix or template.
As possession creates a presumption of ownership, it may prevent or delay the return, in a timely manner, of the loaned matrix or template. To prevent the occurrence of a scenario which may impede its production activities, it is in the interest of the business loaning such matrix or template to properly document the loan. This document establishes the main components of the legal framework required for such loan, as an ancillary agreement to the execution of a sub-contracting agreement.
Description
The loan for use agreement is the legal instrument by which a person called the "client", lends, for free, a good (matrix, template, etc..) to another person, referred to as the "subcontractor" in order for the latter to use it as part of a customer-supplier relationship, to produce the goods ordered by the client.
Use
We recommend the use of this document to govern the relationship between a client and a subcontractor when the latter produces any part intended to be incorporated in the goods manufactured by the client.
If this transaction creates a significant economic challenge due to the value of the loaned item, or due to the importance of the risks caused by the arm's length relationship between the customer and supplier, the loan for use agreement becomes relevant. Otherwise, a less-detailed agreement, such as document G03.305 of the Business Precedents, can be used to evidence the existence of the loan and the terms of governing the loan. Note that most loan for use agreement usually takes the form of a ancillary agreement to a service agreement, such as document G03.200 of the Business Precedents.
