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ARTICLE · 04 FEBRUARY 2019

Best Practices For Customers Structuring Directed-Buy Arrangements

Foley & Lardner LLP
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This article explores the following topics: (1) What is a directed-buy arrangement? (2) What significant issues exist for a customer in a directed-buy arrangement?

United StatesCorporate/Commercial Law
Kathleen Wegrzyn
Kathleen Wegrzyn
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This article explores the following topics: (1) What is a directed-buy arrangement? (2) What significant issues exist for a customer in a directed-buy arrangement? and (3) What are the best practices for a customer entering into a directed-buy arrangement?

1. What is a Directed-Buy Arrangement?

A directed-buy arrangement (also referred to as a directed-supply arrangement) is one in which the customer requires that its direct supplier (the "Tier 1 Supplier") purchase from a specific sub-supplier (the "Tier 2 Supplier") certain raw materials, parts or components (the "Directed Parts") for integration into the product that the Tier 1 Supplier sells to the customer (the "Integrated Product").

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