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A Buy-Back Agreement, sometimes called an Off-take Contract or Counter-Purchase Agreement, establishes a structured path for direct investment in industrial plants. It supports implementation by securing capital for construction and guaranteeing the purchase of the plant’s final output. Under this arrangement, the Investor injects funds, and the Contractor delivers the plant and arranges the investment on behalf of the Plant Owner. The agreement then binds the Plant Owner to sell the final product back to the Investor at predetermined prices within a defined delivery period.

Core Purpose of a Buy-Back Agreement

This Buy-Back Agreement operates as a strong mechanism for financing large-scale industrial facilities. It ties investment repayment to physical output rather than to conventional monetary settlement. Consequently, the Investor recovers capital, plus interest, through product delivery. The predefined price safeguards both sides from market volatility. The emphasis remains on clarity, predictable supply, and a balanced exchange. Because the Contractor arranges the investment, the operational link between financing and plant performance stays intact. This structure keeps implementation aligned with commercial expectations and reduces funding risks.

Commercial Function in Industrial Projects

A Buy-Back Agreement, alongside its synonym Off-take Contract, suits long-term industrial production. It benefits projects where financial closure depends on forward-sold output. Therefore, the Investor gains guaranteed access to the product, while the Plant Owner secures funding without conventional bank loans. The arrangement also encourages stable cross-border cooperation, particularly when production involves commodities, energy products, or specialized industrial materials. Delivery deadlines, pricing formulas, interest components, and volume commitments give the contract its commercial strength.

Legal and Practical Considerations

Drafting must specify quality requirements, delivery schedules, liability limits, payment adjustments, and remedies for delayed production. Furthermore, clear governing law and dispute clauses remain essential for cross-border enforceability. Confidentiality, force-majeure conditions, and performance guarantees support operational certainty. A Buy-Back Agreement, as a direct investment, demands precise alignment between financing obligations and production capability, ensuring practical stability throughout the full investment cycle.

Check out more pages of our website for related content:

• Buy-Back Agreement – 2
• Counter Purchase Agreement
• Barter Agreement

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References:

• UNIDO – “Guidelines for Industrial Investment and Technology Transfer Agreements.”
• World Bank – “International Project Finance Structures and Risk Allocation.”
• OECD – “Global Value Chains and Industrial Production Commitments.”
• WTO – “Long-Term Supply Arrangements in International Trade.”