Concession Agreement Meaning

A rental agreement is a property award of a specific description of the land or other property against a specific price and payment agreement. On the contrary, the concession under a concession agreement is a licence for the use of the property for a specific purpose, once the objective is achieved, all those rights must be returned to the grantor. In this process, the right to manage and control the property is maintained by the owner. Concession agreements generally define operating time, insurance requirements and royalties. Payments to a landowner may include location rent, a percentage of turnover, or a combination of the two. Additional expectations may also be set out in the agreement. The agreement may specify, for example. B, which of the parties is responsible for procurement, maintenance and repair services. Both types of concession agreements involve a transfer of «exploitation risk» to the contractor, i.e. the risk that demand or supply will not be sufficient to make the service or work profitable. Concession agreements can also be used to manage risk. Suppose a country invests a significant amount in the production of a single product.

In this case, that country will have a particular high risk in terms of the price of that commodity. For example, the Brazilian and Mexican governments have invested heavily in state-owned oil companies. The value of their assets and income fell significantly when the price of oil fell in 2020. Countries that make concessions lose revenue from concession fees, but do not risk as much capital. The granting of property or property by a government may be a lease agreement for a specific purpose, in exchange for services or a specific use, a right to performance and to the benefit of a particular activity. A concession may include the right to use certain existing infrastructure necessary to run a business (for example. B a water system in a city); in some cases, such as mining. B, it can only be a transfer of exclusive or non-exclusive reliefs. Also known as concession agreements, concession agreements include different sectors and are available in many sizes. These include hundreds of millions of dollars worth of mining concessions, as well as small food and beverage concessions at a local cinema. Regardless of the type of concession, the dealer normally has to pay the concession fee to the party that grants it the concession fees.

These fees and the rules that allow them to change are usually described in detail in the contract. On a smaller scale, suppliers work under concession contracts awarded by local governments, businesses or other property owners. This activity may include restaurants and retail outlets at major airports, vendors at public fairs or the sale of food and beverage stalls in public parks. In India, the Supreme Court adopted the doctrine of essential facilities for concession agreements in the case of VST Industries Limited v.