“Outsourcing activities are contract-intensive in nature… a successful outsourcing process starts with a good contract” (Zhu, Hsu, & Lillie, 2001; Deckelman, 1998). This is because of the fact that the outsourcing process is very much like a business partnership; and like any other business partnership, the establishment of the relationship between the two businesses depends heavily on the terms of the business relationship as dictated by the contract between them. The implications of the contract are more than simply far reaching. They can be expected to appear in every day dealings between the company and the outsourcing agent and can be expected to play a defining role in cases where the company and the outsourcing agent fall into any nature of conflict.

In the scenario considered, the sensitivity of the contract increases all the more since it will annex specifics and particulars relating to the parts for which the production has been outsourced. The outsourcing agent should be willing to agree on mutually accepted specifications of the parts as well as on any services that the outsourcing agent shall be providing to the end-user on the company’s behalf. The outsourcing agent should also be one who is willing to settle on terms, methods and patterns of payments (Zhu, Hsu, & Lillie, 2001). Also, since the end-product is one that can cause in the loss of life and property as a result of any manufacturing faults, the outsourcing agent should be one that is willing to accept responsibility for its manufactured parts and should be willing to address aspects such as disaster recovery, patent right and protection of company secrets without giving room to any grey areas. Once an outsourcing agent has been singled out that is willing to comply to the above mentioned areas, “the agreement should be clearly understood by both parties and prior to signing, both parties should have the entire agreement reviewed by their legal council who has adequate experience in contract preparation and execution” (Zhu, Hsu, & Lillie, 2001).