About this service
IT outsourcing — handing devices, systems, processes or an entire infrastructure over to the management of an external partner — is an operational decision for a business, but legally it is a complex relationship: access credentials, data and configurations are transferred, and the circle of responsibility widens. Georgian law has no separate statute for outsourcing: the relationship is governed by the mandate chapter of the Civil Code and its general contractual norms. This service is intended both for clients who conclude — or walk away from — an outsourcing agreement, and for providers who want a manageable contractual framework that will also hold up in a dispute.
The mandate contract — the legal basis of outsourcing
Article 709 of the Civil Code defines the mandate contract: under it, the mandatary is obliged to perform for the mandator one or several entrusted acts in the name and at the expense of the mandator. In the outsourcing context this describes precisely the position in which an external partner manages the client's information systems in the client's name and at its cost: assembles servers, performs maintenance, administers access, and sometimes represents the client toward third parties. From this follows the principal legal content of an outsourcing agreement: the partner acts in the client's interests, and this entails accountability and proprietary and contractual consequences defined by the Code — consequences that the agreement should render explicit rather than leave in ambiguity.
The duty to return — credentials, systems and data on exit
Article 715 regulates what happens when outsourcing ends: the mandatary must return to the mandator everything it received for the performance of the entrusted act and did not use for it, as well as everything it acquired in connection with that performance. In a technology relationship this translates into a concrete list: administrator accounts and access rights, configuration files, documentation, test environments, and the data itself — all of it must be returned to the client in a form that makes it usable. Moreover, where the mandatary uses for its own purposes money which it should have returned to the mandator or used for the mandator's benefit, it must return the money together with interest — a rule that directly addresses situations in which an outsourcing partner deploys the client's funds for its own aims.
The proprietary presumption — who owns what is created in outsourcing
A frequent point of contention is what happens when the partner, in performing the assignment, creates or acquires something — builds a new virtual environment, writes an automation script, purchases a licence for the client. Article 716 answers with a presumption: property which the mandatary acquired in performing the entrusted act at the mandator's expense and in its own name, or which the mandator transferred to it for the performance of that act, is deemed, in relations with creditors, to be the mandator's property. Practically, this means that a technical environment created with the client's financing remains the client's resource, and only an explicitly worded clause can modify this presumption.
Expenses and advances
Article 717 governs the reimbursement of expenses: the mandator must reimburse the mandatary for the necessary expenses incurred in performing the entrusted act; no such claim exists where the expenses are to be covered by the remuneration; and the mandatary may demand an advance for the expenses to be reimbursed. In outsourcing these rules are the foundation of the pricing model: where a fixed fee is agreed, it must also cover the expenses; where expenses are reimbursed separately, every item must be necessary and supported by records that exist from the outset.
Termination and the exit plan
Article 720 sets the termination rules for the mandate contract: the parties may terminate at any time, and any agreement to waive this right is void. This is an important guarantee for both sides: an outsourcing relationship cannot be turned into perpetual captivity by any clause. At the same time, where the mandatary terminated at a moment when the mandator was deprived of the possibility of otherwise securing its interests, the mandatary must compensate the damage caused by termination, unless it had substantial grounds. And where the mandator terminates, it must reimburse the mandatary for all necessary expenses incurred in performance, and — if the contract was for reward — pay the remuneration proportionally to the work performed. For outsourcing this means: an exit plan — regulating transferred resources, deadlines and costs — must be an integral part of the agreement, not a hope of good will.
How we can help
Our specialists will prepare the complete framework of an outsourcing agreement — from the mandate concept to the exit plan: an inventory of transferred resources and the return procedure, clarification of proprietary presumptions, the expense and advance model, the consequences of termination and contractual sanctions. Where an agreement already exists, we identify the risk points — ambiguous return clauses, undefined expenses, one-sided termination — and assess your position for a dispute. Contact us and receive a concrete draft tailored to your situation, or an assessment of the existing one.