Manufacturing Agreements
Well-drafted manufacturing agreements are essential to the success of businesses in the manufacturing and supply chain sectors. Whether you are a manufacturer, supplier, or customer, a clear and robust agreement protects your commercial interests, reduces risks, and ensures smooth business operations.
Our expert commercial lawyers have extensive experience advising businesses across industries, from consumer goods to technology, pharmaceuticals, and automotive. We work with you to negotiate, draft, and review manufacturing agreements tailored to your specific needs and commercial goal
What is a Manufacturing Agreement?
A manufacturing agreement is a contract between a customer (the business requiring the goods) and a manufacturer (the party producing the goods) that sets out the terms under which products will be produced, supplied, and delivered.
A well-drafted agreement addresses key issues such as product specifications, pricing, quality standards, intellectual property ownership, delivery schedules, and liability.
Our Manufacturing Agreement Services
- Drafting Manufacturing Agreements
- Creating bespoke agreements that clearly define the obligations of both parties.
- Addressing critical terms such as production schedules, delivery requirements, quality control, and payment terms.
- Ensuring compliance with UK law and international trade regulations, where relevant.
- Reviewing and Negotiating Agreements
- Conducting thorough reviews of existing agreements to identify risks or unfavourable terms.
- Negotiating key terms to achieve a balanced agreement that reflects your commercial interests and mitigates potential disputes.
- Advising on Disputes and Breaches
- Providing advice on breaches of manufacturing agreements, such as delayed deliveries, non-conforming products, or payment disputes.
- Assisting with remedies, including termination rights, damages, and alternative dispute resolution (ADR).
Key Clauses to Include in a Manufacturing Agreement
Our team ensures that your manufacturing agreements include all critical clauses to protect your business interests:
- Product Specifications and Quality Standards
- Detailed descriptions of the products, including specifications, materials, quality control processes, and testing requirements.
- Mechanisms for dealing with defective or non-conforming goods.
- Production and Delivery Timelines
- Clear schedules for production, delivery milestones, and final deadlines.
- Remedies for delays, such as penalties or termination rights.
- Pricing and Payment Terms
- Agreed pricing structure, including fixed or variable pricing, and payment schedules.
- Clauses for currency fluctuations (for international agreements) and penalties for late payment.
- Intellectual Property Rights
- Defining ownership of IP, including designs, formulas, processes, or prototypes used in the manufacturing process.
- Preventing the manufacturer from using your IP for other clients.
- Confidentiality
- Ensuring that sensitive information, such as product designs, business plans, or proprietary processes, remains confidential.
- Liability and Indemnities
- Defining responsibility for defective goods, product recalls, or damages caused by faulty products.
- Limiting liability where appropriate to protect your business.
- Termination and Remedies
- Establishing clear terms for terminating the agreement, including breaches, insolvency, or force majeure events.
- Defining the process for resolving disputes, including mediation, arbitration, or litigation.
Frequently Asked Questions (FAQs)
-
What is the difference between a manufacturing agreement and a supply agreement?
-
A manufacturing agreement governs the production of goods specifically for your business, including specifications, quality control, and IP protection. A supply agreement, on the other hand, focuses on the provision and delivery of pre-existing goods or materials, often without custom production requirements.
-
How can I ensure the manufacturer meets delivery deadlines?
-
The agreement should include clear production and delivery timelines, with remedies such as penalties for delays, suspension of orders, or termination rights. Including “liquidated damages” clauses can provide financial compensation for missed deadlines.
-
What happens if the manufacturer uses my designs or products for other clients?
-
Your agreement should include robust intellectual property (IP) protection and confidentiality clauses. These will clarify your ownership of designs, prototypes, and processes while prohibiting the manufacturer from sharing or reusing them for other purposes.
-
How can I address defects or quality control issues in a manufacturing agreement?
-
The agreement should define quality standards, testing requirements, and inspection rights. Remedies for defective products—such as repairs, replacements, or financial compensation—must also be clearly outlined, along with timelines for rectifying issues.
-
What are the risks of using overseas manufacturers, and how can they be mitigated?
-
Working with overseas manufacturers introduces risks like shipping delays, quality inconsistencies, and jurisdictional disputes. To mitigate these:
- Include Incoterms for shipping responsibilities.
- Specify quality control standards and inspection rights.
- Include choice of law and jurisdiction clauses for dispute resolution.
- Ensure IP protections are enforceable in the manufacturer’s jurisdiction.
-
How should payment terms be structured to protect my business?
-
Payment terms can be structured as:
- Deposits before production begins.
- Milestone payments tied to key production stages or inspections.
- Final payments on delivery or acceptance of goods.
Including clauses for escrow accounts or letters of credit can provide additional protection against non-performance.
-
What is a Force Majeure clause, and why is it important in manufacturing agreements?
-
A Force Majeure clause protects both parties from liability if unforeseen events—such as natural disasters, pandemics, or political disruptions—prevent performance under the agreement. It ensures neither party is unfairly penalized for circumstances beyond their control.
-
How can I terminate a manufacturing agreement if things go wrong?
-
Termination clauses should set out clear grounds for ending the agreement, such as repeated failures to meet quality standards, significant delays, breaches of confidentiality, or insolvency. Include notice periods, termination procedures, and any financial consequences for early termination.
-
Who is responsible for product liability in the event of harm to customers?
-
The agreement should clarify who is responsible for defective products and any resulting claims. Liability clauses, warranties, and indemnities will define each party’s role and protect you from undue legal or financial exposure.
-
How often should a manufacturing agreement be reviewed?
-
Manufacturing agreements should be reviewed regularly, especially when business needs change, product specifications evolve, or new legal and regulatory developments arise. Periodic reviews ensure the agreement remains relevant and continues to protect your interests.
Contact Us
If you need legal advice on drafting, reviewing, or negotiating manufacturing agreements, our experienced team is here to help. We provide clear, pragmatic, and commercially focused solutions to protect your business and support your growth.
Our Manufacturing Agreements Team
What Our Clients Say
Request a Free
No Obligation
20 Minute Call
This introductory call is to discuss your matter so we can provide a well-considered quote.
However, please be aware that the free 20 minute call is at our discretion. If you are more looking for advice and guidance on an initial call, we may instead offer a one-hour fixed fee appointment instead.
Our fixed fee appointments are between £200 – £300 + VAT depending on the seniority of the solicitor taking the call.
