Contract manufacturing agreements

Exporters should consider a range of issues and risks when drawing up a contract manufacturing agreement.

This checklist uses the example of Company B manufacturing on contract to Company A.

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Matters to cover include:

Handling changes to products and specifications
Raw materials – including specifications, delivery, payment and damages
Packaging – including specifications, delivery, payment and damages
Ingredients to produce products from raw materials
Production volumes – minimum, maximum and any limitations
Ordering procedure
Price of finished products – how price will be determined and how the parties will handle price changes
Shipping and payment terms
Quality control – in relation to product testing, inspection and rejection
Intellectual property – who owns the specifications for the finished product
Dispute resolution
Term of agreement
Audit and inspection rights