Buying and selling
Manufacturing agreement
The paper for having a product made by somebody else to your specification. Beyond price and volume, it deals with the things that only exist when a factory is involved: who owns the tooling and the moulds, who owns the design and any improvements made during production, what quality checks happen before shipment, what happens to defective batches, and whether the manufacturer may make the same thing for anybody else. Where production is overseas, it usually also covers inspection rights and export documentation.
- In the catalogue
- Buying and selling
- Where it can live
- Any of the 184 governing laws
Who uses one
- Product companies and brands using a contract manufacturer.
- Founders moving a prototype into production for the first time.
- Businesses moving production to a new factory and needing the terms written down.
What you are deciding
- The specification, and how it may be changed
- Minimum runs, lead times and capacity
- Who owns the tooling, moulds and jigs
- Who owns the design, and any improvements made in production
- Quality standards, testing and inspection rights
- What happens to defective or out-of-specification goods
- Whether the manufacturer may produce for competitors
- What happens to tooling and stock when the arrangement ends
Blanks you leave stay blank and wait in the room. Nothing is filled in from a guess.
The sections a draft usually has
- 1The parties
- 2Products and specification
- 3Forecasts and orders
- 4Tooling and equipment
- 5Intellectual property
- 6Quality control and inspection
- 7Defects and recalls
- 8Exclusivity
- 9Term and termination
- 10Return of tooling and materials
A general outline, not a required one. What turns up in a draft follows what you described. A contract is written in the order a contract is read.
What people call it
The names this kind of paper goes by. They are here because people search for them. They also filter the catalogue. They are not a wordlist the door matches. At the composer you describe the deal in your own words instead.
- manufacturing agreement
- contract manufacturing agreement
- oem agreement
- production agreement
- toll manufacturing contract
- white label manufacturing agreement
Questions people ask
- Who owns the tooling?
- It depends on who paid for it and what the paper says. Agreements of this kind commonly record ownership and a right to collect the tooling at the end, because tooling left behind is leverage.
- Who owns improvements made during production?
- A manufacturer often finds better ways to make the thing. Papers of this kind say whether those improvements belong to the customer, to the manufacturer, or to both, rather than leaving it to be argued later.
- What does OEM mean in this context?
- It is used loosely for arrangements where one company makes a product that another sells under its own name. The label does not decide the terms; the agreement does.
General answers about the document. Not advice about your situation. Not written about any one country.
Where it lives
A contract names the legal system it is governed by. That is a separate decision from which paper it is. You pick it at the door, from any of the 184 units in Governing law, including England and Wales, Delaware, California and New York.
You do not start from this page. Describe the deal in one sentence at the door. Read the draft back in plain language, in the order a contract is read.
Start it at the door →Related kinds