Manufacturing Agreement

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Manufacturing Agreement for use in the United States.

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A manufacturing agreement grants the manufacturer a non-exclusive right to manufacture and package a customer's products. Manufacturing agreements generally include provisions wherein the customer grants the non-exclusive right to use customer's trademarks, trade names and such identification marks on the product packages. Generally, the customer has the right to purchase any improvements or developments made by the manufacturer.

Among others, this form includes the following key provisions:
  • Manufacturing of Product
  • Term of the Agreement and Termination
  • Know-How, Confidentiality and Trademarks
  • Engineering Changes
  • Quality Control and Maintenance of Records
  • Payments
  • Indemnity and Warranties
This attorney-prepared Manufacturing Agreement contains:
  1. Instructions and Checklist
  2. General Information
  3. Step-by-Step Instructions
  4. Manufacturing Agreement for the United States
Law Compliance: This form complies with the laws of all states
Number of Pages20
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#33556
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
Manufacturing Agreement

 

 

This MANUFACTURING AGREEMENT (the Agreement) is made on the ___________20_____ (the Effective Date) entered by and between ___________ (the CLIENT), and ___________________________, (the MANUFACTURER).
 
 
WHEREAS THE CLIENT is engaged in the business of _____________________________
 
WHEREAS upon and subject to the terms and conditions of this Agreement, CLIENT has retained Manufacturers services to provide manufacturing services for the ______________________________________(“Product”) [Mention the type of Product]
 
AND WHEREAS the MANUFACTURER hereby consents to such retention by the CLIENT and agrees to provide manufacturing services for the Product at its factory situated  at ______________ (the Factory Premises)
 
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
 
1.    MANUFACTURE. The MANUFACTURER hereby agrees and undertakes to manufacture the said Products strictly in accordance with the know-how, standards and specifications disclosed or intimated by the CLIENT from time to time.
 
2.    TERM. This Agreement shall commence on the effective date, and shall continue for an initial term of one (1) year. This Agreement shall automatically be renewed for successive one (1) year terms unless either party requests in writing, at least ninety (90) days prior to the expiration of the initial term or renewal term that this Agreement not be so renewed.
 
3.     PRODUCT FORECAST. CLIENT will provide an annual twelve (12) month forecast and a monthly six (6) month rolling Product forecast to MANUFACTURER.
 
4.    KNOW-HOW; CONFIDENTIALITY
 
a)   The CLIENT may disclose, communicate or  intimate to  the  MANUFACTURER  so much  of  the  know-how (Know how), standards and specifications as the CLIENT may in its  absolute  discretion  consider  necessary  or sufficient for the manufacture of the said  Products by the MANUFACTURER at the Premises.  
 
b)   The MANUFACTURER hereby acknowledges that  the know-how,  standards and specifications disclosed or communicated or intimated to it by the  CLIENT for  and/or connected with, or in relation to the manufacture of the said Products pursuant to this Agreement  shall at all times remain and be the sole and  exclusive property of the CLIENT and the MANUFACTURER shall  neither have  nor  shall claim any  right, title or interest in and to  either during the continuance of this Agreement  or after the expiry or earlier determination of this Agreement.
 
c)   The MANUFACTURER hereby agrees, undertakes and declares that it shall not directly or indirectly use the Know how, standards or specifications or any part of it at any time for any purpose other than for the manufacture of the said Products for making supplies to the CLIENT in accordance with this Agreement.
 
d)   The  MANUFACTURER hereby undertakes that it shall keep secret and  confidential and shall not disclose, divulge or reveal either during the continuance of this  Agreement or at any time thereafter  the  information or know-how or standards or specifications disclosed, communicated or given or  gained or otherwise acquired by the MANUFACTURER under, pursuant to or by virtue of or as result of the implementation or performance of this Agreement, to any person, firm, body corporate or  authority whatsoever and shall ensure that the same is kept secret and confidential at all times.
 
   Nothing in this Agreement,  shall  prevent  the  MANUFACTURER  from disclosing or imparting the  same to  their responsible senior employees or staff members but only  in  so far  as may be necessary  for  the satisfactory and proper performance and discharge of their duties and obligations to give effect  to this Agreement .
 
          MANUFACTURER shall if so required by the CLIENT obtain from such employees or staff members an undertaking in favor of  the CLIENT not to reveal, disclose or divulge  the know-how, standards or specifications or any other  documents or papers containing the Know how or any  information relating in any manner whatsoever  to the manufacture of the said Products in such forms and containing such terms and conditions as the CLIENT  may in its sole and  absolute discretion  prescribe and the CLIENT shall also be  entitled to inspect the undertaking which the  MANUFACTURER may have obtained from its employees/staff members and  modifications if any as may be suggested  by the  CLIENT in this connection shall be carried out by the MANUFACTURER and its employees.
 
   FURTHERMORE, MANUFACTURER and CLIENT agree to execute, as part of this Agreement, a Nondisclosure Agreement for the reciprocal protection of confidential information.
 
5.    ENGINEERING CHANGES
 
a)      CLIENT may, upon advance written notice to MANUFACTURER, submit engineering changes for incorporation into the Product. It is important that this notification include documentation of the change to effectively support an investigation of the impact of the engineering change. MANUFACTURER will make a reasonable effort to review the engineering change and report to CLIENT within __________ days of receiving such a notice for change. If any such change affects the price, delivery, or quality performance of said Product, an equitable adjustment will be negotiated between MANUFACTURER and CLIENT prior to implementation of the change.
 
 b)      MANUFACTURER agrees not to undertake significant process changes, design   changes, or process step discontinuance affecting electrical performance and/or mechanical form and fit without prior written notification and concurrence of the CLIENT.
 
6. DELIVERY; ORDERS
 
a)   MANUFACTURER shall  sell to the CLIENT  and the CLIENT  shall purchase from the MANUFACTURER  the said  Products  in the manner set  out  below,  at price set out/determined in  accordance with  the method in Schedule I hereto or such other price as may be  mutually agreed. For this purpose the MANUFACTURER shall disclose to the CLIENT all necessary information, data, working, cost and other expenses necessary for the determination of the prices to be mutually agreed upon.  
 
b)   The CLIENT will from time to time place orders with the MANUFACTURER for the purchase of the said Products and the MANUFACTURER shall supply such quantities as are ordered of the said Products at the agreed prices to the CLIENT within the time specified in each such order. The order shall allow the MANUFACTURER at least 30 (thirty) days for the execution of the order. The MANUFACTURER shall ensure that it shall maintain adequate inventories/stocks of raw, packing and other materials at all times to supply the said Products in accordance with the orders placed. The MANUFACTURER shall ensure that it shall supply the said Products to the CLIENT so that the delivery is affected within one month from the date of manufacture indicated on the label of the product. The MANUFACTURER will be solely and exclusively responsible for the purchase, procurement and storage of raw, packing and other materials required for the manufacture of the said Products and shall purchase/procure the same from any source of its choice as per the specifications laid down by the CLIENT.
 
c)        The CLIENT may revise or cancel a purchase order for Product and may also eliminate a component from a Product. If CLIENT revises or cancels a purchase order or eliminates a component, or through revised forecast (downside) causes excess inventory, MANUFACTURER shall identify all potential liability of CLIENT for material on order, material on hand, work in process, and finished goods. MANUFACTURER shall undertake commercially reasonable efforts to cancel all applicable component purchase orders and reduce component inventory through return for credit programs or allocate components for alternate programs to minimize charges to CLIENT. CLIENT agrees to compensate MANUFACTURER for costs incurred for finished goods (including profit); work in process (including labor performed); material on hand which could not be returned or used for other clients and at other sites of MANUFACTURER; material on order which could not be cancelled; applicable material supplier's restocking or cancellation fees; and agreed MANUFACTURER  handling charges.
 
d)   The  MANUFACTURER shall at its own cost and expense,  pack the said Products in  packages  or containers  in accordance with the directions and specifications given or prescribed by the CLIENT from time to time in that behalf.
 
e)   The CLIENT shall not be bound to accept any products which do not conform to the standards, specifications, instructions or directions prescribed and/or given by the CLIENT in that behalf from time to time or which do not conform to statutory requirement.  In such event the CLIENT shall be entitled to destroy at the Manufacturers cost all of such non-conforming products.
 
f)   If after the CLIENT has accepted the said Products,  it is subsequently found that they do not  conform to the standards specifications prescribed by the CLIENT or with  the  statutory requirements pertaining to that of  for any reason  pertaining to the Manufacture of the product is recalled from any of its establishments or dealers or retailers, the MANUFACTURER shall be liable to  reimburse the CLIENT for the prices of the said products paid/payable by the CLIENT to the MANUFACTURER and for the  expenses which the CLIENT may have incurred from the time of purchase till such recall.
 
 
7.    QUALITY CONTROL & MAINTENANCE OF RECORDS
 
a)   The CLIENT shall be entitled, without being obliged to do so, to give the MANUFACTURER instructions, advice and recommendations with regard to, inter alia, Good Manufacturing Practices, quality of the product and engineering aspects. The MANUFACTURER shall conform to the said instructions, advice and   recommendations given by the CLIENT at any time during the continuance of this Agreement.
 
b)   During the continuance of  this  Agreement, the CLIENT,  its  authorized  agent(s)     and  representative(s) shall from time to time and  at all times  be entitled without being  obliged  to enter upon and inspect the  Manufacturers  Premises  and examine and  supervise  if necessary the process or method of  manufacturing and packing of the said Products and the  storage and use of the raw  materials, ingredients and other materials used or intended to be used by the MANUFACTURER for or in relation to the manufacture and  packing of  the said  Products. The MANUFACTURER shall extend full co-operation to the CLIENT in such inspection or   supervision and shall comply with all directions given by the CLIENT from time to time.
 
c)   The CLIENT shall be entitled to, without being obliged to do so, have the said   Products  examined, inspected and tested in its Quality Control Department or [in its laboratories] and other facilities in accordance with the  instructions and testing procedure prescribed by the CLIENT to ascertain whether the  said  Products conform to the standards and specifications prescribed by the CLIENT from time to time.
 
d)   The MANUFACTURER shall at all times keep and maintain proper records in their books relating to all matters and transactions under or arising out of this Agreement and the CLIENT at all times have access to such records and books including vouchers, receipts, memos and other like documents and a right to inspect the same to make copies of or take extracts there from by or through any of the officers of the CLIENT authorized in that behalf.
 
 
8.      PAYMENTS
 
a)   The said Products shall be supplied by the MANUFACTURER to the CLIENT at prices determined in accordance with clause 4(a) above. The CLIENT shall make payments to the MANUFACTURER within ___days from the date of invoice/delivery of the said Products whichever is later. This may be varied from time to time by mutual Agreement.
 
b)   Further it is agreed that Parties that the total expenses envisaged in the manufacture of the said Product would be $. _________________(_____________). [Mention if this expense would be divided between the Parties or if borne by only the CLIENT] 
 
 
9.       INDEMNITY & WARRANTIES
 
a)    MANUFACTURER has represented and warranted to the CLIENT that  it possesses adequate manufacturing capacity at the Factory Premises and has the necessary  labor, personnel, plant,  machinery, and facilities required for the manufacture of the said Products in  accordance with the statutory requirements pertaining to such manufacture.
 
b)     MANUFACTURER has also represented and warranted that it has obtained all licenses, authorizations and permissions necessary or requisite in law for the manufacture by it of the said Products (under the brand/trade mark ______ of the CLIENT) and that all such licenses, authorizations and permissions are presently in full force and effect and shall be kept in full force and effect during the term of this agreement in  accordance with the laws applicable from  time to time.
 
c)   The MANUFACTURER shall advise the CLIENT of the suggested retail prices at which the said Products may be sold having regard to the provisions of the _______________ [Mention specific price contract board/order to which the prices should comply with] or   any   other applicable provisions in force from time to time.  The MANUFACTURER shall be responsible for ensuring that the said prices advised to the CLIENT are in conformity with the  provisions of  the   _____________ Order or  any  other  applicable statutory  provisions in force from time to  time, and  shall be responsible for compliance with  all the  statutory  requirements  pertaining  to   the selling prices of  the  said Products. The MANUFACTURER shall keep the CLIENT indemnified against any loss, damage or responsibility which may arise if there is any breach of the provisions of the __________________ Order or any other statutory provisions or requirements pertaining to the selling prices of the said Products.
 
d)   The MANUFACTURER guarantees and warrants that  the said  Products manufactured and  packed  hereunder shall  in all respects be strictly  in  accordance with   the  statutory    requirements pertaining hereto  and in accordance with the standards  and specifications  disclosed and communicated by  the CLIENT  to the MANUFACTURER.  The MANUFACTURER further guarantees and warrants that:
 
i.   the said Products will be manufactured in conditions, premises and facilities which comply in all respects with the statutory requirements applicable thereto;
 
ii.   all waste or rejects arising out of or during the process of manufacture shall be destroyed by the MANUFACTURER in accordance with Law at its cost so as to ensure with the same; and
 
iii.   does not leave the  Factory Premises under any circumstances whatsoever.
 
e)   The MANUFACTURER shall indemnify and keep indemnified the CLIENT at all times from and against all actions, suits, proceedings, claims, demands and expense of whatever nature made or suffered or incurred by the CLIENT whether by reason of or by virtue of the efficacy or quality of the said Products or by reasons of or by virtue of any non-performance or non-observance by the MANUFACTURER of any terms and conditions of this Agreement.
 
f)   The MANUFACTURER shall be solely and exclusively liable for payment of all taxes, duties and levies payable by the MANUFACTURER including excise duty, and sales tax, if any, on or in connection with the manufacture and/or sale of the said Products by the MANUFACTURER to the CLIENT under and in accordance with this Agreement and the CLIENT shall in no event be liable or responsible therefore. In the event any claim, penalty or liability is incurred by the CLIENT in this behalf at any time, the MANUFACTURER shall indemnify and keep indemnified the CLIENT from and against all such claims.
 
 
10.   INVENTORY MANAGEMENT
 
a)   MANUFACTURER agrees to purchase components according to the CLIENT approved vendor list (AVL) including any sourcing plans.
 
b)   All CLIENT tooling/equipment furnished to MANUFACTURER or paid for by CLIENT in connection with this Agreement shall:
 
i.   Be clearly marked and remain the personal property of CLIENT.
 
ii.   Be kept free of liens and encumbrances.
 
c)   Unless otherwise agreed, CLIENT is responsible for the general maintenance of CLIENT tooling/equipment.
 
d)   MANUFACTURER shall hold CLIENT property at its own risk and shall not modify the property without the written permission of CLIENT. Upon CLIENTS request, MANUFACTURER shall redeliver the property to CLIENT in the same condition as originally received by MANUFACTURER with the exception of reasonable wear and tear. In the event the property is lost, damaged or destroyed, MANUFACTURERS liability for the property is limited to the book value of the property.
 
 
 11.  TRADE MARKS; INTELLECTUAL PROPERTY
 
a)   The  MANUFACTURER shall for and on behalf of the CLIENT, affix or apply the said Mark  on the  said Products and/or the  labels and/or the packages thereof which are to be supplied to the CLIENT pursuant to  this Agreement. Such affixation shall be in such a manner as is directed by the CLIENT. Save as aforesaid,  the MANUFACTURER shall  not  use, nor shall be deemed to have the right to use the  said Mark in  connection  with  or  in relation to any product of any  nature made or dealt with by the MANUFACTURER. The MANUFACTURER hereby covenants that it shall not use the said Mark in any manner whatever which may jeopardize the significance, distinctiveness or validity of the said Mark and shall apply and affix the said Mark only in pursuance of its obligations under this Agreement. The MANUFACTURER shall not be entitled to use or affix the said Mark on any products or goods except the said Products to be supplied to the CLIENT hereunder.
 
b)       Nothing herein contained shall at any time during the continuation of this Agreement   or after the expiry or earlier determination of that give or be deemed to give or shall be intended to give or confer upon the MANUFACTURER any right, title, interest or claim in or to the said Mark which shall continue to vest solely and absolutely in favor of the CLIENT.
 
c)    The MANUFACTURER shall during the continuance of this Agreement  use its best endeavors to discover any infringement or passing off or suspected infringement  or  passing off or imitation of the said Mark coming to its knowledge and shall communicatethe same to the CLIENT and assist the CLIENT in any action to be taken in such circumstances.
 
d)   The MANUFACTURER by this declares that it has not and shall not any time:
 
i      take any action which shall or may impair the right title or interest of the CLIENT to the said Mark or create any right, title or interest therein or thereto which may be adverse to the CLIENT.
 
ii.   use the said Mark upon or in relation to any goods on its own account or otherwise for any other purpose.
 
iii.   use the said Mark upon or in relation to any goods other than the said Products meant for supplies to the CLIENT.
 
iv.      permit the use of the said Mark by any other person, firm or body corporate.
 
v.   register or attempt to register any mark similar to the said Mark.
 
   e)    Each Party (the “indemnifying party”) shall defend, indemnify, and hold   harmless the other party from any claims by a third party of infringement of intellectual properties resulting from the acts of the indemnifying party under this Agreement, provided that the other party: (i) gives the indemnifying party prompt notice of any such claims, (ii) renders  reasonable assistance to the indemnifying party in that, and (iii)  permits the indemnifying party to direct the defense of the settlement of such claims.
 
 
12.       LICENSES & STATUTORY COMPLIANCES
 
a)    The  MANUFACTURER shall at all times comply with all applicable laws, rules and  regulations  from time to time in force including without  prejudice to  the  generality  of the foregoing, strictly comply with the provisions  of  the  _____________[Mention any specific Act, or legislation to comply with], safety laws and  regulations, laws and regulations relating to  procurement of materials including  imported materials, the excise duties, and the rules, regulations  and  notifications made or issued  there under, relating to or appertaining to the due and  proper performance of  its duties and obligations under this Agreement . In the event of the MANUFACTURER committing a breach of this clause the MANUFACTURER shall indemnify and keep indemnified the CLIENT of, from and against all claims, demands, actions, proceedings, fines, penalties, expenses and other liabilities of whatever nature or brought against sustained or incurred by the CLIENT and whether paid for or not arising out of or as a result of such breach by the MANUFACTURER.
 
   [Also describe what the MANUFACTURER warrants and acknowledges in terms of the licenses and approvals it has obtained for its manufacturing processes]
 
13.      INSURANCE
 
         The MANUFACTURER  shall at its cost take a comprehensive insurance policy [or specific a definite amount] to cover all the raw and packaging materials, stocks in process and finished products against inter alia, theft, fire, riots, civil commotion, natural calamities, including floods.
 
 
14.      NO AGENCY 
 
a)      Nothing in this Agreement shall be deemed to construe or is intended to construe interpret the MANUFACTURER as an agent of the CLIENT.  It is further hereby expressly agreed and declared that MANUFACTURER shall not at any time:
              
i.   enters into a contract in the name of or purporting to be made on behalf of the CLIENT;
 
ii.   by any act pledge the credit of the CLIENT or impose or attempt to impose any contractual obligations on the CLIENT; and
 
iii.   either in its own offices, factories or depots or on invoices, bill heads or letter papers or any other place or by any other means, oral or written, make any statement to the effect or make a representation calculated or liable to include others to believe that it is an agent of the CLIENT.
 
 
b)     The MANUFACTURER shall not sub-contract or delegate to any other person, firm or CLIENT the whole or any part of the manufacture or packaging of the said Products under this Agreement nor shall the MANUFACTURER assign this Agreement or any of its rights, duties or obligations there under without the prior consent in writing of the CLIENT in that behalf.
 
 
15.      TERMINATION
 
a)  Notwithstanding  the foregoing or anything in contrary in this Agreement either party shall be entitled to terminate this Agreement upon the happening of any of the following events:
 
i.   Upon the other party committing a breach of any terms and conditions of this Agreement;
 
ii.        Upon the other party making any  arrangement or  composition with its creditors or if an execution or other process shall be levied upon or if  an  encumbrancer shall take possession of or a receiver shall be appointed  in respect of the assets or properties of  the other party or any part  thereof;
 
iii.      Upon the other party going into liquidation for the purpose of amalgamation or reconstruction.
 
b)      Notwithstanding the foregoing or anything in contrary in this Agreement, either party shall be entitled to terminate this Agreement without assigning any reason by giving three months notice to the other.
 
c)     The termination of this Agreement for any reason whatsoever shall not entitle the other party to any compensation therefore and shall be without prejudice to any claim or right of action previously accrued or acquired by the parties.
 
d)     Upon termination or expiry of this Agreement for any person whatsoever, the MANUFACTURER shall:
 
i.   discontinue manufacture and packing of the said Product;
 
ii. discontinue any and every application and or affixation of the said Mark or any colorable imitation of the same in connection with any goods, products, service, business or trade so as to cause confusion or deception or to detract from or adversely affect the right, title or interest of the CLIENT in or to the said Mark in any manner;
 
iii.   not make any use of the standards, specifications, information or  know-how disclosed or communicated to it by the CLIENT below or acquired by the MANUFACTURER in connection with or as a result of the implementation of this Agreement;
 
iv.   not  retain  any  copies or  extract  of  any documents or  drawings of the know-how  nor shall it make any use of that or of any kind of benefits of research or new  methods of  manufacture acquired by it  concerning  the manufacture of the said Product;
 
v.   not to sell to anyone else any quantity of the said Products that may then be in the possession or custody of the MANUFACTURER;
 
vi.   destroy at its cost any stocks of packing material then in the possession of   the MANUFACTURER and the CLIENT shall not be required to purchase the whole or part thereof;
 
vii.   not directly or indirectly, represent, describe or cause to be represented   or described on any label, advertising material, circular or in any manner whatsoever that it was formerly manufacturing the said products under the said Mark owned by the CLIENT.
 
 
16.  GENERAL
 
 a)    This  Agreement shall be deemed to represent  the entire Agreement between  the  parties   hereto regarding  the  subject matter here of  and  shall supersede, cancel and replace any and all previous agreements, arrangements, writings or undertakings in  this  behalf between the parties  to this Agreement.  
 
b)    Any  time relaxation indulgence or  concessions granted, made or shown by the CLIENT to or in favor of the MANUFACTURER under  this Agreement  shall  not  in  any way prejudice or affect  its  rights or remedies under this Agreement  or at law.
 
c)    This Agreement may be executed in one or more counterparts, each of which will be deemed the original, but all of which will constitute but one and the same document. The parties agree this Agreement and its addenda may not be modified except in writing signed by both parties.
 
d)     Neither party shall delegate, assign or transfer its rights nor obligations under this Agreement, whether in whole or part, without the written consent of the other party provided, however, upon prior written notice to MANUFACTURER, CLIENT   may assign or transfer its rights to third parties.
 
e)       Neither party shall be liable for any failure or delay in its performance under this Agreement  due to acts of God, acts of civil or military authority, fires, floods, earthquakes, riots, wars or any other cause beyond the reasonable control of the delayed party provided that the delayed party: (i) gives the other party written notice of such cause within fifteen (15) days of the discovery of the event; and (ii) uses its reasonable efforts to remedy such delay in its performance.
 
f)        This Agreement and the rights and obligations of the Parties below shall, be construed in accordance with the laws of state of ___________________, without giving effect to principles of conflict of law. In the event of disputes, differences, claims and questions between the partiesto this arising out of this Agreement or in any way relating to this or any term, consultation or provision herein mentioned or the construction or interpretation thereof or otherwise in relation to this, the parties shall first endeavor to settle such differences, disputes, claims or questions by friendly consultation. In the event of failure of parties to resolve by friendly consolation the dispute, the disputes, differences, claims and questions between the Parties hereto arising out of this Agreement or in any way relating hereto or any term, condition or provision herein mentioned or the construction or interpretation thereof or otherwise shall be referred to arbitration. The proceedings held by the arbitrator in making the award will be in accordance with the rules of American Arbitration Association. The award of the arbitrator shall be final and binding on the parties.
g)     This Agreement shall be executed in duplicate. The original it shall be retained by CLIENT and the duplicate by the MANUFACTURER.
 
 
IN   WITNESS  WHEREOF  the  parties below   have executed  these  presents the day and year  first  above  written.
 
 
SIGNED by               
 
_____________________________   
Title:          
 
 
SIGNED by                
 
___________________________                    
Title:                       
 
SCHEDULE 1
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