Contract Manufacturing Agreement Template

Use Template
Manufacturing Agreement

 

  1. Introduction This Manufacturing Agreement ("Agreement") is made and entered into as of the date of the last signature below by and between _________, with a mailing address of ____________________________ ("Supplier"), and __________, with a mailing address of ____________________________ ("Buyer").

 

  1. Purpose The purpose of this Agreement is to establish the terms and conditions pursuant to which Supplier will manufacture products for Buyer.

 

  1. Definitions
  2. "Affiliate" means, with respect to a party, any entity that controls, is controlled by, or is under common control with such party. For the purposes of this definition, "control" means the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise; and the terms "controlling," "controlled by," and "under common control with" have meanings correlative to the foregoing.
  3. "Confidential Information" means any and all information or material that has or could have commercial value or other utility in the business in which Supplier is engaged. If Confidential Information is in written form, the Disclosing Party shall label or stamp the materials with the word "Confidential" or some similar warning. If Confidential Information is transmitted orally, the Disclosing Party shall promptly provide writing indicating that such oral communication constituted Confidential Information.
  4. "Effective Date" means the date of the last signature below.
  5. "Products" means the products to be manufactured by Supplier for Buyer pursuant to this Agreement.

 

  1. Manufacturing

 

4.1 Manufacturing Plan. Buyer shall provide Supplier with specifications for the Products, and Supplier shall use commercially reasonable efforts to manufacture the Products in accordance with such specifications. The parties shall cooperate in good faith to develop and agree upon a manufacturing plan ("Manufacturing Plan") prior to the commencement of any manufacturing hereunder. The Manufacturing Plan shall include, without limitation, (i) a schedule of manufacturing milestones, including target dates for the completion of tooling, pilot production and full-scale production, (ii) the quantity of Products to be manufactured during each phase of production, (iii) quality control procedures to be implemented during each phase of production, (iv) a mechanism for the parties to review and approve production samples, and (v) such other information as may be reasonably necessary or desirable to plan and carry out the manufacturing of the Products.

 

4.2 Changes to Manufacturing Plan. Any changes to the Manufacturing Plan shall be documented in a writing signed by both parties, which shall become part of this Agreement.

 

4.3 Manufacturing Schedule. Supplier shall use commercially reasonable efforts to adhere to the Manufacturing Plan.

 

4.4 Manufacturing Location. The Products shall be manufactured at ____________________________ [insert address of manufacturing facility].

 

4.5 Title and Risk of Loss. Title to, and risk of loss with respect to, the Products shall pass from Supplier to Buyer as set forth in the Manufacturing Plan.

 

  1. Quality

 

5.1 Quality Control Plan. Prior to commencing any manufacturing hereunder, the parties shall develop and agree upon a quality control plan ("Quality Control Plan") for the Products. The Quality Control Plan shall be designed to ensure that the Products conform to Buyer's specifications.

 

5.2 Changes to Quality Control Plan. Any changes to the Quality Control Plan shall be documented in a writing signed by both parties, which shall become part of this Agreement.

 

  1. Pricing

 

6.1 Pricing Schedule. The parties shall develop and agree upon a pricing schedule ("Pricing Schedule") for the Products prior to commencing any manufacturing hereunder. The Pricing Schedule shall set forth the unit prices for the Products and shall be subject to adjustment from time to time as provided herein.

 

6.2 Adjustments to Prices. The prices for the Products may be adjusted upon mutual written agreement of the parties, which shall not be unreasonably withheld, if (i) the cost of any raw materials, components, labor or other costs incurred by Supplier in manufacturing the Products increases after the Effective Date, or (ii) Supplier incurs additional costs as a result of any modifications to the Products requested by Buyer after the Effective Date.

 

6.3 Minimum Purchase. Buyer shall purchase a minimum of ___________ [insert number] Products from Supplier during the term of this Agreement.

 

  1. Payments

 

7.1 Net Terms. Buyer shall pay Supplier for the Products a fixed price of $________ in accordance with the terms set forth in the Pricing Schedule. All invoices shall be due and payable within _____ [insert number] days from the date of invoice, unless other payment terms are mutually agreed to in writing by the parties. Amounts not paid when due shall accrue interest at the rate of _____% [insert percentage] per annum, or the highest rate allowed by law, whichever is less, until paid in full.

 

7.2 Taxes. Buyer shall be responsible for all taxes, duties and assessments arising out of the sale of the Products, other than taxes based on Supplier's net income.

 

  1. Confidentiality

 

8.1 Confidential Information. The parties acknowledge that Confidential Information (as defined below) has been disclosed by or on behalf of the Disclosing Party ("Disclosing Party") to the Receiving Party ("Receiving Party"). The parties agree that such Confidential Information shall remain the sole and exclusive property of the Disclosing Party. The Receiving Party agrees that it shall hold and maintain the Confidential Information in strictest confidence for the sole and exclusive benefit of the Disclosing Party. The Receiving Party agrees to carefully restrict access to Confidential Information to employees, contractors and third parties as is reasonably required and shall require those persons to sign nondisclosure restrictions at least as protective as those in this Agreement. The Receiving Party shall not, without the prior written approval of Disclosing Party, use for Receiving Party's benefit, publish, copy, or otherwise disclose to others, or permit the use by others for their benefit or to the detriment of Disclosing Party, any Confidential Information. The Receiving Party shall return to Disclosing Party any and all records, notes, and other written, printed, or tangible materials in its possession pertaining to Confidential Information immediately if Disclosing Party requests it in writing.

 

8.2 Exceptions. Receiving Party's obligations under this Agreement with respect to any Confidential Information of Disclosing Party shall not apply to information that is: (a) publicly known at the time of disclosure or subsequently becomes publicly known through no fault of the Receiving Party; (b) discovered or created by the Receiving Party before disclosure by Disclosing Party; (c) learned by the Receiving Party through legitimate means other than from the Disclosing Party or Disclosing Party's representatives; or (d) is disclosed by Receiving Party with Disclosing Party's prior written approval.

 

  1. Intellectual Property

 

9.1 Ownership. As between the parties, Buyer shall own all intellectual property rights in and to the Products, including without limitation all patents, copyrights, trade secrets, trademarks and other proprietary rights. Supplier shall not acquire any right, title or interest in or to the Products or any intellectual property rights relating to the Products, except for the limited rights necessary to perform its obligations under this Agreement.

 

9.2 Improvements. Supplier shall promptly notify Buyer of any improvements to the Products or manufacturing processes that it develops during the term of this Agreement. All such improvements shall be the sole and exclusive property of Buyer.

 

9.3 Trademarks. Buyer hereby grants to Supplier a limited, non-exclusive, non-transferable license during the term of this Agreement to use Buyer's trademarks and service marks (the "Licensed Marks") in connection with the marketing and sale of the Products manufactured by Supplier pursuant to this Agreement. Supplier shall use the Licensed Marks only in the form and manner specified by Buyer from time to time and shall not use any trademark or service mark that is confusingly similar to the Licensed Marks. Supplier's use of the Licensed Marks shall inure to the sole benefit of Buyer. Supplier acknowledges and agrees that it has no right to use the Licensed Marks except as expressly set forth herein, and all use of the Licensed Marks by Supplier shall inure to the sole benefit of Buyer.

 

 

  1. Indemnification

 

10.1 By Supplier. Supplier shall indemnify, defend and hold harmless Buyer and its directors, officers, employees and agents from and against any and all damages, costs, liabilities and expenses (including, without limitation, attorneys' fees and expenses) incurred by Buyer arising out of or related to any claims, actions, suits or proceedings (each, a "Claim") to the extent based on or arising out of (i) any breach of this Agreement or any warranty made by Supplier in this Agreement, (ii) the negligence or willful misconduct of Supplier or any of its directors, officers, employees or agents, or (iii) any infringement or violation by the Products of any intellectual property right of a third party.

 

10.2 By Buyer. Buyer shall indemnify, defend and hold harmless Supplier and its directors, officers, employees and agents from and against any and all damages, costs, liabilities and expenses (including, without limitation, attorneys' fees and expenses) incurred by Supplier arising out of or related to any Claim to the extent based on or arising out of (i) any breach of this Agreement or any warranty made by Buyer in this Agreement, (ii) the negligence or willful misconduct of Buyer or any of its directors, officers, employees or agents, or (iii) any infringement or violation by Buyer or its Affiliates of any intellectual property right of a third party.

 

10.3 Procedure. The indemnifying party shall have the right to control the defense and settlement of any Claim for which it is required to indemnify the indemnified party, provided that (i) the indemnifying party gives the indemnified party prompt written notice of the Claim, (ii) the indemnifying party consults with the indemnified party as to the settlement of such Claim, and (iii) the indemnified party gives the indemnifying party such reasonable assistance as it may request, at the indemnifying party's expense, in the defense or settlement of such Claim.

 

  1. Warranties

 

11.1 Supplier Warranties. Supplier warrants to Buyer that (i) it has all necessary power and authority to enter into this Agreement and perform its obligations hereunder, (ii) the execution, delivery and performance of this Agreement by Supplier does not and will not violate, conflict with or constitute a default under any agreement or instrument to which it is a party or by which it or any of its properties or assets may be bound, (iii) this Agreement constitutes the legal, valid and binding obligation of Supplier, enforceable against it in accordance with its terms, and (iv) the Products will conform in all material respects to the specifications set forth.

 

11.2 Except as provided herein, Supplier makes no other warranties, express or implied, or promises or obligations with respect to the Goods. Supplier disclaims any and all other warranties, including the warranties of merchantability and fitness for a particular purpose.

 

  1. Ownership. The Parties hereby agree that Buyer will maintain all ownership in the Goods. Supplier will not be permitted to sell any of the Goods to any third party without express written permission of Buyer. Supplier will also not distribute the Goods to any consumers.

 

  1. Risk of Loss. While Buyer agrees to pay shipping and handling fees, as well as product insurance, as noted above, risk of loss for the Goods shall pass only when Supplier either completes delivery to the Buyer, if the Goods are being personally delivered, or when the Buyer receives the Goods, if Supplier places the Goods with the shipping carrier.

 

  1. Late Fees. If Buyer does not make payment as due, Supplier shall charge the Buyer any outstanding charge. % late interest on If Buyer does not pay, Supplier is entitled to treat this as a material breach and cancel this Agreement or seek other legal remedies, at Supplier's discretion.

 

  1. Discount. If Buyer makes payment at least __________ days before payment is due, Buyer will receive a discount of: _______% on the total due amount.

 

  1. Delivery. The Parties hereby agree that time is of the essence in Supplier's performance under this Agreement. The Goods shall be delivered by _________(the "Delivery Date"). If the Goods are not delivered by the Delivery Date, Buyer shall be entitled to treat this as a material breach and cancel this contract or seek other legal remedies, at the Buyer's discretion.

 

  1. Inspection. After delivery of the Goods, Buyer will have _________ days to inspect the Goods (the "Inspection Period"). If Buyer determines that the Goods do not conform to the Specifications, Buyer shall notify the Supplier, in writing, within the Inspection Period. Supplier shall have ___________ days to cure. The Goods shall be returned to the Supplier at the Supplier's expense.

If the Inspection Period passes and Supplier has not heard from Buyer, the Goods will be deemed accepted.

 

  1. Insurance. Supplier shall be required to maintain a comprehensive insurance policy in the amount of at least $_______.

 

  1. Term and Termination. This Agreement shall be commenced as of the Execution Date and shall continue until the following date: ____________. After that point, the Parties' relationship will automatically terminate.

Either Party may terminate this Agreement for material breach, as well, which shall be defined as: 1) The Supplier's failure to deliver, 2) The Buyer's failure to pay. 3) The Supplier's failure to cure any defect in the Goods; or 4) The bankruptcy of either Party.

If either Party breaches this Agreement, the other Party may terminate upon 10 days' written notice. Such notice shall contain any and all information about the breach and shall provide the breaching Party the opportunity to cure the breach within an additional 10 days. If the breach has not been cured within such time, the Agreement will terminate. If the breach has been cured, this Agreement will continue in full force and effect.

 

  1. Remedies. If this Agreement is canceled because of material breach by a Party, the non-breaching Party may also pursue any available remedies at law and in equity.

 

  1. Notices; Electronic Communications Permitted. i) Any notice to be given under this Agreement shall be in writing and shall be sent by first-class mail, airmail, or email, to the address of the relevant Party set out at the head of this Agreement, or to the relevant email address set out below or other email address as that Party may from time to time notify the other Party in accordance with this clause. The relevant contact information for the Parties is as follows:

Supplier: ________

Buyer: __________

Notices sent as above shall be deemed to have been received 3 working days after the day of posting (in the case of inland first class mail), or 7 working days after the date of posting (in the case of air mail), or next working day after sending (in the case of email).

In proving the giving of a notice it shall be sufficient to prove that the notice was left, or that the envelope containing the notice was properly addressed and posted, or that the applicable means of telecommunication was addressed and dispatched and dispatch of the transmission was confirmed and/or acknowledged as the case may be.

 

  1. Force Majeure. Supplier is not liable for any failure to perform due to causes beyond its reasonable control including, but not limited to, acts of God, acts of civil authorities, acts of military authorities, riots, embargoes, acts of nature and natural disasters, and other acts which may be due to unforeseen circumstances.

 

  1. Counterparts. This Agreement may be executed in counterparts, all of which shall constitute a single agreement.

 

  1. Headings. Headings to this Agreement are for convenience only and shall not be construed to limit or otherwise affect the terms of this Agreement.

 

  1. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes any prior or contemporaneous understandings, whether written or oral.

 

  1. Public Announcement. Neither Party will make any public announcement or disclosure about the existence of this Agreement or any of the terms herein without the prior written approval of the other Party.

 

  1. Severability. If any provision or term of this Agreement is held to be unenforceable, then this Agreement will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remaining terms and provisions, which shall be enforced as if the offending term or provision had not been included in this Agreement.

 

  1. No Waiver. None of the terms of this Agreement shall be deemed to have been waived by any act or acquiescence of either Party. Only an additional written agreement can constitute waiver of any of the terms of this Agreement between the Parties. No waiver of any term or provision of this Agreement shall constitute a waiver of any other term or provision or of the same provision on a future date. Failure of either Party to enforce any term of this Agreement shall not constitute waiver of such term or any other term.

 

  1. Amendments. This Agreement may only be amended in writing signed by both Parties.

 

  1. Assignment. This Agreement, or the rights granted hereunder, may not be assigned, sold, leased or otherwise transferred in whole or part by either Party.

 

  1. Language. All communications made or notices given pursuant to this Agreement shall be in the English language.

 

  1. Governing Law. This Agreement shall be governed in all respects by the laws of the state of __________ and any applicable federal law. Both Parties consent to jurisdiction under the state and federal courts within the state of ________. The Parties agree that this choice of law, venue, and jurisdiction provision is not permissive, but rather mandatory in nature.

 

EXECUTION

Supplier:

Signature: _____________________________________________________

Typed or Printed Name: _________________________________________

Title: ________________________________________________________

 

Buyer:

Signature: _____________________________________________________

Typed or Printed Name: _________________________________________

Title: ________________________________________________________