What is a Manufacturing Supply Agreement Review?
A manufacturing supply agreement is a legal contract between a supplier and a buyer for producing and delivering goods. It has to provide clarity on the type of goods being provided, how orders are fulfilled, and how the goods are priced, to prevent disputes and ensure smooth operations.
Reviewing this document is important to do so that you don’t miss anything important before entering into the working arrangement.
Read the rest of this article for tips on how to review a manufacturing supply agreement, such as what information to check, and how hiring a qualified lawyer to conduct an in-depth legal review of the agreement can benefit you.
What Key Terms Should You Review in a Manufacturing Supply Agreement?
A manufacturing supply agreement usually contains the following essential information to guide both parties:
- Products. The goods being sold must be described accurately.
- Orders. It should be clear how the buyer will place orders.
- Pricing and payments. Unit prices and payment amounts must be detailed. If there are discounts for early payments, this must also be included.
- Delivery. All delivery terms, such as shipping and packaging requirements, must be stated clearly.
- Defects. How rejected products can be handled, such as if they can be returned, should be included to prevent confusion.
- Regulatory compliance. The entire agreement should be checked to ensure compliance with local laws and regulations.
- Intellectual property (IP). The agreement should specify IP ownership of trade secrets, business information, and more to prevent violations and protect parties’ interests.
How Do You Review a Manufacturing Supply Agreement?
Since a manufacturing supply agreement includes information that governs production and delivery, it needs to be closely reviewed for accuracy and to prevent challenges or disputes. Here are some review tips.
Check all Names and Details
Start your review by checking parties’ names and details. Their legal entity names must be provided to make the document legally valid and enforceable.
Confirm an Attached Schedule
For clarity, product specifications should be included in a Schedule that’s attached to the agreement. This is better than including the descriptions in the actual agreement because it will enable you to accommodate for future changes.
Specify Price Adjustments
If you don’t include a price adjustment cap in the agreement, this will result in the buyer not having any protection. The pricing terms should also provide clarity about all unit prices and pricing formulas, while explaining how the supplier can amend pricing.
Consider Delivery Costs and Processes
The agreement must be clear and detailed about the delivery process to ensure both parties understand the costs and damage risks in transit. Check that all delivery dates are specific and realistic to achieve to prevent issues. Consider what will happen if there are late deliveries and how they can be handled.
Verify Inspection Procedures
There must be a clause enabling the buyer to inspect the products and approve or reject them. Define how products are accepted and what grounds for rejection apply. Provide a clear inspection timeline for the buyer to prevent delays or challenges.
Ensure Confidentiality Clauses
While you might specify who owns IP, you should also include a confidentiality clause that prohibits the supplier from being allowed to use the buyer’s information for activities outside of fulfilling orders. This should include post-termination protection to prevent the buyer from being vulnerable to violations after the agreement ends.
Do You Need a Legal Review of a Manufacturing Supply Agreement?
To ensure your agreement is fair and clear, you should get it reviewed by a professional lawyer. This is especially important if your agreement includes significant product volumes or a long-term duration.
A lawyer can help you with a legal review of your manufacturing supply agreement by:
- Checking the agreement to evaluate your legal and financial risks.
- Flagging any vague or ambiguous wording and rewriting it for clarity.
- Reviewing all payment and pricing obligations so there’s no confusion over what’s expected of both parties.
- Evaluating all liability, indemnification, and insurance clauses to protect your interests.
- Including IP and confidential information to prevent violations.
- Complying with all required regulatory requirements to prevent non-compliance penalties.
- Negotiating for more favorable terms with the other party, should this be required.
- Explaining everything in the agreement so that it’s easy to understand and you can reduce your risk of disputes.
Where to Find a Lawyer to Review Your Manufacturing Supply Agreement
Hiring a reputable lawyer to review your manufacturing supply agreement is essential to put your mind at ease that your contract protects your interests. But, finding the right lawyer doesn't have to be a time-consuming process.
Online legal platforms make the process easier by connecting you with experienced and qualified lawyers without you having to leave your home.
ContractsCounsel is one of the largest online legal platforms that enables you to access a curated network of vetted lawyers. All lawyers are experienced in contract drafting and review.
To ask one of them to review your manufacturing supply agreement, here are the easy steps to follow:
- Go to the ContractsCounsel marketplace where it’s free to post a project.
- Include some details of what you need so that you can match with suitable lawyers.
- View lawyer bids. You’ll receive multiple bids on your project from lawyers on the platform.
- Review the lawyer information. Before choosing a lawyer to hire, review their profiles for information about their location, expertise, experience, and client ratings for previous projects.
- Hire a lawyer to review your manufacturing supply agreement for a flat fee.