What is an OEM Agreement Review?
An OEM (Original Equipment Manufacturer) agreement is a legal contract between a company building equipment parts and another company who commits to selling them under their name.
If you’ve drafted an OEM agreement, you should check all the clauses are clear and specific.
Here are some tips to consider when reviewing an OEM agreement and how a qualified lawyer can assist you with the process.
What are Key Terms to Review in an OEM Agreement?
The following core information is important to review:
- Scope. Your agreement must detail what products will be made. Include their specifications.
- Payments. All payment and pricing terms must be clearly defined.
- Intellectual property (IP). It must be made clear what party owns the IP produced before and during the agreement.
- Defects. Should there be product defects, the agreement must outline how these can be handled, such as with a clear returns process.
- Liability and indemnification. The agreement should properly allocate risk between parties, such as for third-party claims.
- Orders. It must be clarified exactly how purchases will be made and what minimum order quantities apply.
How Do You Review an OEM Agreement?
OEM agreements can be comprehensive and technical, so you want to take your time to review all their terms. Here are some things to consider.
Flag Vague Product Descriptions
The agreement must specify exactly what products are to be made, such as by including their product dimensions, specifications, and even how they should be packaged. Be as specific as possible. Remove any ambiguous descriptions and replace them with more detailed ones.
Set Minimum Order Quantities
If minimum order quantities aren’t included in the agreement, they should be to make the agreement fair and protect the manufacturing company’s interest.
Clarify all Payment and Pricing Terms
Payment structures must be clearly defined, so check that the agreement specifies all aspects of the payment, such as payment schedules, payment methods, and how late payments will be treated.
Confirm Product Quality Control
Both parties will want to be assured of quality control. This section of the agreement should mention how products can be inspected and how parties can return products that are damaged or defective. This should provide specific steps for how to navigate the situation.
Consider Exclusivity
The agreement must state if the manufacturer will produce similar products for other companies or if the agreement will be restricted to one company. This is important to specify.
If exclusivity applies, you should align it to the minimum purchase obligation so that the manufacturer doesn’t risk underperformance.
Scrutinize all Delivery Terms
To ensure quality, check that your agreement has outlined all manufacturing lead times and delivery dates. It should also specify shipping terms and how delays are handled.
Distinguish Between IP Types
It’s not enough to state who owns IP created during the agreement term. You should distinguish between IP that the manufacturer owns prior to the agreement and any IP that’s been created by both parties during the agreement. This serves to prevent future disputes.
Do You Need a Legal Review of an OEM Agreement?
To protect your interests, hiring a lawyer to review your OEM agreement is worth considering. A lawyer will conduct the following activities:
- Unpacking any complex language in the agreement so that you know exactly what it contains.
- Identifying your obligations, such as delivery and payment requirements.
- Reviewing product specs and ensuring that they’re accurate as well as aligned with quality standards.
- Assessing pricing terms. A lawyer will check that your agreement clarifies pricing, adjustments, and other payment provisions.
- Evaluating liabilities and indemnities. They’ll consider which party is responsible for things that could go wrong, such as property damage or claims from third parties.
- Determining IP rights for designs, tools, molds, and more.
- Checking regulatory compliance. They’ll ensure that the agreement is aligned with all product safety requirements, laws, and regulations.
- Flagging any risks that could result in legal or financial consequences.
- Negotiating with the other party on your behalf, such as to revise terms so the agreement is more favorable.
- Making edits to the agreement so that the final draft accurately reflects the goods and transactions.
Where to Find a Lawyer for an OEM Agreement Review
If you’d like to hire a qualified lawyer to review your OEM agreement for you, giving you peace of mind that it’s clear and legal, you don’t have to wonder where to find one. Online legal platforms make the process of finding a lawyer an easy task by giving you access to a range of experienced lawyers.
ContractsCounsel is one of the largest online legal marketplaces that connects you to a curated network of vetted lawyers. All the lawyers on the platform have contract drafting and review experience.
Requesting that a lawyer reviews your OEM agreement is easy. Here are the steps to follow:
- Go to the ContractsCounsel marketplace.
- Post your project or request for a legal review of your contract.
- Include some details about what you need so you can match with suitable lawyers.
- Wait to receive bids. You’ll get multiple lawyer bids from lawyers on the platform who are experienced and ready to help you.
- Review the lawyer information. Go to the lawyers’ profiles on the platform and access a range of information about them, such as their location, credentials, years of experience, and client ratings for previously completed projects on the platform.
- Choose a lawyer and hire them to review your OEM agreement for a flat fee.
