What is a Tolling Agreement Review?
A tolling agreement is a contract in which one party provides raw materials for another company to process it into a finished product. This can help companies who don’t have the facilities to complete the process.
If you’ve drafted a tolling agreement, you should review it to ensure that it’s clear and free of red flags that could result in disputes.
Read the rest of this article to explore what key terms to pay attention to in a tolling agreement, how to review the tolling agreement thoroughly, and how a qualified lawyer can assist you with the process.
What are Key Terms to Review in a Tolling Agreement?
A tolling agreement usually contains the following core components, which should be reviewed carefully.
- Scope of services. Check that the agreement clearly describes what the process entails and what the manufacturer will provide.
- Material title. Confirm who keeps the title to all raw materials and completed goods.
- Payment terms. The agreement should include per-unit or per-batch processing fees for clarity. Check all payment terms are explained, such as invoicing schedules and payment due dates.
- Quality control. Inspections and audits should be clearly defined to ensure a high standard of work.
- Liability and indemnification. This should clearly specify who is liable for product defects and damage.
How Do You Review a Tolling Agreement?
There are additional things to consider when reviewing a tolling agreement. Here are some to bear in mind.
Check the Tech Specs
Make sure that the finished goods’ technical specifications are detailed to provide clarity for both parties. You could also include sketches of the final goods so that it’s clear what goals need to be achieved.
For convenience, consider including product details in a Schedule A that’s attached to the contract so that it’s easier to update the specs without rewriting contract sections, should this be required.
Provide a Detailed Scope
Check that the agreement specifies what raw materials will be used, what the toller or processor must do, and who will be responsible for transport and storage. There might also be a minimum or maximum volume that applies to goods, depending on the arrangement.
Consider Ownership Transfer
Make sure that the agreement is clear about who owns the raw materials. This should be tied to responsibility for product losses. Explain what happens if the material is lost or contaminated, or other things go wrong, so that it’s clear which party is responsible.
Verify all Charges
There are various costs involved in the arrangement, such as storage and labor expenses. You want to make these clear and detailed to prevent disputes over surprise costs.
Consider Minimum Batch Requirements
The agreement should provide clarity about what the smallest batch size is that the processor will accept for a production run. Consider how a minimum batch aligns with the fixed costs involved. Don’t forget to include what consequences apply if this quantity isn’t met.
Confirm the Force Majeure Clause
You should look for a force majeure clause in the agreement, so that if anything happens which is out of the parties’ control, they have clarity. For example, consider what happens if there are power interruptions or transport disruptions. Explain what will happen to committed goods and costs in these situations.
Do You Need a Legal Review of Your Tolling Agreement?
Hiring a lawyer to provide a thorough review of your tolling agreement is advisable, especially if you’re signing a long-term or high-value agreement.
A lawyer can help you by:
- Checking all ownership clauses to prevent disputes and clarify who is responsible for losses.
- Considering parties’ obligations so that they know what’s expected of them under the agreement.
- Verifying all fees and charges, ensuring they’re clearly defined.
- Flagging ambiguous wording in the agreement and revising it so that it’s detailed and clear.
- Including information about indemnities, warranties, and insurance coverage.
- Explaining all your rights, such as regarding how to terminate the contract if it’s no longer favorable to you.
- Specifying exit arrangements. Should the contract end early, the agreement must specify how to handle raw materials and works-in-progress after termination.
- Checking that the agreement terms are aligned with health, safety, environmental, and regulatory obligations, where applicable.
Where to Find a Lawyer for a Tolling Agreement Review
If you want to hire a lawyer to review your tolling agreement, you don’t have to struggle to find one who’s experienced and skilled. Online legal platforms give you access to a variety of lawyers who are reputable and professional, and you don’t have to leave your home to find one.
ContractsCounsel is one of the largest online legal marketplaces that connects you with a curated network of vetted lawyers. All the lawyers have experience in contract drafting and review, and are well positioned to provide an in-depth review of your tolling agreement.
Here’s how to request that a lawyer on the platform reviews your agreement:
- Go to the ContractsCounsel marketplace.
- Select ‘One-time project’ and ‘Contract review.’
- Post your project for free. Include some information about what you require so you match with the right lawyers. For example, specify if there are any sections of the agreement you’re concerned about.
- Wait for lawyer bids. You’ll receive multiple bids from lawyers on the platform who are ready to assist you.
- Review the lawyer information. The platform provides a range of lawyer information, such as the lawyers’ location, expertise, years of experience, and client ratings.
- Select a lawyer who meets your requirements and hire them to review your tolling agreement for a flat fee.
