Manufacturing Agreement

What is a Manufacturing Agreement?

A Manufacturing Agreement is a contract between two parties for the manufacture and sale of goods.

A Manufacturing Agreement sets out clearly the type, quantity and specifications of the goods to be manufactured, as well as the purchase price and payment terms.

A Manufacturing Agreement also sets out any minimum purchase obligations, warranties given in respect of the goods and how title and risks in those goods pass.

Key points included

• Type and specifications of the goods to be manufactured;
• How the goods will be delivered;
• Price of goods, whether or not they include taxes and ancillary costs;
• Payment terms, e.g. lump sum payment, instalments or payment cycles;
• Any minimum purchase obligations;
• When will title and risks in the goods pass;
• Warranties given in respect of the goods;
• Duration of the contract and notice period for termination; and
• Events that will trigger termination of the contract.