Overview of a 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.

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.

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