Manufacturing Agreements

What are some of the key terms that should be included in the manufacturing agreement?

1. Intellectual Property Provisions

Protection of the intellectual property relating to a product is essential for a party purchasing manufacturing services, and it is paramount that the agreement allows the manufacturer to use it for a specific purpose should not be overlooked. However, the manufacturer may, as part of the manufacturing process, make improvements to the product as they work. In doing so, the improvements (and the intellectual property in those improvements) are likely to belong to the manufacturer unless the agreement specifically states otherwise. It is important that this is discussed with your manufacturer or client at the outset so that clear terms are added to the agreement. If not, there is a risk that the improvements could not be used in the future.

You should also consider whether any third party’s intellectual property will be used and whether there are sufficient agreements in place allowing you to use this IP.

2. Confidentiality

A non-disclosure or confidentiality clause would be prudent within the agreement to safeguard your business and your product and make it clear in what circumstances information can be disclosed. We would recommend putting in place an NDA as soon as possible when negotiations start, as it’s likely negotiating the agreement will require that you share commercially sensitive information with a manufacturer.

3. Quality Control

The agreement should set each parties expectation of quality. This should include the standards of workmanship, the timescales of the work, the right to inspect the manufacturers' workplace and any production targets.

Whether you need a manufacturing agreement to be drafted, reviewed or enforced, our Commercial Team will be able to help you get it right so you’re safe in the knowledge that your intellectual property is protected.