International Business Law Advisor Insights on International Litigation & Transactions

How to Draft an International Manufacturing Contract.

Posted in Business Transactions, Intellectual Property, international business, International Investments, international manufacturing, international trade

international manufacturing agreement, international manufacturing contract, international business attorneyThe other day I got a call from a company requesting my assistance in structuring an international manufacturing agreement.

While the majority of my cases are centered on international litigation or arbitration, I get a big thrill out of structuring international business contracts.

Doing international transactional work allows me to get an inside look at the business side of many different kinds of industries.

As with all agreements, drafting an international manufacturing agreement  requires careful attention to in defining the scope of the transaction.

International manufacturing contracts are used when one company arranges for another company in a different country to manufacture its products.

In a typical arrangement, Company X  provides Manufacturer Y with the specifications, and possibly also the materials necessary for the manufacturing process.

It’s also important to point out that intellectual property rights (patents, industrial designs and models, etc.) are usually conveyed to the manufacturer for the term of the contract.

At minimum, an international manufacturing agreement should contain the following 5 terms:

  •  Obligations of the manufacturer:  Sets forth the expectations of the manufacturer and may include time and quantity requirements.
  •   Inspection & testing: Provides the right to inspect the manufacturing process to ensure that quality standards are being met.
  •  Delivery terms:  Specifies packaging requirements, risk of loss and transit obligations.
  •   Rejection of products: Specifies under what conditions a manufactured product may be rejected and can include time to cure provision.
  •  Intellectual property: This provision is immensely important and identified the intangible legal rights or interests that cover any idea, design, concept, technique, invention, discovery, or improvement. This extends to any work of authorship and any other similar rights..

To guide you along, I’ve embedded a few pages from a standard international manufacturing agreement below.

This sample may be used for the contracting of products such as food, textiles and clothing, furniture, toys, electronics components, machinery, etc.:

International Manufacturing Contract

Follow the guidelines above and you’ll be well on your way to drafting an iron-clad international manufacturing contract!