Contract for the Manufacture of Goods

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Contract for the Manufacture of Goods Powered By Docstoc
					This Contract for the Manufacture of Goods creates an agreement between a
manufacturer of goods and another party. The agreement states that for a specified
amount of compensation, the manufacturer will produce goods for the requesting party.
This document in its draft form contains numerous of the standard clauses commonly
used in these types of agreements, as well as optional language allowing for
customization to ensure the specific terms of the parties' agreement are addressed.
This document may be used by a manufacturer, or by a person or business that wants a
manufacturer to produce goods.
         CONTRACT FOR MANUFACTURE OF GOODS

THIS CONTRACT FOR MANUFACTURE OF GOODS (the “Agreement”) is made on this
________________ day of ___________, 20___ (the “Effective Date”) entered by and between
________________________,      (hereinafter       called   the      "CLIENT"),       and
___________________________, (hereinafter called the “MANUFACTURER”).

                               RECITALS:
WHEREAS, the CLIENT is engaged in the business of _____________________________;

WHEREAS, the MANUFACTURER is engaged in providing manufacturing services of
______________________ products;

WHEREAS, subject to the terms and conditions of this Agreement, CLIENT desires to retain
MANUFACTURER’s services and MANUFACTURER desires to provide such manufacturing
services for the following Product(s) to the CLIENT:

__________________________________. [Comment: describe the type of Product] (the
“Product”)

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the CLIENT and the MANUFACTURER mutually agree as follows:

1. ENGAGEMENT

    A. The MANUFACTURER hereby agrees and undertakes to manufacture the said Products
       strictly in accordance with the know-how, standards and specifications as provided by the
       CLIENT and in compliance with the Product Specifications as described in Schedule I,
       which is attached hereto and made a part hereof (the “Product Specifications”).

    B. Both during the term and following termination of this Agreement, in perpetuity,
       MANUFACTURER shall not supply the Product or any prototype thereof, or any of the
       Product Specifications, to any third party whatsoever.

2. GRANT OF RIGHTS

    A. The CLIENT hereby grants to the MANUFACTURER the right to manufacture and
       package the Products and to use CLIENT's Know-how and Product Specifications in the
       process of manufacturing of the Products and to grant to its Affiliates the right to
       manufacture and package the Products and to utilize the know-how, subject to the terms
       of this Agreement.


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    B. The MANUFACTURER hereby grants to the CLIENT the exclusive right to use any
       improvements or technical developments of the Product which are developed by the
       MANUFACTURER after obtaining from CLIENT the know-how and the Product
       Specifications as required by this Agreement. Such right shall be royalty-free provided,
       however, that if the CLIENT does not elect to exercise such right in writing within _____
       [Instruction: insert any number] (       ) days after the Manufacturer makes written
       disclosure to the CLIENT, the Manufacturer will be free to deal with others with respect
       to such right.

3. TERM

This Agreement shall commence on the effective date and shall continue for an initial period of
one (1) [Instruction: insert any number] year. Thereafter, this Agreement shall automatically
renew for successive one (1) [Instruction: insert any number] year periods unless either party
gives notice in writing, at least ninety (90) [Instruction: insert any number] days prior to the
anniversary date of this Agreement, to the other party specifying its intention not to renew.

4. DISCLOSURE OF KNOW-HOW

After the execution of this Agreement, the CLIENT will provide know-how, standards and
specifications, which are to be complied with, to the MANUFACTURER. The CLIENT shall
promptly inform the MANUFACTURER of any know-how thereafter acquired by the CLIENT.
The MANUFACTURER shall be entitled to make and retain such notes and memoranda and
such copies of papers relating to the CLIENT's know-how and Specifications as may be
appropriate to enable the MANUFACTURER to utilize such know-how and Specifications in
manufacturing the Product. All disclosures of the CLIENT's know-how shall be treated as
Confidential Information as defined under this Agreement and shall not be disclosed to others.

5. PRODUCT FORECAST

CLIENT will provide an annual twelve (12) [Instruction: insert any number] month forecast
and a six (6) [Instruction: insert any number] month rolling Product forecast to
MANUFACTURER by the ________ business day of each calendar month. Any such
information provided by CLIENT to MANUFACTURER shall be treated as Confidential
Information

6. MATERIAL PROCUREMENT

MANUFACTURER is authorized to purchase materials using standard purchasing practices
including, but not limited to, acquisition of material by recognizing Economic Order Quantities
and long lead time component management in order to meet the forecasted requirements of
CLIENT. CLIENT is responsible for material to the extent that (i) material was purchased by
MANUFACTURER to support the Product forecast and agreed upon safety stock; (ii)
MANUFACTURER exercised reasonable business judgment in managing suppliers and lead

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times and _____________________________________. [Comment:               add any additional
provisions]

7. PURCHASE ORDER

   A. The Manufacturer shall perform the work as described in the attached Product
      Specification and within the requirements as detailed in the Product Specification and in
      accordance with the terms and conditions of this Agreement. The CLIENT will authorize
      the Manufacturer to perform the work by issuing a purchase order(s) (the “Order”).

   B. CLIENT shall issue a purchase order for each lot of product purchased, and shall order in
      minimum quantities of _____ [Instruction: insert any number] (“Units”).

   C. CLIENT shall have the authority to revise or cancel a purchase order and may also
      eliminate a component from the Product. However if any such revision or cancellation of
      a purchase order, or elimination of a component by CLIENT causes any loss to the
      MANUFACTURER, CLIENT agrees to compensate MANUFACTURER for costs
      incurred for: finished goods (including profit); work in process (including labor
      performed); material on hand which could not be returned or used for other clients and at
      other sites of MANUFACTURER; material on order which could not be canceled;
      applicable material supplier's restocking or cancellation fees; and agreed
      MANUFACTURER handling charges.

   D. Any and all agreements in connection with the work entered into by the
      MANUFACTURER with subcontractors shall include the terms and conditions of this
      Agreement which govern the MANUFACTURER. No provision of such agreement shall
      be construed as an agreement between the CLIENT and the subcontractors. The
      MANUFACTURER shall be responsible for the acts or neglect of any of its
      subcontractors.

8. PRICING

CLIENT shall pay for the manufacturing services provided by the MANUFACTURER in
accordance with the Pricing Schedule attached hereto (Schedule II).

9. PROPRIETARY RIGHTS
MANUFACTURER acknowledges that it has no right to or interest in the Product resulting from
the manufacturing services performed hereunder. The MANUFACTURER acknowledges that
the Product has been specially commissioned or ordered by the CLIENT and that the CLIENT is
therefore to be deemed the owner of all rights and interest to the Product.

10. WARRANTY

   A. MANUFACTURER warrants and represents that it has the requisite and necessary
      experience, all necessary licenses and permits, equipment, facilities and personnel to
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         properly perform the manufacturing services in accordance with the Product
         Specifications.

    B. MANUFACTURER agrees to use its best efforts and all due diligence to manufacture the
       Products in accordance with the Product Specifications. MANUFACTURER warrants for
       a period of ______ [Instruction: insert any number◊] months from shipment that all
       Products sold to CLIENT shall be free from any defects in MANUFACTURER design,
       materials, and workmanship, and are free of all liens, claims and encumbrances of any
       kind.

    C. MANUFACTURER has the corporate and legal right to enter into this Agreement and is
       not a party to any other Agreement that would in any way conflict with, or restrict, its
       ability to perform the manufacturing services.

    D. MANUFACTURER represents and warrants that the MANUFACTURER will not,
       without the prior written consent of the CLIENT, sell or distribute the Products.

    E. MANUFACTURER further warrants that during the warranty period
       MANUFACTURER assumes full responsibility for the repair or replacement of Products.

    F. MANUFACTURER shall have no responsibility or obligation to CLIENT under
       warranty claims with respect to Products that have been subjected to abuse, misuse,
       accident, alteration, neglect or unauthorized repair.

    G. THE WARRANTIES CONTAINED IN THIS SECTION ARE IN LIEU OF, AND
       MANUFACTURER EXPRESSLY DISCLAIMS AND CLIENT HEREBY WAIVES
       ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED,
       STATUTORY OR ARISING BY COURSE OF DEALING OR PERFORMANCE,
       CUSTOM, USAGE IN THE TRADE OR OTHERWISE, INCLUDING WITHOUT
       LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE
       AND FITNESS FOR A PARTICULAR USE.

11. QUALITY

    A. It is an express condition of this Agreement that at all times during the period of this
       Agreement the MANUFACTURER shall ensure that the Products shall satisfactorily
       meet the requirements for good manufacturing practice.

    B. The Manufacturer warrants to the CLIENT that all Products delivered hereunder shall
       comply with the specifications agreed to between the parties from time to time. If any of
       the Products is found not to comply with the specifications, the CLIENT shall have the
       right to demand replacement and to return the defective quantity to the
       MANUFACTURER at MANUFACTURER's expense.


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    C. In the event that the CLIENT and MANUFACTURER do not agree on whether the
       Products meet the specifications established by the CLIENT, the matter shall be
       submitted for review to an independent testing laboratory mutually acceptable to the
       MANUFACTURER and CLIENT. The determination of such independent test laboratory
       shall be binding on both parties. The cost of the independent testing laboratory shall be
       borne by the party whose testing results were in error.

12. DEFECTIVE PRODUCTS

    A. The CLIENT may inspect the Products within a reasonable time after delivery. The
       CLIENT may return such non-conforming Products to the MANUFACTURER at the
       MANUFACTURER's risk and expense.

    B. MANUFACTURER shall within two weeks of receipt of such returned products provide
       a report to CLIENT detailing those Products accepted under warranty and any that are not
       accepted under warranty due to physical damage or improper use. MANUFACTURER
       will use its best efforts to repair defective products within four (4) [Instruction: insert
       any number◊] weeks from receipt of the returned product.

    C. Shipment of the repaired or replaced warranted products to CLIENT’s location shall be
       at the expense of MANUFACTURER. Shipment of the repaired or replaced non-
       warranted products shall be at the expense of CLIENT. In the event a product
       modification shall become necessary, MANUFACTURER shall make such
       modifications, as approved by CLIENT, at a separate cost borne by CLIENT.

    D. Payment for the manufacturing services by the CLIENT shall not constitute an
       acceptance of the Products nor impair the CLIENT's right to inspect or any of its other
       remedies.

13. PRODUCTION TOOLING AND FIXTURES.

    A. All CLIENT production tooling/equipment furnished to MANUFACTURER or paid for
       by CLIENT in connection with this Agreement shall be clearly marked and remain the
       personal property of CLIENT and be kept free of liens and encumbrances.

    B. Unless otherwise agreed, CLIENT is responsible for the general and periodic
       maintenance of CLIENT tooling/equipment.

14. REGULATORY APPROVALS

Prior to manufacturing any Products, the CLIENT shall give all necessary notices, obtain all
regulatory approvals, registrations, necessary permits and licenses and pay all the fees related to
the performance of the work. Furthermore, the MANUFACTURER shall provide to the


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CLIENT, copies of all certificates necessary as evidence that the work conforms to the laws and
regulations of all authorities having jurisdiction.

15. TRADEMARKS

    A. The MANUFACTURER shall apply CLIENT’s trademarks, trade names, logos etc.
       (collectively ‘Marks’) on the Products and/or the labels and/or the packages which are to
       be supplied to CLIENT pursuant to this Agreement. Such usage of the Marks shall be in
       accordance with the directions of the CLIENT.

    B. MANUFACTURER shall not use, nor shall have the right to use the Marks in
       connection with or in relation to any other product of whatsoever nature made or dealt
       with by the MANUFACTURER except for the Products supplied to the CLIENT.

    C. The MANUFACTURER hereby warrants that it shall not use the said Mark in any
       manner which may jeopardize the significance, distinctiveness or validity of the said
       Mark.

    D. Nothing herein shall at any time during the term or after the expiration of this Agreement
       give or shall be intended to give or confer upon the MANUFACTURER any right, title,
       interest or claim in or to the said Mark which shall continue to vest solely and absolutely
       in favor of the CLIENT.

    E. Each party shall defend, indemnify, and hold harmless the other party from any claims by
       a third party of infringement of intellectual properties resulting from the acts of the
       indemnifying party pursuant to this Agreement, provided that the other party (i) gives the
       indemnifying party prompt notice of any such claims, (ii) renders reasonable assistance to
       the indemnifying party thereon, and (iii) permits the indemnifying party to direct the
       defense of the settlement of such claims.

16. PRODUCT LIABILITY

Each Party shall notify the other promptly in writing of any product liability claim brought with
respect to the Product based on alleged defects in the design, manufacture, packaging, or labeling
of the Product or other adverse claim regarding the Product. Upon receiving such written notice,
CLIENT shall assume and have sole control of the defense of any such claim, including the
power to conduct and conclude any and all negotiations, compromises or settlements.
MANUFACTURER shall promptly comply with all reasonable requests from CLIENT for
information, materials or assistance with respect to the conduct of such defense.

17. DELIVERY and SHIPMENT.

The delivery of each Order shall be made to the address as specified in the Order and within the
time as specified in the Order. All risk or loss after shipment by MANUFACTURER is borne by

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CLIENT. Upon learning of any potential delivery delays, MANUFACTURER will notify
CLIENT as to the cause and extent of such delay. If MANUFACTURER fails to make deliveries
at the specified time and such failure is caused by MANUFACTURER, MANUFACTURER
will, at no additional cost to CLIENT, employ accelerated measures such as material expediting
fees, premium transportation costs, or labor overtime required to meet the specified delivery
schedule or minimize the lateness of deliveries.

18. CONFIDENTIAL INFORMATION

    A. Both MANUFACTURER and CLIENT shall maintain as confidential, and not to disclose
       to third parties or use for its own benefit, any specifications, drawings, blueprints, flow
       charts, reports, data, business information, trade secrets, manufacturing processes, or
       other confidential information of the other party which MANUFACTURER or CLIENT,
       as the case may be, learns or acquires by virtue of this Agreement, except that
       MANUFACTURER or CLIENT may disclose confidential information pursuant to the
       order or requirement of a court, administrative agency, or other governmental body, and
       for disclosures required to be made pursuant to United States Securities Law. Both parties
       must notify the other party in writing of the need for such disclosure in advance of any
       such disclosure being made and MANUFACTURER and CLIENT further agree to use
       reasonable efforts to protect the confidential information against disclosure to
       unauthorized persons.

    B. MANUFACTURER may disclose confidential information to MANUFACTURER's
       personnel who have a need to know and legal duty to protect such confidential
       information. At CLIENT’s written request, MANUFACTURER agrees to destroy or
       otherwise dispose of all confidential information, except as prohibited by regulatory or
       safety agencies.

    C. The confidential information shall not include information which is in the public domain
       at the time of disclosure or afterward, except where such information becomes public due
       to a breach by the disclosing party of its obligations hereunder, nor shall the term
       confidential information in possession at the time of disclosure or which may be
       disclosed by third party having the right to disclose the same.

19. TERMINATION

    A. If either party is in material breach or default of one or more of the terms and conditions
       of this Agreement, MANUFACTURER and CLIENT agree to negotiate in good faith to
       resolve such default. If the defaulting party fails to cure such default within thirty (30)
       [Instruction: insert any number◊] days following notice of default, the non-defaulting
       party shall have the right to terminate this Agreement by furnishing the defaulting party
       with thirty (30) [Instruction: insert any number] days written notice of termination.



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    B. This Agreement shall immediately terminate if either party; (i) become insolvent; (ii)
       enter into or file a petition, or proceeding seeking an order for relief under the bankruptcy
       laws of its respective jurisdiction; (iii) enter into a receivership of any of its assets or; (iv)
       enter into a dissolution of liquidation of its assets or an assignment for the benefit of its
       creditors.

    C. Either MANUFACTURER or CLIENT may terminate this Agreement without cause by
       giving ninety (90) [Instruction: insert any number] days advance written notice to the
       other party.

20. FORCE MAJEURE

Any failure or delay by a party in the performance of its obligations under this Agreement is not
a default or breach of the Agreement or a ground for termination under this Agreement to the
extent the failure or delay is due to elements of nature or acts of God, acts of war, terrorism,
riots, revolutions, or strikes, labor troubles, or other factor beyond the reasonable control of a
party (each, a "Force Majeure Event"). The party failing or delaying due to a Force Majeure
Event agrees to give notice to the other party which describes the Force Majeure Event and
includes a good faith estimate as to the impact of the Force Majeure Event upon its
responsibilities under this Agreement, including, but not limited to, any scheduling changes.
However, should any failure to perform or delay in performance due to a Force Majeure Event
last longer than thirty (30) days, the party not subject to the Force Majeure Event may terminate
this Agreement by notice to the party subject to the Force Majeure Event.

21. DISPUTE RESOLUTION

If any dispute arises, the parties will try in good faith to settle the same through mediation
conducted by a mediator to be mutually selected. The parties will share the costs of the
mediation equally. Each party will cooperate fully and fairly with the mediator and will attempt
to reach a mutually satisfactory compromise to the dispute. If the dispute is not resolved within
30 days after it is referred to the mediator, it will be arbitrated by arbitrator in accordance with
the rules of the American Arbitration Association (AAA) under its jurisdiction in the state of
_______________ before a single arbitrator. Judgment on the arbitration award may be entered
in any court that has jurisdiction over the matter. Costs of arbitration, including lawyers’ fees
will be allocated by the arbitrator.

22. LIMITATION OF LIABILITY

IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY,
OR TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, PRODUCT LIABILITY, OR
OTHERWISE, SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL, EXEMPLARY DAMAGES OF ANY KIND WHETHER
OR NOT EITHER PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.


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23. INSURANCE

   A. The MANUFACTURER shall at its cost take a comprehensive insurance policy for
      _________ dollars ($ ________________) to cover all the raw and packaging materials,
      stocks in process and finished products against theft, fire, riots, civil commotion, natural
      calamities, including floods.

   B. Each party to this Agreement will maintain insurance to protect itself from claims (i) by
      the party's employees, agents and subcontractors under Worker's Compensation and
      Disability Acts, (ii) for damages because of injury to or destruction of tangible property
      resulting out of any negligent act, omission or willful misconduct of the party or the
      party's employees or subcontractors, (iii) for damages because of bodily injury, sickness,
      disease or death of its employees or any other person arising out of any negligent act,
      omission, or willful misconduct of the party or the party's employees, agents or
      subcontractors.

24. RELATIONSHIP BETWEEN CLIENT AND THE MANUFACTURER

MANUFACTURER acts as an independent contractor and is not an agent or employee of the
CLIENT. MANUFACTURER is not authorized to act on behalf of CLIENT and is not
authorized to negotiate, execute any agreement on behalf of the CLIENT. The
MANUFACTURER shall not use CLIENT’s name in any public advertising or similar activities
without CLIENT’s prior written consent.

25. NON-COMPETITION

MANUFACTURER hereby agrees that during the term of this Agreement, and for a period of
two (2) [Instruction: insert any number] years following termination hereof, shall not:

   A. directly or indirectly engage in any Competitive Business

   B. assist others in engaging in any Competitive Business or

   C. develop, enhance, produce, market, promote or support, or render consulting or other
      services to a third party with respect to, a similar Product having substantially similar
      functionality to the Product.

26. INJUNCTIVE RELIEF

MANUFACTURER acknowledges and agrees that the obligations and promises of
MANUFACTURER under this Agreement are of a unique, special and intellectual nature giving
them particular value.     MANUFACTURER further acknowledges and agrees that
MANUFACTURER 's breach of any of the promises or covenants contained in this Agreement,
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will result in irreparable and continuing damage to CLIENT for which there will be no adequate
remedy at law and, in the event of such breach, CLIENT, in addition to its rights of termination
set forth herein, will be entitled to seek injunctive relief, or a decree of specific performance, or
both, and such other and further relief as may be proper including monetary damages if
appropriate.

27. AMENDMENTS

No amendment, modification or supplement to this contract shall be binding unless it is in
writing, signed by a corporate officer or his authorized representative.

28. NOTICES

All notices under this Agreement shall be in writing and shall be deemed given:

         A. when personally delivered; or

         B. when sent by confirmed fax or facsimile; or

         C. when sent by confirmed e-mail; or

         D. when sent by pre-paid first class post to the address mentioned below:

If to MANUFACTURER:
____________________________

____________________________

If to CLIENT :
____________________________

____________________________

or such other address as such Party may hereafter specify.

29. NO PUBLICITY

MANUFACTURER will not, without the prior written consent of the CLIENT, in any manner
disclose information about the existence of this Agreement, including its value, or its terms and
conditions, through any media including but not limited to, the issuance of any news or press
releases, announcement, denial, or confirmation, all of which shall be treated as Confidential
Information. Nothing in this Agreement implies that CLIENT will agree to any such publicity.

30. GOVERNING LAW

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The provisions of this Agreement shall be governed by the laws of the state of _____________,
regardless of conflict of laws.

31. WAIVE OF BREACH

No waiver by either party of any breach of any of the covenants or conditions herein contained,
performed by the other party, shall be construed as a waiver of any succeeding breach of the
same or of any other covenant or condition.

32. ASSIGNMENT

Neither party may delegate, assign or transfer its rights or obligations under this Agreement,
whether in whole or part, without the written consent of the other party.

33. DESCRIPTIVE HEADINGS

The descriptive headings herein are inserted for convenience purpose and for reference only and
are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

34. ENTIRE AGREEMENT

The parties agree that this constitutes the entire agreement and there are no further items or
provisions, either oral or otherwise. MANUFACTURER agrees that it has not relied upon any
representations of CLIENT as to prospective performance of the goods, but has relied upon its
own inspection and investigation of the subject matter.

                                   [SIGNATURE PAGE TO FOLLOW]




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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above


__________________ (“CLIENT”)                              _____________ (the “MANUFACTURER”)

By: _______________________                              By: ______________________




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SCHEDULE I
PRODUCT SPECIFICATIONS

    1. ________________________________________________________
    2. ________________________________________________________
    3. ________________________________________________________
    4. ________________________________________________________
    5. ________________________________________________________




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SCHEDULE II
PRICING

    1. ________________________________________________________
    2. ________________________________________________________
    3. ________________________________________________________
    4. ________________________________________________________
    5. ________________________________________________________




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DOCUMENT INFO
Description: This Contract for the Manufacture of Goods creates an agreement between a manufacturer of goods and another party. The agreement states that for a specified amount of compensation, the manufacturer will produce goods for the requesting party. This document in its draft form contains numerous of the standard clauses commonly used in these types of agreements, as well as optional language allowing for customization to ensure the specific terms of the parties' agreement are addressed. This document may be used by a manufacturer, or by a person or business that wants a manufacturer to produce goods.
This document is also part of a package 0 Documents Included