Manufacturing clause: Copy, customize, and use instantly
Introduction
A manufacturing clause outlines the rights, obligations, and quality standards in manufacturing agreements. It ensures that production processes, intellectual property use, and compliance with regulations are clearly defined. This clause is commonly used in supplier agreements, OEM contracts, and product development deals.
Below are templates for manufacturing clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Quality control manufacturing clause
This variation requires the manufacturer to meet specific quality standards.
The [Manufacturer] shall ensure that all products manufactured under this Agreement meet the quality standards specified in [Quality Manual/ISO Certification]. The [Other Party] reserves the right to conduct inspections and reject any products that do not conform to these standards.
Intellectual property protection manufacturing clause
This variation ensures that proprietary designs and trade secrets are protected.
The [Manufacturer] shall not use, disclose, or reproduce any proprietary designs, trade secrets, or intellectual property provided by the [Other Party] except for the purpose of fulfilling obligations under this Agreement. Upon termination, all related materials shall be returned or destroyed as instructed.
Supply chain compliance manufacturing clause
This variation requires adherence to ethical sourcing and labor laws.
The [Manufacturer] shall ensure that all raw materials and components used in manufacturing comply with applicable labor, environmental, and sourcing regulations. The [Other Party] reserves the right to audit the supply chain for compliance at any time.
Exclusivity manufacturing clause
This variation restricts the manufacturer from producing similar products for competitors.
The [Manufacturer] agrees that it shall not manufacture, distribute, or sell products substantially similar to those produced under this Agreement for any third party without prior written consent from the [Other Party].
Batch testing manufacturing clause
This variation requires periodic testing of manufactured goods to ensure consistency.
The [Manufacturer] shall conduct batch testing on all products manufactured under this Agreement to ensure compliance with the agreed specifications. The [Other Party] reserves the right to review testing results and require corrective action if deviations are found.
Recall responsibility manufacturing clause
This variation assigns responsibility in the event of a product recall.
If a product recall is required due to a manufacturing defect, the [Manufacturer] shall bear the costs associated with retrieving, repairing, or replacing the affected products. The [Other Party] shall notify the [Manufacturer] immediately upon discovery of any defects requiring recall.
Raw materials sourcing manufacturing clause
This variation specifies requirements for sourcing materials used in manufacturing.
The [Manufacturer] shall procure raw materials exclusively from pre-approved suppliers listed in Appendix [X] to ensure product consistency and regulatory compliance. Any substitution of materials must receive prior written approval from the [Other Party].
Waste disposal and environmental compliance manufacturing clause
This variation mandates compliance with environmental laws regarding waste disposal.
The [Manufacturer] shall comply with all applicable environmental regulations regarding waste disposal, emissions, and hazardous material handling. The [Other Party] reserves the right to audit compliance with these standards.
Production capacity manufacturing clause
This variation sets minimum or maximum production requirements.
The [Manufacturer] agrees to maintain a production capacity sufficient to meet the volume requirements specified in Exhibit [X]. If the [Manufacturer] fails to meet demand, the [Other Party] may seek alternative suppliers without penalty.
Subcontracting manufacturing clause
This variation regulates the use of subcontractors in production.
The [Manufacturer] shall not delegate or subcontract any manufacturing obligations under this Agreement without the prior written consent of the [Other Party]. Any approved subcontractors must comply with all relevant terms of this Agreement.
Defect liability manufacturing clause
This variation establishes liability for defective products.
The [Manufacturer] shall be responsible for any defects in materials or workmanship discovered within [X] months of delivery. The [Other Party] may return defective products for repair, replacement, or refund at the [Manufacturer]’s expense.
Tooling and equipment ownership manufacturing clause
This variation clarifies ownership of tools and equipment used in manufacturing.
Any tooling, molds, or custom equipment provided by the [Other Party] for use in manufacturing shall remain the property of the [Other Party]. The [Manufacturer] shall maintain and return such equipment in good condition upon termination of this Agreement.
Lead time and delivery schedule manufacturing clause
This variation sets timeframes for order fulfillment.
The [Manufacturer] shall deliver products according to the lead times specified in Appendix [X]. Failure to meet agreed delivery schedules without prior notice may result in penalties or contract termination.
Regulatory compliance manufacturing clause
This variation requires compliance with industry regulations and certifications.
The [Manufacturer] shall ensure that all products manufactured under this Agreement comply with applicable industry regulations, including [FDA, CE, UL, ISO, or other standards]. The [Other Party] may request compliance certificates upon demand.
Product specification change manufacturing clause
This variation outlines the process for modifying product specifications.
The [Other Party] reserves the right to modify product specifications upon providing [X] days’ written notice. The [Manufacturer] shall implement changes as required and adjust production processes accordingly.
Payment terms and cost adjustments manufacturing clause
This variation governs how costs are determined and adjusted.
The [Manufacturer] shall invoice the [Other Party] based on agreed pricing in Schedule [X]. Any changes in production costs due to inflation, material shortages, or regulatory changes must be documented and approved before price adjustments take effect.
Product exclusivity manufacturing clause
This variation prevents the manufacturer from selling the same product to competitors.
The [Manufacturer] agrees that any products developed under this Agreement shall be exclusively produced for the [Other Party] and shall not be sold to third parties without prior written consent.
Confidentiality and trade secret protection manufacturing clause
This variation ensures that confidential manufacturing processes remain protected.
The [Manufacturer] shall not disclose, use, or replicate any proprietary manufacturing processes, formulations, or designs provided by the [Other Party]. Any unauthorized disclosure shall be considered a material breach of this Agreement.
Inspection and audit rights manufacturing clause
This variation allows the other party to inspect manufacturing facilities.
The [Other Party] shall have the right to inspect the [Manufacturer]’s production facilities upon providing [X] days’ notice. The inspection may include quality control audits, compliance checks, and testing of production samples.
Returns and rework manufacturing clause
This variation establishes rules for returning defective or non-compliant products.
The [Other Party] may return any non-compliant or defective products for rework or replacement. The [Manufacturer] shall bear all costs associated with reworking or replacing defective products.
Fair labor practices manufacturing clause
This variation requires compliance with labor laws and ethical workplace standards.
The [Manufacturer] shall comply with all applicable labor laws, including fair wages, safe working conditions, and prohibitions on child or forced labor. Any violation of these standards shall constitute grounds for contract termination.
Production cost reimbursement manufacturing clause
This variation ensures that the manufacturer is reimbursed for pre-approved costs.
The [Other Party] agrees to reimburse the [Manufacturer] for reasonable pre-approved costs incurred in tooling, testing, and certification. Such costs must be documented and submitted for approval prior to reimbursement.
Recall cooperation manufacturing clause
This variation establishes a process for handling product recalls.
If a recall is necessary due to manufacturing defects, the [Manufacturer] shall cooperate fully in investigating the issue, retrieving affected products, and implementing corrective actions. The costs associated with recalls shall be borne by the responsible party.
Non-compete manufacturing clause
This variation restricts the manufacturer from working with direct competitors.
The [Manufacturer] agrees not to manufacture or distribute similar or competing products for any entity other than the [Other Party] during the term of this Agreement and for [X] months thereafter.
Production confidentiality manufacturing clause
This variation prevents unauthorized disclosure of production details.
The [Manufacturer] shall keep all production methods, product details, and supply chain information confidential. Any breach of this confidentiality obligation shall result in immediate contract termination and potential legal action.
Material substitution approval manufacturing clause
This variation requires approval before changing raw materials.
The [Manufacturer] shall not substitute any raw materials or components without prior written approval from the [Other Party]. Any unapproved substitutions may result in product rejection and reimbursement for damages.
Warranty coverage manufacturing clause
This variation ensures that the manufacturer provides warranty coverage for defects.
The [Manufacturer] warrants that all products shall be free from defects in materials and workmanship for a period of [X] months from the date of delivery. Any defective products shall be repaired or replaced at no cost to the [Other Party].
Contingency production plan manufacturing clause
This variation ensures continuity in production during unforeseen disruptions.
The [Manufacturer] shall maintain a contingency production plan to mitigate risks associated with supply chain disruptions, equipment failure, or labor shortages. If production is delayed beyond [X] days due to unforeseen circumstances, the [Manufacturer] shall notify the [Other Party] immediately and implement alternative solutions.
Packaging and labeling manufacturing clause
This variation sets requirements for product packaging and labeling compliance.
The [Manufacturer] shall package and label all products in accordance with the specifications outlined in Schedule [X]. Any changes to packaging materials, labeling content, or branding elements must be approved in writing by the [Other Party] prior to implementation.
Counterfeit prevention manufacturing clause
This variation requires safeguards to prevent counterfeit components in production.
The [Manufacturer] shall implement quality control measures to ensure that all components and materials used in production are authentic and sourced from verified suppliers. The [Other Party] reserves the right to audit supply chain records to prevent counterfeit products.
Ethical sourcing manufacturing clause
This variation ensures that all materials used in production comply with ethical sourcing policies.
The [Manufacturer] shall source raw materials and components only from suppliers that adhere to fair trade, labor rights, and environmental protection standards. The [Other Party] may request verification of ethical sourcing compliance at any time.
Maintenance and calibration manufacturing clause
This variation requires the manufacturer to maintain production equipment properly.
The [Manufacturer] shall ensure that all production machinery and tools are regularly maintained and calibrated in accordance with industry standards. The [Other Party] reserves the right to request maintenance records upon request.
Product expiration and shelf-life manufacturing clause
This variation establishes expiration dates and shelf-life requirements for manufactured goods.
The [Manufacturer] shall ensure that all products have a minimum shelf life of [X] months from the date of production. Expired or near-expired products shall not be shipped to the [Other Party] without prior approval.
Prototype approval manufacturing clause
This variation requires prototype approval before mass production.
The [Manufacturer] shall submit a prototype of the product for approval by the [Other Party] before commencing full-scale production. Any modifications to the design or specifications must receive prior written consent.
Shipping and logistics manufacturing clause
This variation governs transportation and delivery obligations.
The [Manufacturer] shall be responsible for coordinating the shipment of finished goods to the designated location using approved carriers. The [Other Party] may require tracking and insurance for all shipments.
Temperature-controlled manufacturing clause
This variation applies to products requiring controlled production environments.
The [Manufacturer] shall ensure that all temperature-sensitive products are manufactured, stored, and transported under strict temperature control conditions. Records of temperature monitoring shall be maintained and provided upon request.
Production scalability manufacturing clause
This variation requires the manufacturer to adapt production capacity as needed.
The [Manufacturer] agrees to scale production capacity up or down based on the [Other Party]’s demand forecasts, with a lead time of [X] days for adjustments. Failure to meet scalability requirements may result in contract renegotiation.
Cost reduction and efficiency manufacturing clause
This variation encourages cost-saving initiatives.
The [Manufacturer] shall continuously seek ways to improve production efficiency and reduce costs without compromising quality. Any proposed changes must be submitted for approval to the [Other Party] before implementation.
Return-to-vendor (RTV) manufacturing clause
This variation establishes procedures for returning defective goods.
The [Other Party] may return defective or non-conforming goods to the [Manufacturer] under a Return-to-Vendor (RTV) policy. The [Manufacturer] shall be responsible for shipping costs, replacement, or refund of returned products.
Third-party testing and certification manufacturing clause
This variation requires independent testing for product safety and quality.
The [Manufacturer] shall submit products for third-party testing and certification as required by regulatory authorities. The [Other Party] reserves the right to request additional testing at its discretion.
Component traceability manufacturing clause
This variation mandates tracking of all components used in production.
The [Manufacturer] shall maintain full traceability of all raw materials and components used in the production process. Batch numbers and supplier details shall be recorded and made available to the [Other Party] upon request.
Recycling and sustainability manufacturing clause
This variation promotes sustainable production practices.
The [Manufacturer] shall implement recycling programs and minimize waste generation throughout the production process. Whenever possible, eco-friendly materials shall be used in manufacturing.
Local manufacturing preference clause
This variation prioritizes domestic manufacturing over overseas production.
The [Manufacturer] shall prioritize local manufacturing facilities over offshore production to reduce supply chain risks and ensure faster turnaround times. Any deviations from this requirement must be approved by the [Other Party].
Product serialization manufacturing clause
This variation requires the manufacturer to apply serial numbers to all products.
The [Manufacturer] shall assign unique serial numbers to all manufactured products for tracking and authentication purposes. The [Other Party] may request serialized product reports at any time.
Energy efficiency manufacturing clause
This variation requires compliance with energy efficiency standards.
The [Manufacturer] shall ensure that all production processes adhere to energy efficiency guidelines to minimize environmental impact. Compliance reports may be requested by the [Other Party] periodically.
Cybersecurity and data protection manufacturing clause
This variation governs the protection of digital manufacturing data.
The [Manufacturer] shall implement robust cybersecurity measures to protect sensitive production data and intellectual property. Any data breaches or cyber incidents must be reported to the [Other Party] within [X] hours.
Product testing liability manufacturing clause
This variation establishes liability for failed product testing.
The [Manufacturer] shall bear full responsibility for any testing failures resulting from manufacturing defects. If a product fails safety or compliance testing, the [Manufacturer] shall rectify defects at no additional cost to the [Other Party].
Government contract compliance manufacturing clause
This variation ensures compliance with government contract manufacturing requirements.
The [Manufacturer] shall adhere to all regulatory and legal requirements applicable to government contract manufacturing, including reporting obligations, cybersecurity standards, and ethical sourcing mandates.
Health and safety compliance manufacturing clause
This variation mandates compliance with workplace safety regulations.
The [Manufacturer] shall maintain a safe working environment and comply with all occupational health and safety laws. Failure to adhere to safety regulations may result in contract termination.
Joint development manufacturing clause
This variation governs co-development of new products.
The [Manufacturer] and the [Other Party] agree to collaborate on new product development. Ownership rights, intellectual property, and cost-sharing arrangements shall be defined in a separate joint development agreement.
Counterfeit prevention manufacturing clause
This variation requires anti-counterfeiting measures in production.
The [Manufacturer] shall implement anti-counterfeiting measures, such as holograms, security seals, or blockchain authentication, to prevent unauthorized replication of the product.
Risk-sharing manufacturing clause
This variation establishes shared financial responsibility for production risks.
The [Manufacturer] and the [Other Party] shall share financial responsibility for unforeseen risks in the production process. Any cost overruns due to regulatory changes or supply chain disruptions shall be negotiated in good faith.
Automated production manufacturing clause
This variation ensures the manufacturer uses automation to improve efficiency and consistency.
The [Manufacturer] shall implement automated production systems where feasible to maintain consistency, reduce human error, and enhance efficiency. The [Other Party] may audit automation processes to ensure compliance with agreed-upon production standards.
Intellectual property ownership in tooling manufacturing clause
This variation clarifies ownership of tooling and molds used in production.
Any molds, dies, or tooling developed specifically for the production of the [Product] shall remain the property of the [Other Party], regardless of whether they are housed at the [Manufacturer]’s facility. The [Manufacturer] shall not use such tooling for any third party without written approval.
Regulatory reporting manufacturing clause
This variation requires the manufacturer to report on regulatory compliance.
The [Manufacturer] shall provide periodic reports to the [Other Party] documenting compliance with all applicable industry regulations, safety requirements, and environmental laws. Failure to submit required reports may result in penalties or termination.
Multi-source component approval manufacturing clause
This variation ensures that alternative suppliers are pre-approved.
The [Manufacturer] shall source critical components from pre-approved suppliers listed in Schedule [X]. If a listed supplier is unavailable, the [Manufacturer] shall seek written approval from the [Other Party] before using an alternative supplier.
Intellectual property licensing manufacturing clause
This variation defines IP usage rights for production.
The [Other Party] grants the [Manufacturer] a limited, non-exclusive license to use its trademarks, patents, and designs solely for the purpose of fulfilling this Agreement. The license shall automatically terminate upon expiration or termination of this Agreement.
Batch expiration tracking manufacturing clause
This variation requires monitoring and tracking of batch expiration dates.
The [Manufacturer] shall implement batch tracking measures to monitor product expiration dates and ensure compliance with regulatory requirements. Expired or near-expired products shall be quarantined and reported to the [Other Party] immediately.
Surplus inventory management manufacturing clause
This variation establishes rules for handling excess inventory.
The [Manufacturer] shall notify the [Other Party] of any surplus inventory exceeding [X]% of the agreed forecast. The parties shall mutually determine whether the excess inventory is to be stored, repurposed, or disposed of.
Independent third-party quality inspection manufacturing clause
This variation requires inspections from a third-party quality control provider.
The [Other Party] reserves the right to engage independent third-party inspectors to assess product quality at the [Manufacturer]’s facility. The [Manufacturer] shall cooperate fully with such inspections and provide access to relevant production records.
Export compliance manufacturing clause
This variation ensures that products comply with export regulations.
The [Manufacturer] shall comply with all applicable export control laws, trade sanctions, and customs regulations when producing and shipping goods. The [Other Party] may request export documentation to verify compliance.
Contract renewal based on performance manufacturing clause
This variation ties contract renewals to performance metrics.
The renewal of this Agreement shall be contingent upon the [Manufacturer] meeting key performance indicators (KPIs), including on-time delivery, defect rate, and compliance with quality standards. The [Other Party] shall review performance annually before renewal.
Obsolescence management manufacturing clause
This variation requires planning for discontinued components or materials.
The [Manufacturer] shall notify the [Other Party] at least [X] months in advance if any component or raw material used in production is being discontinued. The parties shall work together to identify suitable replacements.
Insurance and liability coverage manufacturing clause
This variation requires the manufacturer to carry insurance for liabilities.
The [Manufacturer] shall maintain adequate insurance coverage, including product liability insurance, worker’s compensation, and general business insurance. Proof of insurance shall be provided to the [Other Party] upon request.
End-of-life product phase-out manufacturing clause
This variation establishes procedures for discontinuing a product.
The [Manufacturer] shall provide the [Other Party] with a written notice of at least [X] months before ceasing production of any product. The parties shall coordinate a phase-out plan, including final order fulfillment and disposal of remaining inventory.
Emergency production ramp-up manufacturing clause
This variation allows for rapid production increases during emergencies.
The [Manufacturer] shall maintain the capacity to increase production by up to [X]% within [Y] days if required due to supply chain disruptions, market demand, or emergency events.
Secure supply chain manufacturing clause
This variation mandates secure handling of materials and products to prevent fraud or theft.
The [Manufacturer] shall implement security measures to prevent unauthorized access, counterfeiting, or theft of materials and finished products. Security audits may be conducted by the [Other Party] as needed.
Sustainable sourcing manufacturing clause
This variation ensures materials are sustainably sourced.
The [Manufacturer] shall source raw materials and components from suppliers that comply with sustainable practices, including reducing carbon footprint, ethical labor policies, and responsible waste management.
Flexible production scheduling manufacturing clause
This variation allows for adjustments to production schedules.
The [Manufacturer] agrees to accommodate changes in production schedules due to shifts in demand, provided that the [Other Party] provides at least [X] days’ notice before requesting schedule adjustments.
Dual-manufacturer sourcing manufacturing clause
This variation allows the [Other Party] to use multiple manufacturers.
The [Other Party] reserves the right to engage additional manufacturers to mitigate supply chain risks. The [Manufacturer] shall collaborate with other approved manufacturers as needed to ensure seamless production continuity.
Cost-plus pricing manufacturing clause
This variation sets pricing based on production costs plus a fixed margin.
The price of goods manufactured under this Agreement shall be calculated using a cost-plus model, where the [Manufacturer]’s documented costs plus a margin of [X]% shall determine final pricing.
Technical documentation and process transparency manufacturing clause
This variation requires full documentation of production processes.
The [Manufacturer] shall maintain and provide detailed technical documentation, including process workflows, machine settings, and material specifications, to the [Other Party] upon request.
Conflict minerals compliance manufacturing clause
This variation ensures that no conflict minerals are used in production.
The [Manufacturer] shall certify that no conflict minerals, including tin, tungsten, tantalum, or gold sourced from conflict-affected regions, are used in production. Compliance documentation may be requested periodically.
AI-assisted production manufacturing clause
This variation allows AI-driven process improvements.
The [Manufacturer] may integrate AI-assisted production technologies to optimize quality control, reduce waste, and enhance efficiency. The [Other Party] shall have access to AI-generated performance reports.
Employee training and certification manufacturing clause
This variation requires trained personnel to handle production.
The [Manufacturer] shall ensure that all personnel involved in production are properly trained and certified in accordance with industry standards. Training records shall be maintained and provided upon request.
Zero-defect manufacturing goal clause
This variation sets a high standard for defect-free production.
The [Manufacturer] commits to a zero-defect manufacturing standard. Continuous improvement initiatives shall be implemented to identify and eliminate potential sources of defects.
Vendor-managed inventory manufacturing clause
This variation allows the manufacturer to manage inventory levels.
The [Manufacturer] shall be responsible for maintaining an optimal inventory level of raw materials and finished goods. The [Other Party] may provide periodic usage forecasts to assist in inventory planning.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.