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Manufacturing Agreements

Do You Need A Manufacturing Agreement Lawyer in California?

When a customer approaches a manufacturer of commercial goods to produce a product the two parties will likely enter into a written manufacturing agreement.  By spelling out the responsibilities of the manufacturer and the customer, the written manufacturing agreement protects both parties from potential legal problems that may arise out of their relationship.  

Areas of particular importance to manufacturing agreements include:

  • Product Specifications: One of the biggest problems customers face in dealing with a manufacturer of goods is receiving goods which they believe do not conform to the customer’s specifications.  Each manufacturing agreement should contain a lengthy attachment that describes the exact specifications of the products by providing drawings, measurements, and detailed description of the materials to be used.           

 

  • Delivery:  Timing and costs of delivery are important and must be clearly spelled out.  Depending on the written agreement the manufacturer may have the duty to deliver the goods to the customer’s location, to a nearby port, or only to its factory loading dock.  All of these methods of delivery can be satisfactory to the parties as long as they are outlined and the customer is ready to receive the goods at a particular time and location.

 

  • Warranties:  By complying with the product specifications, the manufacturer provides the customer with assurances that the products will be produced as requested.  However, the manufacturer can also extend a further warranty that the product will function as intended for some period of time after production.  A warranty guaranteeing the function of the product can be very important to the customer especially when the item being manufactured is complex.  In complex items it may be difficult to determine whether a design defect (customer’s responsibility) or a manufacturing defect (manufacturer’s responsibility) is at the root of the problem.  The broader the warranty the more responsibility the manufacturer is taking upon itself to assure the proper working of the product.

 

  • Loss:  The parties must also agree on who bears the risk of loss for the goods at different times during the manufacturing and delivery process.  Typically the party who has control of the goods bears the risk of loss but the obligations must be stated so that each party can insure against potential loss.

 

  • Infringement of Intellectual Property Rights:  Anytime a product is manufactured, there is a risk of patent or copyright infringement suit by a third party.  Typically the customer must warrant to the manufacturer that the customer is not violating any third-party intellectual property rights by having the product manufactured.  Often the customer also agrees to “indemnify” the manufacturer in case of third-party intellectual property law suits meaning that the customer promises to defend the manufacturer and cover any expenses as well as judgments resulting from such suits.

 

  • Governing Law:  Each country, and sometimes each state, has different laws governing the interpretation of contracts, and therefore it is important that the parties agree on which laws should govern any dispute.

 

  • Venue:  Sometimes parties agree in advance the place the venue which is the place where any lawsuit between the customer and the manufacturer arising out of the manufacturing contract must be filed.  Venue usually benefits one of the parties by having the lawsuit resolved in its own “back yard”.  Parties often insist on having venue close to its headquarters, or persons who have knowledge about the transaction, so that litigation takes place in a familiar, predictable, and convenient place.    

 

There are other contractual issues that are common to all contracts.

Manufacturing Agreement Attorney in California / Bay Area

Please contact the firm’s California Bay Area / San Francisco attorneys for a free consultation by calling 415-637-8483 or by submitting to our website form on the right hand side of your screen. 

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