Your Manufacturing Agreement clearly outlines the obligations of both parties. If you are the manufacturer, you will be aiming to limit your obligations. If you are the customer, you will be seeking to ensure that your manufacturer agrees to a set of obligations that you feel comfortable with. When negotiating these agreements, it is important that they be realistic. This article will unpack the contents and functions of this clause in a Manufacturing Agreement.

Types of Obligations in Manufacturing Agreements

The manufacturer typically needs to meet the following requirements:

  • manufacture the goods in accordance with the specs the customer provides,
  • keep the goods safe and make sure that they are not damaged,
  • make sure the goods are ready on time, and
  • meet the order given by the customer.

If there are any issues with the goods, then the manufacturer should contact the customer and try to provide the most appropriate match to the goods that they ordered.

It is important your specifications are as clear and precise as possible. These specifications are the standard to which the manufacturers work will be held and to compare whether they did meet the specifications as required.

Product Safety and the Australian Consumer Law

Under the Australian Consumer Law, the manufacturer is obliged to ensure that the goods provided to the customer are of an acceptable quality and can be used safely (i.e. they are not defective). Failure to meet this requirement amounts to breaching a consumer guarantee and exposes manufacturers to customers taking action against them.

You cannot contract out of this obligation and so it is of paramount important that you seek any clarification about your responsibilities under this clause.

Customer Obligations

Customer obligations, although generally less onerous, will typically include:

  • the customer must work with the manufacturer and provide sufficient and correct specifications, and
  • the customer must pay for and collect the goods on time.

This clause will most likely set out who is responsible for dealing with customer complaints. It is prudent to include that as the customer, you should not be liable for the cost of repair and dealing with customer complaints unless otherwise required under Australian Consumer Law.

Indemnity and Liability

Critically, your Manufacturing Agreement will include clauses addressing Indemnity and Liability. If you are the customer, you should carefully read these provisions and understand to what extent the manufacturer will responsible for any issues with the product. For example, will they agree to adhere to Australian standards when manufacturing the product? The Agreement should also explicitly state when the customer is responsible and when the manufacturer is responsible for the product during the shipping process.

Conclusion

If you’re in need of legal advice in regards to drafting a Manufacturing Agreement or have questions about consumer law issues, contact LegalVision on 1300 544 755 and speak with one of our experienced solicitors.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Edith Moss
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy