Why is a Manufacturing Agreement Important?

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On this page

• Manufacturing Goods in Australia
• What is a Manufacturing Agreement?
• Conclusion

Many businesses in Australia base their commercial activity on selling goods. These goods could be anything from clothing to devices or machinery. Often businesses come up with the idea or design of the good, but they do not have the capital to manufacture the product on a wide scale. Not every business will have the resources to produce the goods they want to sell; these resources may include large machinery and the sourcing of materials. This is where manufacturers come into the picture with their Manufacturing Agreement.

Manufacturing Goods in Australia

There are various businesses in Australia and overseas who exist solely for the purpose of manufacturing the goods you want to sell. Although you can develop the prototype of the good on your own, using an external manufacturer is useful for bringing goods to the market at a much larger scale.

The search for a good manufacturer is an essential part of developing your business. The specifications of the good are provided by you and the manufacturer creates them based on these requirements. In some industries, it is common to provide moulds of what you want to manufacture, in other industries such as textiles, it is common to provide a pattern or design.

What is a Manufacturing Agreement?

The Manufacturing Agreement is the legal document used when a business is satisfied with the manufacturer and wishes to engage them to produce their goods. The Manufacturing Agreement should cover the entire process, from the specifics of the design and the material to be used, up to costs, payment and delivery.

A Manufacturing Agreement is important as it formalises the terms of the manufacturing process. It provides an overview of how you will engage the manufacturer and gives you a timeframe for when your goods will be created. It will also run through areas of the the manufacturing process you might not have thought of. The Manufacturing Agreement should answer questions such as:

• What happens if the manufacturer has sent me goods with defects?
• Who is responsible for damaged goods?
• Will the manufacturer be able to use my design and intellectual property for other purposes?
• What are the manufacturer’s responsibilities to me?

As a large portion of manufacturers are based overseas, the Manufacturing Agreement can provide you with added security. It can be used with manufacturers based in other countries so long as they are willing to sign an agreement that is governed by Australian law.

Conclusion

When it comes to getting your goods manufactured, the LegalVision team know how to help businesses protect their interests. Although using an external manufacturer is often the best commercial answer to getting your goods to the public, it is important to ensure they understand your requirements and that both parties are aware of their obligations. If you are about to consider using a manufacturer, our team of commercial lawyers can assist in guiding you through the process and drafting your Manufacturing Agreement.