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INDEX

PartiesPreambleClauses

1. Appointment 2. Orders 3. Obligations of the Manufacturer4. Inspection & testing5. Delivery terms6. Rejection of products7. Warranty and indemnity8. Prices and payment terms9. Variations of products10. Intellectual Property11. Confidentiality12. Termination13. Subcontracting14. Force Majeure15. Resolution of disagreement16. Applicable law and competent jurisdiction17. Language

SignaturesAnnexes

This contract is used when one company arranges for another company in a different country to manufacture its products; in other words, international subcontracting. The company which subcontracts the manufacturing is usually based in a developed country, and the manufacturer in a developing country

The company provides the manufacturer with all the specifications, and possibly also the materials necessary for the manufacturing process. Similarly, the rights to industrial property (patents, trademarks, industrial designs and utility models, etc.) which are to be used for manufacturing the products, are conferred to the manufacturer for the term of the contract.

The contract establishes the requirements which the manufacturer must satisfy concerning the quality of the products, certification, quantities, conditions and dates of delivery, etc. Clauses regarding the inspection and testing of the products are also established by the company which contracts out the manufacture, or by its own clients; modifications to orders, as well as guarantees and compensation in case of breach of contract.

The model may be used for the contracting of products such as food, textiles and clothing, furniture, toys, electronics, components, machinery, etc.

Nº of pages: 8 + 3 (User Guide)Format: WordLanguage: English

MODEL OFINTERNATIONAL MANUFACTURING CONTRACT

INTERNATIONAL MANUFACTURING CONTRACT

Date: ...............................................................................................................................................

Between:

................................. [company legal name] whose registered office is at .................................................................... [address, city and country] and registration/fiscal number is .............................., represented by ............................................................. [surname and first name, position] (hereinafter referred to as “the Company”),

and:

................................. [company legal name] whose registered office is at .................................................................... [address, city and country] and registration/fiscal number is ............................., represented by ............................................................. [surname and first name, position] (hereinafter referred to as “the Manufacturer”).

Preamble [Parties may include a preamble explaining the activities of each and describing the history of their relationship, if for example the Contract continues a prior relationship].

.........................................................................................................................................................

.........................................................................................................................................................

It is agreed as follows:

1. APPOINTMENT

1.1 The Company appoints the Manufacturer to manufacture the products.

1.2 The Manufacturer agrees to manufacture all products describe in Annex 1 of this contract in accordance with orders issued by the Company and to supply the products as set out in this Contract.

1.3 This Contract shall commence on the date written above and continue for an initial period of ……… [6 or 12] months. It shall then continue for further consecutive periods of ……… [6 or 12] months until terminated by the Company at any time on one month’s written notice to expire at the end of the initial or any subsequent period of …… [6 or 12] months.

1.4 The Manufacturer acknowledges that this appointment is non-exclusive and The Company is free to appoint other manufacturers, in the Manufacturer´s country or in other countries, to manufacture products on its behalf.

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2. ORDERS

2.1 Each order for products shall be in writing and shall contain a detailed specification to enable the Manufacturer to fulfil the order including any special requirements and the date for delivery of the completed Products.

2.2 Unless otherwise agreed in writing when an order is placed, the terms and conditions in this contract will apply to it.

2.3 The Manufacturer will promptly confirm in writing receipt of each order and confirm to the Company the delivery date of products based on the information provided by the Company. Any discrepancy or omission in the information supplied by the Company must be notified by the Manufacturer to the Company within …… [3, 5, 7] working days of the date of each order.

2.4 The Company may but is not obliged to give the Manufacturer a forward estimate of requirements for products in advance of placing specific orders and will notify any changes in its estimates.

3. OBLIGATIONS OF THE MANUFACTURER

3.1 The Manufacturer shall manufacture and deliver all products so as to meet the requirements of all orders.

3.2 Every order for products must be completed ready for delivery within ……. [3, 5, 10] weeks from the date of the order unless otherwise specified in the order or agreed in writing within …… [3, 5, 7] working days of the order being received by the Manufacturer.

3.3 All products must:

3.3.1 Fully comply with the order and with any specification, samples or patterns comprised in the order.

3.3.2 Be of high quality, comprise only suitable materials and be fit for the purposes for which they are supplied.

3.3.3 Comply with all applicable laws, regulations and standards including but not limited to fire, health and safety regulations.

3.4 The Manufacturer shall for the duration of this contract maintain adequate product liability insurance in respect of all products and against loss or damage of materials and products at his factory or when in transit. Whenever reasonably requested he will provide a copy of his insurance policy and evidence that the insurances remain in effect and premiums are paid up to date.

4. INSPECTION AND TESTING

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Company shall be given access to The Manufacturer’s works during ordinary working hours [8 am. to 6 pm.] on any working day, on ……[1, 2, 3, 5] working days notice to enable it to inspect and attend tests of the products during manufacture. Inspection will not constitute acceptance of any products by the Company. The Manufacturer will also allow access to customers or prospective customers of the Company upon reasonable written notice being given.

5. DELIVERY TERMS

5.1 All products shall be delivered in accordance with the details specified in the order. When the delivery address is not known by the Company at the date of the order, or is changed, relevant details will be supplied to the Manufacturer as soon as reasonably practicable.

5.2 The Manufacturer will ensure that all products are inspected before dispatch and that they are adequately and safely packaged so as to avoid any damage or loss in transit. A detailed packing list will accompany every delivery of products. Reasonable advance notice of every delivery shall be given in writing by the Manufacturer to the Company. The Manufacturer remains responsible for all products until they are delivered to the delivery address and signed for by The Company or its customer.

5.3 Delivery shall not constitute acceptance of any defect in any products or relieve The Manufacturer of any of its obligations under this contract.

6. REJECTION OF PRODUCTS

6.1 The company may reject any products which are not in accordance with the order and the terms set out in this contract by giving written notice specifying its reasons within ……..[3, 5, 7, 10] working days of delivery.

6.2 Company may cancel the order with respect to rejected products or, at its option, require Manufacturer to replace any rejected Products to Company’s reasonable satisfaction. Failure to replace within …… [10, 20, 30, 60] working days shall entitle the Company to cancel the order for the rejected products and recover its costs and losses from Manufacturer under the terms of the indemnity set out at Clause 7 of this contract.

7. WARRANTY AND INDEMNITY

7.1 The Manufacturer shall promptly at Company’s written request replace or repair, to Company’s reasonable satisfaction, all products in which any defect appears within …… [10, 20, 30, 60] working days from delivery. Any replacement or repair work shall be guaranteed by the Manufacturer for a further ……. [6, 12 ] months.

7.2 The Manufacturer will keep the Company fully indemnified against any loss or damage, including all reasonable legal costs and expenses, whether direct, indirect, or those peculiar to Company’s particular circumstances, suffered by the Company, including any claims made against the Company by a third party for reasons attributable to any defect in product or breach of any of the terms of this contract by the Manufacturer.

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8. PRICES AND PAYMENT TERMS

8.1 The prices payable by the Company for products under this contract shall be agreed in writing between the Parties annually or at other agreed intervals. The EXW (Ex Works) prices for products at the date of this contract are set out in Annex 2. These prices are exclusive of VAT which will be payable in accordance with the Tax Laws in the countries where the Company and the Manufacturer are based.

8.2 The prices include packing of all products. Transportation of each Product to the destination established by Company will be the responsibility of Manufacturer and the reasonable costs will be reimbursed by Company against copies of invoices or other evidence of payment as required by Company.

8.3 The Manufacturer shall submit invoices upon delivery of products and, unless otherwise agreed in writing, all products shall be paid for within …… [30, 60, 90] working days of the invoice date.

9. VARIATIONS OF PRODUCTS

9.1 The Company may request The Manufacturer to vary any particulars in an order by written notice (a “Variation Notice”). The Manufacturer shall within …… [3, 5, 7, 10] working days of receipt of a Variation Notice provide the Company with a written estimate of the cost of complying with the notice and the effect, if any, which the request is likely to have on the delivery date.

9.2 The Manufacturer shall use its best endeavours to minimise any adverse time and cost implications when complying with a Variation Notice.

9.3 The Company may, within ……. [3, 5, 7, 10] working days of receipt of Manufacturer’s estimate, withdraw the Variation Notice or accept Manufacturer’s variation estimate.

10. INTELLECTUAL PROPERTY

10.1 The Manufacturer acknowledges that all designs, specifications, trademarks, copyright, patents, know-how and other intellectual property rights in the products, (together referred to as “IP Rights”) are the property of The Company and The Manufacturer shall not acquire any rights or benefit in Company’s IP Rights under this contract, except a licence to use the IP Rights for the purpose of this contract while it remains in force.

10.2 The Manufacturer shall not either during this contract or at any time after its termination use or permit the use of any of the designs or specifications or other IP Rights of the Company for the manufacture of any products for any third party.

10.3 The Manufacturer shall keep the Company fully indemnified against all costs (including all legal costs and expenses) claims and losses (whether direct, indirect, or those peculiar to Company’s particular circumstances) incurred or suffered by Company as a result of any breach of this Clause 10 by the Manufacturer.

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10.4 This Clause 10 shall survive the termination of this contract.

11. CONFIDENTIALITY

11.1 All information supplied by either party to the other and identified as confidential shall be kept strictly confidential by the recipient and shall not be disclosed to any third party without the other’s prior written consent. The Manufacturer shall take appropriate steps to ensure that its employees, subcontractors, agents and professional advisers are also bound by confidentiality undertakings in similar form with respect to the IP Rights and that confidential information is only provided to them as it is essential to enable them to perform their obligations of this Contract.

11.2 All confidential information and documents supplied to either party shall be returned promptly to the supplying party on termination of this Agreement. In particular, the Manufacturer undertakes to return all designs and specifications and other documents and data relating to the IP Rights in its possession and not to keep any copies, whether in paper copy or electronic format.

11.3 The obligations of confidentiality in this contract shall remain in force after expiry or termination of the contract, however, they will not apply to information which becomes public knowledge.

12. TERMINATION

12.1 Either Party may terminate this contract by written notice to the other at any time if the other Party:

12.1.1 Commits a breach of this contract and, in the case of a breach capable of remedy, it fails to remedy the breach within ……. [5, 7, 10] working days of being requested to do so in writing.

12.1.2 Becomes insolvent, enters into a composition with its creditors or has an administrative receiver or liquidator appointed.

12.2 Upon termination of the contract the Manufacturer shall:

12.2.1 Fulfil all outstanding orders from Company within ……. [30, 60, 90] working days.

12.2.2 When termination is due to the default of the Manufacturer, pay to Company an amount which will adequately compensate the Company for all losses suffered by the Company including (but not limited to) cancellation fees, overtime payments, increased administration costs and damages/compensation payable to Company’s customers.

12.3 Upon termination of the contract the Company shall pay all money then owing to the Manufacturer within …. [30, 60, 90] working days.

12.4 On termination of the contract, the Company shall be entitled (but not obliged) to purchase at cost price all stock of products held by the Manufacturer and all

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materials already ordered for the purpose of manufacturing products. The Company shall give Manufacturer written notice confirming its intention to purchase such stock and/or materials within …. [10, 20, 30] working days of termination.

13. SUBCONTRACTING

The Manufacturer shall not subcontract any of its obligations to any third Party without the prior written consent of the Company.

14. FORCE MAJEURE

Neither Party shall be liable for default on the obligations derived from the present contract, nor shall be bound to compensate for damages, when such default is caused by proven Force Majeure.

15. RESOLUTION OF DISAGREEMENT

Should any disagreement arise as to the present contract or during the course of activities of the Manufacturer, the Parties shall endeavour to reach amicable agreement. Should an amicable solution not be reached, the Parties may request that the matter be referred to persons of higher rank within their own organizations, with whom they shall meet at least once in order to analyze the disagreement and possible means of resolving it.

16. APPLICABLE LAW AND COMPETENT JURISDICTION

Both Parties, by mutual consent, resolve to refer any dispute to:

Alternative A. The appropriate legal proceedings in the .................... [Company or Manufacturer] country of origin and, where appropriate, to those of the local authorities where the headquarters are located, unless the ..................... [Company or Manufacturer] as plaintiff wishes to pursue legal proceedings within the jurisdiction of the other Party’s headquarters.

Alternative B. The Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with said Rules. The place of arbitration shall be ........... [city and country] and the proceedings shall be carried out in the ………… language.

17. LANGUAGE

The whole text of the present contract, as well as the documents derived from it, including those in the annex, have been written in:

Alternative A. English, and is therefore considered to be the only authentic text for all legal effects.

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Alternative B. …………… and English, both versions being deemed authentic, but for legal purposes the text in .......... is to be given priority of interpretation.

Both Parties declare their conformity to the present contract, which is signed in ...... copies, each of which shall be considered an original.

Signed by a duly authorized representative of the Company and of the Manufacturer.

Alternative A. At………….., the………………..

Alternative B. The Company, at ……………, the……………, and the Manufacturer at…………., the………………..

For and on behalf of the Company For and on behalf of the Manufacturer

________________________________ ________________________________Mr./Mrs. ............................................. Mr./Mrs. .................................................................................................[position] ................................................. [position]

© Global Marketing Strategies (ISBN 978-92570-77-5)

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ANNEX 1. DESCRIPTION OF PRODUCTS TO BE MANUFACTURED BY MANUFACTURER(CLAUSE 1)

Product Description

ANNEX 2. PRICE LIST OF PRODUCTS (APPLICABLE AT THE DATE OF THE CONTRACT)(CLAUSE 8)

Quantity discounts and transportation charges can also be included in this annex.

Product Price(EUR/USD)

Quantity discount

Transportation charges

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Contracts drafted by the legal experts of Global Negotiator cover all relevant aspects that are negotiated and agreed in the different types of business between companies. However, when these contracts are used you should take into account some recommendations common to all of them that are described in this User Guide. DATE

The date when the contract comes into force is the one that appears in its header, as mentioned in the final paragraphs of the contract, before signatures (This Contract comes into force on the date written above).

In some contracts -for example in the Supply Contract- the date of coming into force is also mentioned in one of the clauses. In these cases you have to verify that the two dates inserted in the contract (in the heading and in the corresponding clause) are the same, in order to avoid discrepancies.

PARTIES

Be sure to insert in the first page of the contract the full details of the Parties:

When a Party is a company you must insert the following information: legal name, legal form (limited, incorporated, etc.), full address, registration data and fiscal identification number.

When a Party is an individual that works as independent professional (for example a commercial agent) you must insert the following information: full name, profession, full address and fiscal identification number.

CLAUSES

Clauses with different alternatives: choose the most favorable

In the most important clauses of each contract (exclusivity, payment terms, applicable law and competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the most appropriate to each situation. Therefore, the user before submitting the contract to the other Party must choose the alternatives that seem best suited to their interests, and eliminate the rest. Clauses with blank spaces to be completed

In several clauses of the contract blank spaces appear with dots (.......................) that the user has to complete inserting text. Following the dots, between brackets, you will see the data and explanations to insert the text.

When the text between brackets is in normal letters (the same as the contract) and separated by "," or the word "o", the user must insert one of the options suggested.

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USER GUIDE

Example of blank space (........) with options to select between brackets:

Orders handled before completion of the present Contract which produce sales transactions within .......... [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission. In this case the user must choose between options 1, 2, 3 or 6 months and insert one in the blank space (........).

When the text between brackets is in italics the user has to insert the data and information requested and eliminate the bracketed text.

Example of blank space - (.........) to insert text:

Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with said Rules. The place of arbitration shall be ........... [city and country]. In this case the user must insert in the blank space (...........) the city and country chosen to conduct the arbitration and afterwards eliminate the bracketed text [city and country].

Notices Clause

Sometimes it may happen that the official address of the Parties which appear at the beginning of the contract is different from which is to be used for communications between the Parties during the terms of the contract. In this case the user should include at the end of the contract a Notices Clause.

Example of Notices Clause:

Notices. - In order to comply with their contractual obligations, the Parties establish the following address for the provision of notices related to this contract:

- Party 1 ............................................................. [insert full address].- Party 2 .............................................................. [insert full address].

ANNEXES

The contracts incorporate some Annexes, each of them, referenced to the corresponding Clause. Annexes are drafted in commonly used formats, although the user must adapt these formats and the text inserted in them to each particular situation.

SIGNATURES

People who sign

Persons signing the contract on behalf of the company must have the authority to do so and preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to the full name of the person that signs his/her position must be inserted. When one of the Parties who signs is a natural person (for example a commercial agent in a Agency Contract) obviously he or she is the person that has to sign the contract.

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The laws of some countries require that contracts, to be valid, shall be signed in front of witnesses or a public notary. Therefore, before signing a contract you should be informed about the requirements that may exist in each country.

Place and date of signature

Usually contracts are signed by both Parties on the same date and place. Nevertheless, in international contracts, due to physical distance, it is common that each of the Parties sign in different dates and places. This contract provides for both alternatives so it comes to choosing the most appropriate to each situation.

Number of copies

Usually, the Parties sign two copies of the contract, each Party retaining one of them, but cal also arise the need to sign more copies. In this case all you have to do is mention explicitly the number of copies to be signed in the paragraph that is included at the end of the contract (Both Parties declare their conformity to the present contract, which is signed in ...... copies, each of which shall be considered an original).

GENERAL RECOMMENDATIONS

The Parties must sign all pages of the contract, including Annexes, so they are also valid. It is better to use ball point or pen (not pencil) in a color other than black (e.g.: blue); this makes it easier to distinguish an original document from a photocopy.

It is preferable (although no mandatory) to express sums of money and percentages in words and figures. Of course, the words and figures for a given amount must match exactly. You also must insert the currency in which the amounts are expressed. It is advisable to use the rules establish by ISO that name each currency by three capital letters (EUR for euro, USD for dollar, GBP for sterling pound, JPY for Japanese yen, etc. - you can get the acronyms of every currency in the website www.oanda.com).

Once you have chosen the best alternatives of each clause and have completed the blank spaces you should revise the whole contract to remove remaining paragraphs and correct any errors.

LEGAL WARNING

Depending upon your particular situation this contract might not meet your needs and requirements. In case of doubt, you should consult a legal advisor. Global Marketing Strategies, S.L. as publisher and copyright holder of this contract disclaims all warranties, whether express or implied, respecting the legal content of this contract. For any claims arising out or in connection with the use of this contract, Global Marketing Strategies shall be limited to a refund of the purchase price.

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