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Below are a few key terms that may be clarified in such agreements.
Product and Pricing. Naturally, the agreement should include precise descriptions of the product, packaging and pricing, including design, specifications, materials, components, logos, and so forth. Such items are best described in addendums to the agreement, so they may be easily modified as needed. The agreement may also describe the process for making any price adjustments.
Quality and Inspections. The agreement should specify all governmental, environmental, industry, compatibility and customer quality requirements to be complied with, as well as required testing and certifications. It may permit quality audits by the customer (the customer may outsource that task if needed) and should clearly describe inspection rights and remedies for non-conforming products.
Forecasts and Volume. The manufacturer will want binding, rolling forecasts and a guaranteed minimum purchasing volume. The customer will typically provide only non-binding forecasts and will refuse to commit to a particular volume. Various compromises are possible.
Orders & Delivery. The agreement should describe placement and acceptance of orders, minimum order quantity, delivery terms, and respective rights and remedies concerning cancelation, modification or re-scheduling delivery of orders, all prime areas for potential disputes.
Intellectual Property. The agreement may … Read More