The International Manufacturing Contracts is used in situations when one company appoints a manufacturer, usually based in emerging countries, to manufacture goods for it. In a typical arrangement, Company A gives Manufacturer B the specifications, and possibly also the materials necessary for the manufacturing process. Such agreements are entered into for the manufacture of pharmaceuticals, food and beverages, airplanes, industrial products, and high tech components.
The Manufacturer has experience and expertise in the design, engineering, and manufacture of goods and the Client. The manufacturer is willing to manufacture and supply such goods for the Client, on the terms of this contract.
Contract manufacturing offers a number of benefits–
Cost Savings: International Manufacturing Contracts are an effective tool for companies to save an incredible amount of money on their capital costs. Companies can directly benefit from low-cost labor wages in China.
Advanced Skills: Companies can take advantage of the skilled labors and expertise of the China contract manufacturing firm. At a very affordable rate, international companies can produce their products from skilled labors.
Quality: Contract Manufacturers are likely to have their own methods of quality control in place that help them to detect counterfeit or damaged materials early.
Focus: When companies sign International Manufacturing Contracts, the biggest advantage is they can concentrate on their core business rather than worrying about production.
The Model Contract for the International Sale of Goods is presented in two versions –
The Standard– It contains definitions of relevant notions, special comments, explanations, and/or warnings.
The Short One– It is more practice-oriented, covering the main rights and obligations of the Parties.
In the past, many CMs in China insisted on no product warranty. Today, more and more CMs are willing to offer product warranty against product defects for which the CMs are responsible—i.e., design defects for which the buyer is responsible are not covered. Find out if the contract manufacturer can dropship your product directly to customers everywhere or even to a specified geographic area. Some may handle individual shipments to customers, while others only deliver a large lot to a central warehouse where the hiring firm takes care of shipments.
International Law standards are not applied to this type of Agreement. The parties are free to submit any conflicts regarding the agreement to International Arbitration or to the Laws of the country of one of the parties.