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Contract Manufacturing Agreements

<p>A well-crafted agreement executed between parties for the manufacture, supply and distribution of products can alleviate uncertainties and clarify the respective obligations of the parties.</p>

Believe it or not, some companies still conduct business without a formal written agreement, operating by the proverbial “handshake agreement" and a hodgepodge of purchase orders, emails and other communications, often leading to uncertainty and unwanted strife down the road. A well-crafted agreement executed between parties for the manufacture, supply and distribution of products can alleviate uncertainties and clarify the respective obligations of the parties.

In a written agreement, the key aspects of the relationship between the parties must be clearly addressed and, in some instances, more specifically defined to reduce any uncertainties and ambiguities. Ideally, agreements should address those questions that can be reasonably anticipated surrounding the rights and responsibilities of the parties. The identification of the responsibilities of the contracting parties for complying with applicable laws and regulations is another important aspect of any agreement.

The initial responsibilities each party has to perform or to each other may be clear due to the nature of the services provided, but the onus of those responsibilities can be shifted. Experience shows that the time to negotiate any indemnifications between the parties is when the contract is being negotiated and prepared instead of after things have fallen apart and the parties are trying to resolve a dispute.

To learn more about contract manufacturing agreements, download INSIDER’s Contract Manufacturing Digital Magazine.

Justin J. Prochnow is an attorney and shareholder in the Denver office of the international law firm of Greenberg Traurig LLP. His practice concentrates on legal issues affecting the food & beverage, dietary supplement and cosmetic industries. He can be reached at (303)572-6562 or prochnowjj@gtlaw.com and he can be followed on Twitter at @LawguyJP.

This article is issued for informational purposes only and is not intended to be construed or used as general legal advice. The opinions expressed are those of the author exclusively.

Editor’s Note: Justin Prochnow will be speaking in detail about contract manufacturing agreements during the Details Matter: Achieving a Successful Contract Manufacturing Partnership workshop at SupplySide West in Las Vegas on Sept. 29 at 8:30 a.m. Visit west.supplysideshow.com for more information, and to register to attend.

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