Contract Manufacturing Agreement (intra-group)
The Contract Manufacturing Agreement is a Swiss-law governed standard contract manufacturing agreement for use on an intra-group basis.
In a contract manufacturing arrangement, the manufacturer is usually responsible for procuring the production materials. Conversely, in a toll manufacturing arrangement, the principal procures and provides the raw materials to the manufacturer.
Under the Contract Manufacturing Agreement, the manufacturer is compensated on the basis of recovery of the fully-loaded costs of manufacture, plus a margin (user defined). The agreement assumes that as between the parties, the principal owns all intellectual property rights relating to the products and the manufacturing process.
The template includes, as standard, an allocation of risks between the parties that is consistent with that found in a typical contract manufacturing relationship, as well as an obligation on the principal to indemnify the manufacturer for any loss or damage arising out of the performance of the manufacturing activities.
Terms which are configurable to the user’s needs include:
- Purpose and background;
- Term and termination;
- The products to be manufactured and any specific requirements applicable to the manufacturing process;
- Budgeting, payment and reconciliation mechanisms;
- Purchase of production materials;
- Terms relating to delivery of products;
- Termination assistance;
- Sub-contracting and assignment rights;
- Provisions relating to notices;
- Dispute resolution, jurisdiction and arbitration; and
- Other boiler-plate provisions (e.g. confidentiality, force majeure).
Circumstances of Use
This document is intended to be used to document the provision of contract manufacturing services between group companies, for transfer pricing purposes.
The Contract Manufacturing Agreement may be used for cross-border transactions where the parties have agreed to use Swiss law.
The purchase of this Product is subject to PartnerVine Terms.
You (the registered user through whose account the purchase is made) may:
- Access the document-generation interview for 90 days from date of purchase;
- Export and download an unlimited number of copies of the document(s) in Word or pdf format;
- Share and use the document copies in connection with the circumstances described in this Author’s Note and only for the ordinary business purposes of the group of companies to which you belong.
Exclusions and Limitations
The Contract Manufacturing Agreement assumes that the allocation of risk between the parties is aligned with that in a typical contract manufacturing relationship, and that the manufacturer is compensated accordingly.
The key differences between a contract manufacturing relationship and a toll manufacturing relationship lie in the in the assumption of risks and responsibility for procuring raw materials. A Toll Manufacturing Agreement template is also available.
No warranty or representation is given or made that the allocation of functions and risk and the related transfer pricing arrangements provided for in this document are appropriate in the specific circumstances of any given group of companies. No legal or tax advice is provided and nothing in this template or the related user interview shall be deemed to constitute the provision of legal or tax advice in relation to any fact or matter. Where necessary, specialist legal and tax advice should be sought together with input from group accounting functions prior to executing this agreement.