Is this checklist a substitute for legal review?

No. This is a practical discussion checklist to help you prepare for a conversation with a lawyer, not legal advice, and it does not cover every clause a specific agreement may need.

Who typically owns the formulation in a contract manufacturing agreement?

It depends on who developed it and what the agreement states. If you supplied the formulation, ownership usually stays with you; if the manufacturer developed it, this needs to be explicitly agreed rather than assumed.

Should tooling ownership be decided before or after production starts?

Before. Agreeing who pays for and owns moulds or dies upfront avoids disputes later if you want to move the tooling to another manufacturer.

What should a price revision clause cover?

It should state how often price can be revised and what specifically triggers a revision, such as a defined movement in a key input cost, so neither side is surprised by a change.

Who usually bears the cost of a product recall?

This varies and should be explicitly agreed in the contract based on the likely cause, such as a manufacturing defect versus a formulation or labelling issue supplied by the brand. Discuss apportionment and any insurance requirements with your lawyer.

What should happen to unused stock if the agreement ends?

The termination clause should state how raw material, work-in-progress and finished stock are handled, including who pays for or absorbs any unused packaging material.

Manufacturing guide

Contract manufacturing agreement checklist

A contract manufacturing agreement should clearly cover scope and specifications, who owns the formulation and IP, quality and COA commitments, pricing and payment terms, tooling ownership, confidentiality, recall and liability handling, and how the relationship can end. This page is a practical discussion checklist for founders to bring to a lawyer and is not legal advice.

Scope and specifications

Vague scope language is the most common source of later disputes. Both sides should be able to point to one agreed specification document whenever there is a disagreement about what was promised.

Exact product description, formulation version and pack specification referenced by a controlled document, not just an email thread
Approved raw material sources and what happens if a source becomes unavailable
Tolerances for fill weight, colour, viscosity or other measurable attributes
Process for approving any change to formulation or packaging before it goes into production

IP and formulation ownership

Who owns the formulation if you supplied it versus if the manufacturer developed it for you
Whether the manufacturer can use your formulation, in part or whole, for any other client
Ownership of any improvements made during production (yield fixes, stability tweaks)
Rights to packaging design, mould and artwork files

Quality, COA and testing

Which certificate of analysis parameters are tested on every batch versus periodically
Who pays for third-party testing if a result is disputed
Retention period for samples and batch records
Process for handling a batch that fails internal specification

Clause-by-clause: what to agree and why it matters

Key clauses to discuss with your lawyer
Clause	What to agree	Why it matters
MOQ and pricing	MOQ per SKU, price per unit, and conditions that change either	Avoids disputes when order sizes or input costs shift
Price revision	How often price can be revised and what triggers it (e.g. input cost movement)	Protects both sides from being locked into stale pricing or surprise increases
Payment terms	Advance percentage, balance timing, currency and penalties for late payment	Keeps cash flow predictable for both parties
Tooling ownership	Who pays for and owns moulds, dies or custom tooling	Determines what happens to tooling if you move manufacturers
Confidentiality	What counts as confidential and how long obligations last after the agreement ends	Protects formulation and business information from disclosure
Recalls and liability	Who bears cost and responsibility if a batch needs to be recalled	Clarifies exposure before a problem occurs, not during one
Termination	Notice period, handling of work-in-progress stock and unused packaging	Prevents a messy, costly exit if the relationship ends
Dispute resolution	Preferred mechanism and location for resolving disagreements	Gives both sides a known process instead of an ad-hoc negotiation

Confidentiality beyond the formulation

Sales volumes, pricing and customer information shared during the relationship
Obligations that survive after the agreement ends, and for how long
Restrictions, if any, on the manufacturer making a similar product for a competing brand

Recalls, liability and what happens when something goes wrong

No brand plans for a recall, but the agreement is the only place to settle who pays for it before it happens. Discuss with your lawyer how liability is apportioned between a manufacturing defect, a formulation issue you supplied, and a labelling error, since each points to a different party.

Who initiates and coordinates a recall if one becomes necessary
How costs are split between manufacturer and brand depending on the cause
Insurance requirements on either or both sides

Termination and dispute resolution

None of the above is legal advice; treat it as a starting checklist to take into a conversation with a lawyer who can tailor the agreement to your category, state and specific manufacturer relationship.

Minimum notice period for either party to end the agreement
What happens to unused raw material, packaging and finished stock on termination
Agreed process for resolving disputes before escalating further

Frequently asked questions

Is this checklist a substitute for legal review?: No. This is a practical discussion checklist to help you prepare for a conversation with a lawyer, not legal advice, and it does not cover every clause a specific agreement may need.
Who typically owns the formulation in a contract manufacturing agreement?: It depends on who developed it and what the agreement states. If you supplied the formulation, ownership usually stays with you; if the manufacturer developed it, this needs to be explicitly agreed rather than assumed.
Should tooling ownership be decided before or after production starts?: Before. Agreeing who pays for and owns moulds or dies upfront avoids disputes later if you want to move the tooling to another manufacturer.
What should a price revision clause cover?: It should state how often price can be revised and what specifically triggers a revision, such as a defined movement in a key input cost, so neither side is surprised by a change.
Who usually bears the cost of a product recall?: This varies and should be explicitly agreed in the contract based on the likely cause, such as a manufacturing defect versus a formulation or labelling issue supplied by the brand. Discuss apportionment and any insurance requirements with your lawyer.
What should happen to unused stock if the agreement ends?: The termination clause should state how raw material, work-in-progress and finished stock are handled, including who pays for or absorbs any unused packaging material.

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