Most sourcing problems that surface nine months into a relationship were decided in the first two weeks — not by the price, but by what was left unwritten. This page lists the terms worth settling before a deposit, in the order they tend to cause trouble.
The purpose is not to replace legal review. It is to make sure your lawyer is reviewing a document that covers the right subjects, and that the commercial conversation has happened before the contract drafts it.
The specification should be an annex to the agreement, not a paragraph inside it, and it should be versioned. That single structural decision prevents the most common dispute in manufacturing: two parties working from different versions of the same formula.
A workable specification annex states the actives and their levels per serving, the dosage form and unit weight, packaging materials and dimensions, labelling responsibilities, storage conditions, and the shelf life being claimed. Each of those becomes a defined deliverable rather than an expectation.
Who owns the formula is the question buyers most often discover they never answered. There are three common arrangements and they are not equivalent.
An existing formula supplied from the manufacturer's range is normally owned by the manufacturer, and the brand licenses use of it. A customised version of that formula sits in between and is where ambiguity lives: the base may remain the manufacturer's while the adaption is yours, or vice versa. A bespoke development commissioned and paid for by the brand is usually expected to transfer to the brand, and that transfer should be explicit — including the right to have it produced elsewhere.
Adjacent questions belong in the same clause: exclusivity (can this exact formula be sold to a competitor, and for how long), ownership of artwork and packaging tooling, confidentiality in both directions, and what happens to the formula at the end of the relationship. If you intend to switch manufacturers at some point, the answer to that last question determines whether switching is possible at all.
| Term | What to settle in writing |
|---|---|
| Price and validity | The unit price, the volume it applies to, and what event triggers a re-quotation |
| Payment structure | Deposit, balance and what milestone releases each payment |
| Lead time | Whether the clock starts at order, deposit or artwork approval — and a definition of force majeure |
| Order mechanics | Forecast versus firm order, and how far ahead the manufacturer needs volume visibility |
| Currency and Incoterms | The currency of the contract and the trade term, defined by reference to the current published rules |
| Price review | What raw material movement justifies discussion, and how it is evidenced |
An agreement that defines a product but not its acceptance criteria leaves the buyer with no mechanism to reject a bad batch. Four points close that gap. The acceptance criteria should be the specification annex, not a general promise of quality. Sampling and testing responsibility should be stated — who tests, at which stage, and at whose cost.
The right to reject and the remedy should be explicit: replacement, credit, or refund, and the timeframe within which a complaint is valid. And documentation should be a contractual deliverable rather than a favour — the certificates, test reports and batch records you will need for your own market compliance obligations.
Regulatory responsibility is usually split, and the split should be written down. The manufacturer is typically responsible for producing to specification and for the documentation it issues; the brand is responsible for the market-specific labelling and for claims. Where those two overlap — and they do, in labelling — the agreement should say who approves the final artwork.
Recall responsibility is the clause buyers most often read last and need most. It should cover who decides, who notifies, who bears cost in each scenario, and what records the manufacturer will retain and for how long, because a recall without batch traceability is not manageable.
A relationship that ends well is worth planning for at the start. The clause should cover notice periods, obligations on outstanding orders, the transition of tooling or artwork, and — if the formula is yours — the practical handover of the specification and the manufacturing parameters needed to reproduce it.
Ownership arrangements vary by case: some products are supplied from the manufacturer's existing range, some are adaptations, and some are developed specifically for the buyer. The distinction belongs in writing, and it determines what you can do later.
It is worth asking for and understanding the price of. Exclusivity on a specific formulation is one thing; exclusivity on a whole category is a commercial commitment that both parties should price deliberately.
Function, format, actives at target levels, serving size, packaging concept, target volume, destination market and any regulatory constraint you already know about.
More guides in this group:
Browse all guides and products
Preparing to place a first order? Shandong Guihe Pet Food Co., Ltd. manufactures pet supplements and pet food in Yishui County, Linyi, Shandong, with a 12,000 m² plant and 30,000 tons of annual capacity. See our OEM & ODM services, read how MOQ and sampling work, or see who owns the formula.