Example: Manufacturing Contract

Product Manufacturing Agreement

Date 8 October 2568

Executed at Legend of Products Co., Ltd.

This Agreement is made on the day of....8...Month...October...B.E....2568.. Between Mr. XXXXX Surname XXXXX acting as the authorized representative of XXXXX Co., Ltd. Company Registration No. 0100000000000, located at 99/88 Nuan Chan Subdistrict, Bueng Kum District, Bangkok 10230

hereinafter referred to in this Agreement as the “Client,” of the one part, and Legend of Products Company, represented by Mr. XXXXX Surname XXXXX acting as its authorized representative, with its office located at 42/11 Moo 7, Chatuchot Road, Soi 20, O Ngoen Subdistrict, Sai Mai District, Bangkok 10220, hereinafter referred to as the “Contractor.” Both parties agree to enter into this Agreement under the following material terms:

Clause 1. The “Client” agrees to engage the “Contractor,” and the “Contractor” agrees to manufacture cosmetic products for the Client, hereinafter referred to in this Agreement as the “Goods.” The manufactured Goods shall be the exclusive property of the “Client,” and the Contractor shall deliver all Goods solely to the Client. Full ownership shall vest in the “Client” only upon payment for the Goods in accordance with this Agreement. Details of the Goods are set out in the attachments to this Agreement and/or the original quotation submitted to the Client for the manufacturing order, which shall form part of this Agreement.

Clause 2. For the first order, the “Client” agrees to pay the manufacturing fee as a deposit of 50% of the total value of the Goods commissioned from the Contractor. The remaining 50% shall be payable once the Contractor has delivered all Goods in the agreed quantities and under the agreed conditions, the Client has inspected and accepted the Goods as complying with all agreed conditions, and the Contractor has not breached any provision of this Agreement. Payment of the balance shall follow the agreed payment terms, under which the Contractor requires the balance to be paid upon delivery. For subsequent orders, the “Client” agrees to pay the Contractor a 50% deposit before production, by cheque, bank transfer, or cash, within 3 days of placing the order.

Clause 3. The Client may change, reduce, or increase production by giving the Contractor at least 30 days’ prior written notice. Regardless of the type of Goods affected by the change, the Client shall pay manufacturing fees of no less than the minimum rate specified in the terms. If production exceeds the quantity agreed in this Agreement, the Contractor shall charge for the actual quantity produced. If the Contractor encounters difficulties that prevent production, the Contractor may reduce or increase production by giving the Client 7 days’ prior notice. The Contractor shall refund any deposit or security payment arising from such cancellation of production to the Client within 3 days of notifying the Client of the cancellation. Any such action shall require the consent of both parties, the “Contractor” and the “Client.”

Clause 4. The Contractor shall manufacture the Goods for the Client to international standards and at the quality agreed, using the product samples supplied to the Client as the quality standard. If any loss arises from production in relation to the quality of the Goods supplied by the Contractor, the Client may conduct an inspection. The Client may inspect only to the extent necessary, and the inspection must not cause damage to the Contractor and must remain under the Contractor’s supervision throughout. If any Goods produced fail to meet the quality standards, the Contractor shall complete corrective work within 7 days or within the period agreed with the Client.

Clause 5.If the Client requires product samples, the Contractor shall produce and deliver samples to the Client for inspection before actual production. The Client must first approve the relevant samples in writing via LINE or another communication channel. The Client shall approve the samples within 10 days of receipt. If more than 10 days have passed since receipt of the samples and the Client still instructs the Contractor to proceed with production, the Client shall be deemed to have approved production in accordance with the samples previously supplied, without the need for written approval.

Clause 6.If the Client orders the packaging themselves, the Client shall supply the Contractor with sufficient packaging for the production quantity. If the packaging supplied is insufficient or deliveries are interrupted, or if inspection finds that the packaging is damaged and/or substandard, preventing the Contractor from producing Goods for delivery, the Contractor shall complete a quality inspection of the packaging within 5 days. The Contractor shall notify the Client in advance in writing via LINE or another communication channel within 3 days and obtain the Client’s prior approval. The time taken by the Client to consider approval shall be added to the production period. After completing the inspection, the Contractor may procure packaging from other parties as necessary to package the Goods for the Client. The Client shall bear all resulting costs and damages unconditionally.

Clause 7.“Except as provided in Clause 11,” the Contractor undertakes to keep confidential all information concerning the Client’s Goods, prices, and all other Client information relating to this production, and shall not disclose such information to any third party without the Client’s prior permission.

Clause 8.“Except as provided in Clause 11,” the Contractor agrees not to copy, imitate, and/or modify any part or all of the Client’s work and/or products, and/or counterfeit the Client’s products under any circumstances. This prohibition also extends to allowing others to perform such acts, whether or not the Contractor receives any benefit from them.

Clause 9.“Except as provided in Clause 11,” the manufacturing Contractor must not disclose any product information and/or confidential information belonging to the Client to others under any circumstances.

Clause 10.“Except as provided in Clause 11,”  the provisions of Clauses 7, 8, and 9 also apply to the Contractor’s employees and any persons involved in the Contractor’s manufacturing operations. The Contractor is responsible for ensuring that such persons comply with those provisions. The Contractor shall be liable for any damage arising from their breach of those provisions and must compensate for such damage without any conditions whatsoever, subject to the Contractor first conducting a fact-finding investigation. If the Contractor breaches those provisions, legal proceedings will be pursued without any settlement.

Clause 11. Any manufacturing formula developed by the Contractor for the Client shall remain the property of the Contractor unless the Client has purchased the formula from the Contractor. If there has been no contact or no production order for more than 12 months, the Contractor shall have the right to sell the formula or use it to manufacture products for third parties without any conditions whatsoever.

Clause 12The Contractor must immediately return all originals, product designs, documents, and other design materials to the Client upon completion of production and the Client’s inspection and acceptance of all work, and/or upon the Client’s request, and/or upon termination of the agreement for any reason. Any damaged or incomplete product designs must be destroyed in their entirety, with all destruction costs borne solely by the Contractor.

Clause 13.In the event of a breach of any provision of this agreement, the Client must notify the Contractor of the breach in writing and specify a period within which the Contractor must remedy it. If the Contractor fails to remedy the breach within the specified period, the Client may deduct an amount corresponding to the damage incurred from the fees payable to the Contractor under Clause 2. For any such deduction, the Client must substantiate the damages and provide the manufacturing Contractor with a written explanation. Any deduction from the fees payable to the Contractor due to a breach of any provision or damage incurred shall not prejudice the Client’s right to bring legal proceedings or claim damages exceeding the amount that can be deducted, or any other damages. The Contractor must also pay all remaining damages. The Client may terminate this agreement immediately if it considers the breach to be serious. Upon termination due to the Contractor’s fault, the Contractor must immediately refund the deposit, return all originals, product prototypes, models, and/or documents or other design materials to the Client, and pay all damages in full.

Clause 14.If an issue arises involving prohibited substances that are harmful to consumers’ health, the Contractor shall consider the Client’s intent as the primary factor.

Clause 15.The manufacturing Contractor must check with the Thai Food and Drug Administration (FDA) whether the products fall within a category requiring authorization and promptly notify the Client in writing, via LINE, or through another communication channel. If the products require authorization from the Thai Food and Drug Administration (FDA), the Contractor must complete the authorization process on the Client’s behalf as quickly as possible, with all expenses borne by the Client.

Clause 16.If the Client defaults on any installment payment for the goods, the Contractor may suspend production and/or delivery of the goods until the Client has paid the full amount due.

Clause 17.If the Client fails to pay the Contractor for the goods after more than 3 payment demands or notices, the Client must pay the Contractor default interest at a rate of 5 percent of the outstanding amount. The Client shall be deemed in default from the date on which the Contractor delivered the goods to the Client. In addition, the Client agrees that the Contractor may revise the credit period and payment method for the goods and/or terminate this agreement. This shall not prejudice the Contractor's right to claim damages for goods already manufactured but not delivered under Clause 16. and/or any other damages arising from the Client's breach of this agreement.

Clause 18.If an epidemic or other disaster constitutes a force majeure event through no fault of the Contractor, and the government and/or an authority with direct jurisdiction orders the factory to suspend operations or close, preventing production from being completed within the specified period, the Contractor shall notify the Client in writing via LINE or another communication channel within 3 days of the order or force majeure event, to request a postponement of delivery due to the force majeure circumstances described in the notice.

Clause 19.In this special case, the parties enter into a commercial cooperation agreement to develop a special formula exclusively for the Client.

Accordingly, the Client has paid a deposit in the amount of 23,540.00 baht (50%)

(...twenty-three thousand five hundred and forty baht only...)

out of the total amount of 47,080.00 baht as specified in the quotation No. QN20251000001

This agreement is executed in 2 copies with identical content. Both parties have read and fully understood the agreement and confirm that it accurately reflects their intentions. In witness thereof, they have signed below in the presence of witnesses.