--- title: "Manufacturing and Supply Agreements | Pitch" description: "What a manufacturing or supply agreement must settle: specifications, quality, liability, exclusivity and, above all, who owns the tooling, know-how and…" url: https://www.pitch.law/academy/manufacturing-supply-agreements --- [pitch](https://www.pitch.law/) [Academy](https://www.pitch.law/academy) [Commercial](https://www.pitch.law/academy/topics/commercial) # Manufacturing and Supply Agreements What a manufacturing or supply agreement must settle: specifications, quality, liability, exclusivity and, above all, who owns the tooling, know-how and improvements. - By By Bart Lieben, Attorney-at-Law - Published 26 October 2026 ## The legal framework A manufacturing agreement governs production that you outsource, usually to your specification. A supply agreement governs the purchase of goods on a continuing basis. Often one contract does both. Sale of goods between businesses is not harmonised by the EU: the legal basis is the national law of sale and contract law of the country whose law applies (chosen by the parties or, without a choice, under the Rome I Regulation). In cross-border supply between businesses in different contracting states, the UN Convention on Contracts for the International Sale of Goods (CISG) applies automatically unless the contract excludes it. Most, but not all, EU member states are parties to it. That exclusion should be a conscious decision, not an accident of a standard form. EU and national rules shape the key clauses. **Quality, acceptance and warranty.** The contract should say what the goods must comply with: specifications, standards, samples. It should set an inspection and acceptance procedure and a warranty period. Statutory warranties for hidden defects exist, but between businesses they can largely be limited or excluded by contract, within the limits of national rules on unfair terms and the general bar on excluding liability for intentional fault. Some member states have a B2B unfair-terms rule of their own; the EU unfair-terms directive protects consumers only. **Product liability and recall.** Whoever places a product on the EU market remains responsible for its safety. The new Product Liability Directive (EU) 2024/2853 has to be transposed by member states by 9 December 2026 and will cover software and digital elements as products. The agreement should allocate responsibility for recalls, cooperation and costs, and require suitable insurance. **Exclusivity and competition law.** Exclusive supply and non-compete clauses are common. Under the Vertical Block Exemption Regulation (EU) 2022/720, they are covered by the safe harbour if both parties' market shares stay below 30% and the clause is not a hardcore restriction. A non-compete obligation on the buyer is exempted for no more than five years, and not if it is tacitly renewable beyond that period. If the supplier is also a competitor, the analysis changes. **Late payment.** The EU Late Payment Directive (2011/7/EU), implemented in each member state, gives businesses statutory interest and a fixed recovery cost on late payment and limits how far payment periods can stretch. ## In practice ### The IP questions to answer in writing Five questions need explicit answers. Who owns the tooling and moulds? What happens to the know-how you transfer to the manufacturer during the relationship? May the manufacturer subcontract, and do the IP restrictions flow down to the subcontractor? Who owns improvements the manufacturer makes to the product or process? And what happens to all of this on termination? Leaving any of them to implication is where trouble starts. Paying for tooling does not automatically make you the owner of it, or of the design rights in it. Unless the contract says so, you may be unable to move production to another manufacturer without negotiating. Know-how is protected as a trade secret only if reasonable steps are taken to keep it secret, as the Trade Secrets Directive (EU) 2016/943 and the national laws that implement it require. Restrictions on use, access controls and return or destruction obligations are those steps. ### Keeping the agreement aligned with your rights An IP provision is only as good as the right behind it. If the agreement refers to your registered trademarks or designs, those registrations should be current and cover the relevant territories. A brand name applied by the manufacturer under a licence should be clearly licensed, with quality control, as discussed in [licensing agreements](https://www.pitch.law/academy/licensing-agreements). ### An example A furniture brand in Kortrijk has its new chair produced by a Polish workshop. The brand pays for the moulds, but the contract says nothing about them. When the workshop's prices rise, the brand wants to move to a Portuguese manufacturer. The workshop refuses to release the moulds and claims the improvements it made to the production process belong to it. A short clause on ownership and release of tooling, on improvements, and on stock and materials at termination would have avoided the standoff. ## Frequently asked questions ### Which IP provisions should a manufacturing agreement contain? Ownership of tooling, restrictions on transferred know-how, limits on subcontracting with flow-down of the IP restrictions, ownership of improvements, and return or destruction of materials on termination. ### Does paying for the tooling mean we own it? Not automatically. Unless the contract says so, payment may not transfer ownership of the tooling or of design rights in it. ### Can we require the manufacturer to supply only us? Yes, within limits. Exclusivity and non-compete clauses are generally acceptable if market shares are below the VBER thresholds and the non-compete does not exceed five years. ### Does the CISG apply to our supply contract? It applies to cross-border sales of goods between businesses in contracting states unless excluded, and it covers goods to be manufactured except where the buyer supplies a substantial part of the materials. Whether to exclude it is a choice to make deliberately. ## How this connects Manufacturing agreements are part of our [commercial contracts and transactions](https://www.pitch.law/solutions/commercial-contracts-transactions) work, and connect to [technology transfer agreements](https://www.pitch.law/academy/technology-transfer-agreements) where know-how is shared. We draft them with [our Document Studio](https://www.pitch.law/technologies/contract-studio), review counterparty drafts with [our contract review](https://www.pitch.law/technologies/clause-library-risk-review) and follow the commitments after signature with [the rights and obligations register](https://www.pitch.law/technologies/contract-obligations). For the broader context, see [Commercial Contracts: a Map](https://www.pitch.law/academy/commercial-contracts-overview). ## In short - Specifications, quality and acceptance - Tooling, know-how and improvements - Warranty, recall and product liability - Exclusivity and non-compete limits under EU law ## Related solutions - [Solutions](https://www.pitch.law/solutions/commercial-contracts-transactions) ### [Commercial Contracts & Transactions](https://www.pitch.law/solutions/commercial-contracts-transactions) [Supply, distribution, services, SaaS and procurement contracts, and the deals around them, drafted and reviewed with the IP, data and tax angles in view.](https://www.pitch.law/solutions/commercial-contracts-transactions) ## Technology we use - [Technology](https://www.pitch.law/technologies/contract-studio) ### [Document Studio](https://www.pitch.law/technologies/contract-studio) [Our Document Studio drafts and analyses legal documents in a secure, on-premise environment, and keeps the documents behind your matters up to date as new data comes in and procedural steps fall due.](https://www.pitch.law/technologies/contract-studio) - [Technology](https://www.pitch.law/technologies/clause-library-risk-review) ### [Contract Review](https://www.pitch.law/technologies/clause-library-risk-review) [Send us the contract the other side drafted and we check it clause by clause against our playbook, with a risk ranking an attorney has verified.](https://www.pitch.law/technologies/clause-library-risk-review) - [Technology](https://www.pitch.law/technologies/contract-obligations) ### [Contract Management: Rights and Obligations](https://www.pitch.law/technologies/contract-obligations) [Once a contract is final, we pull out each party's duties and rights with the clause they come from, have a person confirm them, and follow them with reminders.](https://www.pitch.law/technologies/contract-obligations) ## More in Commercial - ### [Commercial Contracts: a Map](https://www.pitch.law/academy/commercial-contracts-overview) [The main families of commercial contract, the EU and national rules that frame them, and where risk and value tend to sit.](https://www.pitch.law/academy/commercial-contracts-overview) - ### [Distribution and Reseller Agreements](https://www.pitch.law/academy/distribution-reseller-agreements) [How to structure distribution and reseller agreements in the EU: exclusivity, termination protection, online sales, and the brand provisions that keep control.](https://www.pitch.law/academy/distribution-reseller-agreements) - ### [Licensing Agreements](https://www.pitch.law/academy/licensing-agreements) [How to structure an IP licence: scope, royalties, improvements, quality control, termination, and the EU rules that frame it.](https://www.pitch.law/academy/licensing-agreements) - ### [Master Services Agreements and SOWs](https://www.pitch.law/academy/master-services-agreements-sow) [How a master services agreement and statements of work split the legal terms from the project detail, and how EU and national rules shape the key clauses.](https://www.pitch.law/academy/master-services-agreements-sow) - ### [Running an RFI or RFP](https://www.pitch.law/academy/rfi-rfp-procurement) [How to run a request for information or proposal so that confidentiality, IP and your contract terms are protected before you choose a vendor.](https://www.pitch.law/academy/rfi-rfp-procurement) - ### [SaaS Agreements](https://www.pitch.law/academy/saas-agreements) [Subscriptions, service levels, data ownership, liability and exit in SaaS contracts, with the GDPR, the Data Act and national contract rules.](https://www.pitch.law/academy/saas-agreements) ## Let’s talk Tell us what you’re working on. 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