Business

Your Absolute Guide to Contract Packing Agreements: What to Expect

If you are involved in manufacturing various products and are having trouble with your production line, whether it’s due to a lack of equipment, no access to advanced equipment, or simply because you don’t have the time to take care of your packaging requirements, the services of a contract packer may well come in handy. Contract packing services abound, but not all are equal – you have to choose your contract packing partner with a few key factors in mind so you can make a wise choice that will benefit you in both the short- and the long term.

But choosing a partner in contract packing is just one step, albeit an important one. What happens if you have already found an excellent prospective partner and their proposal looks reasonable? You will then have to review the agreement they draw up, and this is where it gets tricky as well. If you want to ensure that your agreement with your contract packing partner is ideal, here’s your definitive guide to contract packing agreements: what to expect.

 The basics of contract packing agreements

The agreement between you and your contract packing partner is a legal and binding contract, and this is why it’s crucial to make sure you choose the right contract packing company for all your requirements, whatever work or services you have discussed beforehand should be included in the contract, no matter how seemingly small.

Under the law, in most cases, you (as the manufacturer) will be responsible for whatever risks are related to your product/s, even if your contract packing partner played a role in enhancing a risk. Therefore, you still have to ensure that you have a water-tight contract that explicitly includes all the relevant details. Additionally, if you have a food or cosmetic product with a special blend or recipe, you may have to divulge this to your contract packer, which means that they may become aware of your ‘trade secrets.’ It, therefore, makes sense to come up with an agreement that covers this as well.

But regardless of what kind of product/s you have, some components are a standard across all agreements. Your contract packing contract, for instance, should have the following:

  • The complete names of all the relevant parties (the manufacturer – you, and the co-packer)
  • The agreement’s date
  • The specific period covered by the contract
  • A comprehensive summary of all you have discussed and agreed on
  • The details of the pricing
  • Who will be responsible for the materials’ conformance and acquisition
  • An exit clause
  • The product’s standard description
  • The names as well as signatures of those who are authorised to sign the contract. Note that just the signatures are not good enough – the names should be noted down as well.
  • The names and signatures of witnesses
  • Information on the process employed if you need to have ingredients changed, and who will change it. With this, you can make sure that you don’t face problems with allergens that are undeclared.
  • If the product/s need recall, who is responsible for it
  • A non-disclosure agreement (NDA) for your recipe/blend
  • The terms and conditions of your contract packer
  • Indemnification in case of sickness liabilities related to food products, recalls and misbranding, if appropriate.
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