Reviewing a manufacturing agreement with an overseas factory

A manufacturing agreement with a factory in another country has to work at a distance and across two legal systems: the specification the factory must meet, the inspection the buyer can carry out, the point at which risk passes on the journey, who owns the tooling and the designs, and what the buyer can do when a shipment arrives wrong. The agreement needs to cover all of it. I review the agreement from the buyer's side and return it marked up with a written explanation of the changes and the ones a factory will accept, for a fixed fee of £895 in five working days.

Who this is for

Brands, product businesses and importers in England and Wales that have products made to their design by a factory in China, Turkey, India, Portugal, Vietnam or elsewhere, and want the agreement to protect the specification, the tooling and the intellectual property, and to work when a shipment fails. The buyer and the factory are businesses; consumer law matters because the buyer will be the importer and the producer for the products it sells.

What to look for in an overseas manufacturing agreement

Specification, samples, inspection and rejection

The agreement should attach the specification and the approved pre-production sample, require the factory to produce to both, and give the buyer a right to inspect before shipment and on arrival. Under section 34 of the Sale of Goods Act 1979 a buyer has a reasonable opportunity to examine goods before acceptance, and under section 35 it can lose the right to reject by acting inconsistently with the seller's ownership, so the review asks for a defined inspection period after arrival, a rejection procedure, and the factory's obligation to replace or credit rejected goods and pay return freight.

Delivery terms, risk and title

The agreement should state the Incoterm that governs delivery, because it decides where risk passes and who pays freight, insurance and duty. Under section 32 of the Sale of Goods Act 1979 delivery to a carrier is treated as delivery to the buyer unless the contract says otherwise, and under section 20 risk passes with property unless agreed, so a buyer paying a deposit before shipment needs title to pass on payment and risk to stay with the factory until the agreed delivery point. The review checks the Incoterm, the insurance obligation and the point at which the buyer's inspection rights arise.

Tooling, moulds, designs and the factory's use of them

Tooling paid for by the buyer should belong to the buyer, be marked as such, be insured by the factory, and be returned on termination. Under section 17 of the Sale of Goods Act 1979 property in the tooling passes when the parties intend, so the agreement should say it passes on payment. The buyer's designs are protected in the UK by copyright under section 11 of the Copyright, Designs and Patents Act 1988 and by unregistered design right under section 213 or registration under the Registered Designs Act 1949, but those rights do not run in the factory's country, so the agreement needs an express prohibition on the factory making the product for anyone else, selling overruns or seconds, or using the buyer's marks, which under section 28 of the Trade Marks Act 1994 it may use only under a written licence.

Product safety, importer liability and the supply chain

The UK buyer that imports the products is the producer for the purposes of Part I of the Consumer Protection Act 1987, with strict liability for damage caused by a defective product, and the producer under the General Product Safety Regulations 2005, responsible for safe products and for recalls. The agreement should require the factory to meet the UK safety standards for the product, to provide test reports and technical documentation, and to indemnify the buyer for defects in manufacture with insurance behind it. The review also checks the Modern Slavery Act 2015 and social compliance warranties that the buyer's own customers will require it to pass down.

Payment, currency, duty and letters of credit

The agreement should fix the currency, the deposit and balance structure, and the documents against which the balance is paid, and should not require payment before the buyer's inspection rights arise. Import duty and VAT are the buyer's, as importer under the Taxation (Cross-border Trade) Act 2018, so the agreement should require the factory to provide the commercial invoice, packing list and origin documents the customs declaration needs. The review checks that price changes are limited to agreed cost indices and notice, and that the factory bears the cost of its own errors in documentation.

Governing law, disputes and being able to enforce

An English governing law clause is worth having, but a judgment against a factory abroad may be hard to enforce, so the review considers arbitration under the Arbitration Act 1996 with a seat and rules whose awards are enforceable in the factory's country under the New York Convention. Because the contract is an international supply contract, section 26 of the Unfair Contract Terms Act 1977 means the Act's reasonableness controls do not apply to the factory's exclusions, so the liability clause has to be negotiated on its own terms. Regulation (EC) No 593/2008 as retained governs how an English court treats the choice of law.

What it costs

Complex review, £895. Heavily negotiated or unusually complex documents. Five working days.

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The factory has sent its own contract in English with its local law. Should we insist on English law?

English law is worth asking for, and the review asks. If the factory will not move, the review concentrates on what protects you regardless of governing law: inspection before payment, title to tooling passing on payment, an arbitration clause whose award you can enforce there, and product liability insurance you can claim on.

We paid for the moulds. Can we take them if we change factory?

Only if the agreement says they belong to you and must be released on request. The review checks that title passes to you on payment, that the factory holds the tooling as bailee, and that release on termination is not conditional on paying disputed invoices.

Who is liable if a product the factory made injures a customer in the UK?

You are, as the importer, under the Consumer Protection Act 1987, and you cannot pass that liability to the customer. The review asks for an indemnity from the factory for manufacturing defects, product liability insurance in a currency and amount you can claim, and test documentation that shows the product met the standard.

Related guidance and services

• Contract review, £895, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a distribution agreement from a manufacturer
• Reviewing a supplier agreement from a large customer

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.