Reviewing a tooling agreement with a supplier

A tooling agreement covers the moulds, dies, jigs and fixtures that a supplier makes or holds to produce the buyer's parts. The buyer pays for the tooling, the supplier keeps it, and the question the agreement must answer is what the buyer owns, what it can take away, and what the supplier may do with it in the meantime. The agreement needs to answer each of those in terms. I review the agreement from the buyer's side and return it marked up with a written explanation of the changes and which ones a supplier will accept, for a fixed fee of £495 in three working days.

Who this is for

Manufacturers, product businesses and engineering companies in England and Wales that pay a supplier to make or hold tooling for their components, whether the tooling is a separate agreement or a schedule to a supply agreement, and want to be sure they can move the tooling if the supplier fails, raises prices or goes out of business. Both parties are businesses.

What to look for in a tooling agreement

Ownership and when title passes

The agreement should state that the tooling belongs to the buyer, and say when. Under section 17 of the Sale of Goods Act 1979 property passes when the parties intend it to, so a tooling agreement that is silent leaves title to argument, and a supplier's terms may keep title until the whole tooling cost and the first production run are paid. The review asks for title to pass on payment of the tooling invoice, for the tooling to be marked and recorded as the buyer's, and for the supplier to hold it as bailee, with no lien over it for other debts. Where the buyer pays in stages, title to the work in progress should pass with each stage payment.

Amortised tooling and the price of parts

Where the tooling cost is recovered through the part price rather than paid up front, the agreement should record the amortisation: the amount included in each part, the volume over which it is recovered, and the point at which the tooling is paid for and title passes. The review checks that a shortfall in volume gives the supplier a claim for the unrecovered amount rather than ownership of the tool, and that the buyer can pay the balance and take the tooling at any time. The Late Payment of Commercial Debts (Interest) Act 1998 applies to sums due either way.

Storage, maintenance, insurance and the tool's life

The supplier holds the tooling, so the agreement should require it to store the tooling in proper conditions, maintain and repair it as part of the part price, insure it for its replacement value with the buyer's interest noted, report its condition on request, and not modify it without consent. The review checks who pays for wear that shortens the tool's life, who pays for refurbishment or replacement after the agreed number of shots or cycles, and whether the supplier may use the buyer's tooling to make parts for anyone else, which it should not.

Design rights and the drawings

The buyer's drawings and the design of the part are protected by copyright under section 11 of the Copyright, Designs and Patents Act 1988, by unregistered design right under section 213, and by registration under the Registered Designs Act 1949 where the buyer has registered the design. Where the supplier contributes to the design of the tool or the part, the agreement should assign that contribution to the buyer, because under section 213 design right in a commissioned design belongs to the designer unless assigned. The review asks for an assignment, a confidentiality obligation over the drawings, and a prohibition on making the part or a similar part for others.

Release on termination, dispute and insolvency

The clause that matters is the one that lets the buyer collect the tooling. It should require release within a stated period on request or on termination, without conditions other than payment of the tooling invoice, and should say the supplier has no right to retain the tooling against disputed part invoices. If the supplier refuses, the buyer's remedy is a claim for wrongful interference with goods under section 3 of the Torts (Interference with Goods) Act 1977, which can include an order for delivery up, and the agreement should make the buyer's ownership clear enough that an administrator or liquidator of the supplier releases the tooling without a fight. The review also checks that the buyer may recover the tooling to make parts elsewhere if the supplier fails to deliver.

What it costs

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

We have paid for the mould but the supplier says it stays with them. Who owns it?

That depends on what the agreement says about when title passes, and if it says nothing the answer turns on what the parties intended, which is where disputes start. The review asks for an express term that title passes on payment, that the mould is marked as yours, and that the supplier holds it for you and must release it on request.

Can the supplier use our tooling for another customer's parts?

Not if the agreement says it cannot, and it should. The review asks for a prohibition on using the tooling, the drawings or the design for anyone else, with an assignment of any design contribution the supplier made, so that the part cannot be made for a competitor from your tool.

What happens to the tooling if the supplier goes into administration?

If title has passed to you and the agreement records it, the administrator should release the tooling on proof of ownership. If title is unclear the tooling may be treated as the supplier's asset. The review makes the ownership, marking and release provisions clear enough to be shown to an administrator on day one.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a manufacturing agreement with an overseas factory
• Reviewing a supplier quality agreement

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.